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1 PROSPECTS OF LNG DEVELOPMENT IN REGIONS OF RUSSIA PRODUCTION AND FORMING OF EFFICIENT MARKET Geneva, Palace of Nations Meeting of UNECE Group of Experts on Gas Alexander Karasevich Doctor of Technical Sciences, professor

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Page 1: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

1

PROSPECTS OF LNG DEVELOPMENT

IN REGIONS OF RUSSIA

PRODUCTION AND FORMING OF EFFICIENT MARKET

Geneva, Palace of Nations

Meeting of UNECE Group of Experts on Gas

Alexander Karasevich

Doctor of Technical Sciences, professor

Page 2: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

2

Structure of the presentation

Current situation

Prospects of LNG development

In regions of Russia

On the example of Kostroma region

Problems and solutions

Proposals

Page 3: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Current situation with gas supply in regions of Russia

Level of gas supply for Eastern Siberia and Far East :

natural gas and LPG– 27,5%

natural gas– 4,1%

Level of gas supply in Russia:

natural gas and LPG – 68,7%

natural gas – 57,8%

Level of gas supply in Russia :

The length of gas transmission pipelines exceed 170

thousands km, gas distribution pipelines – 694 thousands. km

not supplied< 25%25-50 %50-75%>75%

Page 4: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

4

LNG facilities operating in Russia

LNG Vyborg,

PJSC "Gazprom", 5 tonnes / year,

Implementation in Russia

LNG Nikolskoe, PJSC

"Gazprom", 7 thousand

tons / year,

Implementation in Russia

LNG Kingisepp,

JSC "Kriogaz" 7 tonnes / year,

Implementation in Russia

LNG Peterhof, PJSC "Gazprom", 7

thousand tons / year,

Implementation in Russia

LNG Kaliningrad, Ltd.

"Gas-Oil", 24 thousand

tons / year, exports

LNG Razvilka PC NPF "EKIP"

7 tonnes / year,

Implementation in Russia

LNG Kanyusyata,

PJSC "Gazprom", 8 thousand

tons / year,

Implementation in Russia

LNG Pervouralsk,

PJSC "Gazprom", 4 thousand

tons / year,

Implementation in Russia

LNG Bratislava PJSC "Gazprom",

24 thousand tons / year,

Implementation in Russia

LNG plants:

- existing low-tonnage

- existing large-tonnage

Today there are 9 small scaled LNG plants in Russia with total LNG production of заводов 93 000 t/year.

Page 5: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

5

Prospects of LNG development in regions of Russia

Level of natural gas supply for regions of Russia – 57,8 %. Objects that are not supply with

natural gas are located far from existing natural gas network and their connection to the grid

is not economically viable

It reasonable to convert on LNG only objects that use expensive fuel, such as:

diesel

heavy oil

heating oil

electricity

Each region of Russia has from 20 to 400 objects, that use diesel, heavy oil, heating oil and

electricity as a fuel

The cheapest ways to produce LNG are – on GDS and CNG stations

Potential of LNG production on GDS in Russia - 22 ,4 billion standard m3/year

Potential of LNG production on CNG stations in Russia – 1,3 billion standard m3/year

Page 6: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Potential for LNG production on GDS

Of 4100 GDS only 311

are suitable for LNG

production.

Total annual potential of

LNG production on GDS

is 22,3 billions m3 0.0

2000.0

4000.0

6000.0

8000.0

10000.0

12000.0

14000.0

59 GDS; 2130,6

mill.m3/year

105 GDS; 13107,215 mill.m3/year

69 GDS; 3839,63

mill.m3/year

41 GDS; 1590,79

mill.m3/year22 GDS; 825,64

mill.m3/y…14 GDS;742,72

mill.m3/year

Page 7: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

7

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

17 CNG stations; 166,36 mill.m3/year

37 CNG stations; 324,44 mill.m3/year

33 CNG stations; 319,50 mill.m3/year

27 CNG stations; 250,30 mill.m3/year

16 CNG stations; 144,48 mill.m3/year

7 CNG stations; 55,48 mill.m3/year

Of 219 CNG stations:

Suitable for LNG production - 137

Total annual potential of LNG

production on GDS - 1,3 billions m3

Potential for LNG production on CNG stations

Page 8: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

8

Future small-scaled LNG projects

It is planned to build 9 small-scaled LNG plants with total LNG production

capacity 1,75 mill. t/year.

Page 9: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

9

Current state of Kostroma region gas supply

Area that is not connected to natural

gas grid -17 districts

Population – 187 thousand peopleArea that is connected to natural gas

grid - 7 districts

Level of natural gas supply – 78,3%

Population – 472 thousand people

Level of gas supply – 78,4% (urban area. – 84,8%, rural

area – 66,4%)

Level of network gas supply– 50,8% (urban area. – 66,3%,

rural area– 21,5%)

Level of gas supply with LPG– 27,6% (urban area. –

18,5%, rural area– 44,9%)

Gas supplied to 1896 localities (263 with natural gas)

Natural gas consumption– 4,9 bill. m3/year

LPG consumption – 3,6 thousand tones

Page 10: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Prospects of natural gas supply for Kostroma region

Natural gas demand for 17

districts –

432 mill. m3

Natural gas demand for 7 districts

– 5,0 bill. m3

(grow 380 mill. m3)

Construction of 10 new GDS

Construction of 510 km of trunk

pipelines

Construction of 3,10 thousand km

of gas distribution pipelines

Reconstruction of 3 GDS

Construction of 230 km of gas

distribution pipelines

17,7 bill. RUR

31,0 bill. RUR

- districts that are not supplied with natural gas

Page 11: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

11

Fuel balance of districts that are not supplied with natural gas

Ко стро мско йрай о н

Красн о сельски йрай о н

Суди славски йрай о н

Остро вски йрай о н

Кадый скийрай о н

Ан тро по вски йрай о н

Ней ски йрай о н

Ман т уро вски й

рай о н

Макарьевски й

рай о н

Шарьин ски й

рай о н

По н азыревски йрай о н

Пыщ угски й

рай о н

Павин ски йрай о н

Октябрьски йрай о н

Ко ло гри вски йрай о н

Чухло мскийрай о н

Со ли га ли чски йрай о н

парфен ьевски й

рай о н

Вохо мскийрай о н

Меж евско й

рай о н

Буй ски йрай о н

Сусан ин ски йрай о н

Га ли чски йрай о н

Нерех тски йрай о н

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CURRENTLY VARIANT 1 VARIANT 2 VARIANT 3

Fuel consumption structure

others

local fuel

coal

heavy oil

gas0

100

200

300

400

500

VARIANT 1 VARIANT 2 VARIANT 3

432.3

147.1

315.0

Natural gas consumption, mill. m3

Page 12: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

12

Ко стро мско йрай о н

Красн о сельски йрай о н

Суди славски йрай о н

Остро вски йрай о н

Кадый скийрай о н

Ан тро по вски йрай о н

Ней ски йрай о н

Ман т уро вски й

рай о н

Макарьевски й

рай о н

Шарьин ски й

рай о н

По н азыревски йрай о н

Пыщ угски й

рай о н

Павин ски йрай о н

Октябрьски йрай о н

Ко ло гри вски йрай о н

Чухло мскийрай о н

Со ли га ли чски йрай о н

парфен ьевски й

рай о н

Вохо мскийрай о н

Меж евско й

рай о н

Буй ски йрай о н

Сусан ин ски йрай о н

Га ли чски йрай о н

Нерех тски йрай о н

1.252.16

0.51

1.56

0.57

1.54 1.92

0.98

0.46

1.74

0.61

0.53

1.17

0.56

0.590.49

0.49

0.47

1.50

1.54

0.69

1.51

0.69

0.57

0.58

1.51

0.61

1.20

0.66

1.61 2.15

0.33

1.53

0.46

1.42

0.55

0.56

1.45

1.44

0.87

0.54

1.35

0.67

1.72

1.15

Comparison of fuels prices with natural gas prices

Conventions

gas

coal

heavy oil

pit

wood

1 – is a price of network gas for 3-d group 4390 RUR/1000m3 (3889 RUR./t.c.e).

Deviations of prices for different fuels to natural gas price are:

coal – from 1,15 to 1,74; heavy oil - from 1,15 to 2,16; pit - from 0,87 to 0,98; wood - from 0,33 to 0,69.

Page 13: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Possible gas consumption in districts that are currently not supplied with gas

Districts

Possible gas consumption, млн. М3

VARIANT 1 VARIANT 2 VARIANT 3

TOTAL population boilers CHP TOTAL population Boilers CHP TOTAL population boilers CHP

1. Antropovskiy 4,8 2,7 1,5 0 3,3 2,7 0,6 0 3,3 1,8 1,5 0

2. Vohomskiy 8,8 4,7 4,1 0 5,5 4,7 0,8 0 6,4 2,3 4,1 0

3. Kadyiskiy 5,3 4,1 0,8 0,4 0 0 0 0 0 0 0 0

4. Kologrivskiy 4,6 3,1 1,5 0 0 0 0 0 0 0 0 0

5. Makarievskiy 9,1 7,7 1,3 0,1 0 0 0 0 0 0 0 0

6. Manturovskiy 31,9 11,2 20,7 0 24,9 11,2 13,7 0 29,6 8,9 20,7 0

7. Mejevskiy 3,6 2,1 1,5 0 2,6 2,1 0,5 0 3,0 1,6 1,4 0

8. Neiskiy 13,1 4,8 6,0 0 10,3 4,8 5,5 0 10,3 4,3 6,0 0

9. Oktyabrskiy 3,1 2,4 0,7 0 0 0 0 0 0 0 0 0

10. Ostrovskiy 14,4 6,4 8,0 0 7,9 6,4 1,5 0 10,7 2,6 8,1 0

11. Pavinskiy 3,0 2,4 0,6 0 0 0 0 0 0 0 0 0

12. Parfienievskiy 14,4 2,5 2,4 8,8 3,2 2,5 0,7 0 3,2 0,8 2,4 0

13. Ponazyrevskiy 5,6 3,3 1,5 0 4,1 3,3 0,8 0 4,1 2,5 1,6 0

14. Pystchugskiy 3,5 2,6 0,9 0 0 0 0 0 2,7 1,8 0,9 0

15. Soligalichskiy 172,3 5,1 23,2 144,0 24,3 5,1 19,2 0 170,5 3,3 23,2 144,0

16. Chukhlomskiy 6,4 5,7 0,7 0 0 0 0 0 0 0 0 0

17. Sharienskiy 128,4 25,2 54,9 48,3 61,0 25,2 35,8 0 71,3 16,4 54,9 0

TOTAL: 432,3 96,0 130,3 201,6 147,1 68,0 79,0 0,0 315,0 46,3 124,8 144,0

Page 14: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Gas supply development of Kostroma region (variant – network gas)

Grow of natural gas consumption – 147 mill. m3

Investments – 11,0 bill. RUR

Construction of 6 GDS and 270 km of trunk pipelines

Construction of 300 km of gas distribution pipelines

- LPG only

- Network gas and LPGКострома

Галич

Page 15: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Gas supply development of Kostroma region(variant - LNG)

Grow of natural gas consumption – 147 mill. m3

Investments – 9,1 – 13,8 bill. RUR

Construction of LNG plant in Galich or on GDS Kostroma-3

(23 t/hour)

Construction of 16 LNG regasification units

- LPG only

- LNG and LPG

- LNG supply roots

Кострома

Галич

Page 16: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Gas supply development of Kostroma region(mix variant – network gas and LNG)

Grow of natural gas consumption – 147 mill. m3

Investments – 7,5 – 12,2 billion RUR

Construction of 1 GDS

Construction of 50 km of gas distribution pipelines

Construction of LNG plant in Galich or on GDS Kostroma-3 (20

t/hour)

Construction of 10 LNG regasification units

- LPG only

- network gas and LPG

- LNG and LPG

- LNG supply roots

Галич

Кострома

Page 17: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Comparison of different Kostroma region gas supply development’s variants

IndicatorsVariant 1

(network gas)

Variant 2

(LNG)

Variant 3

(mix of LNG and

network gas)

Grow of gas consumption,

mill. m3/year147 147 147

Investments,

billions RUR, including11,0 9,1-13,8 7,5-12,2

network gas supply 11,0 - 0,7

LNG gas supply - 9,1-13,8 6,8-11,5

The recommended variant is Variant 3 (mix of LNG, network gas and LPG)

Page 18: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Problems of small-scaled LNG market development

Low level of legal framework:

Outdated requirements of normative documents for LNG infrastructure design and operation

Difficulties with obtaining approvals for construction

Fire safety regulations for LNG infrastructure is not match real level of risk

High price for domestic equipment :

Low competition level among domestic cryogen equipment producers

Absence of incentive to develop technologies an decrease cost of equipment

High gas price for end-user:

Absence of LNG pricing mechanisms

Big share of foreign equipment that price is dependent on economic situation

Absence of interaction mechanisms among LNG gas supply participants

Page 19: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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Comparison of Russian and foreign norms for LNG infrastructure placement

(example – Kostroma region)

Necessary to change Russian norms in accordance with foreign. Requirements changing from Russian to foreign decrease autonomy gas supply projects capital cost and improve projects economic.

Page 20: Meeting of UNECE Group of Experts on Gas...3 Current situation with gas supply in regions of Russia Level of gas supply for Eastern Siberia and Far East : natural gas and LPG–27,5%

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THANK YOU!