russian far east team contribution to aes project

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RUSSIAN FAR EAST TEAM RUSSIAN FAR EAST TEAM CONTRIBUTION TO AES CONTRIBUTION TO AES

PROJECTPROJECTAsian Energy Security (AES) Project

Asian Energy Security Workshop Asian Energy Security Workshop 20062006

6 to 7 November, 2006, Beijing, ChinaRFE Team Members:

Ruslan Gulidov, Victor Kalashnikov,Alexander Ognev

[Presented for Team by David Von Hippel, Nautilus Institute]

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RFE AES CONTRIBUTION: PROJECT TEAM AND ROLES

Dr. Victor Kalashnikov: Overall supervisor of Russian team Develops the strategic framework of the LEAP modeling

activities and follow-up analysis of the results Defines basic qualitative and quantitative assumptions of

the scenarios implemented Resolves various theoretical problems

Dr. Alexander Ognev: Advisor for all general and specific issues related to the RFE electric power industry

Mr. Ruslan Gulidov: Modeler Collects and processes data, inputs to LEAP model Creates and examines LEAP scenarios for RFE energy

sector based on advice from other members

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RFE AES CONTRIBUTION: RFE ENERGY SECTOR OVERVIEW

RFE Energy Sector Generating, transmission & distribution companies, marketing

and management bodies of the electric power industry Coal-mining industry (in all territories of the RFE) Oil and gas industries (Yakutia, Sakhalin, Kamchatka, Chukotka) Refining industry (mostly in Khabarovskiy Krai, but also in

Sakhalin and Yakutia) Characterized by huge distances, low level of development,

non-uniform and dispersed character of the development of RFE's economy

20+ "energy districts" independent in power supply, energy sectors based on local resources. With some imports from elsewhere in RFE

Favorable conditions for concentration of energy production and centralization of energy transportation and distribution Power grid: Integrated Power System of the East (OES Vostoka).

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RFE AES WORK:RFE ENERGY SITUATION

Energy production in the Russian Far East in Recent Years

Index2000 2001 2002 2003 2004

Electricity production, bill kWh

38.8 39.0 38.6 38.9 40.1

Crude oil extraction, mill tons

3.8 4.2 3.6 3.6 4.0

Natural gas extraction, BCM

3.5 3.5 3.5 3.6 3.6

Coal mining, mill tons 28.3 28.2 30.1 30.7 31.8

Oil Refining, mill tons 6.3 6.7 7.4 9.1 8.8

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Energy industry accounts for more than 10% of regional GDP, 28% of industrial output, employs 4% of economically active population

Investments in modernization and development of energy sector in 2003-2004 > 50% of total capital investments in region’s economy Implementation of large-scale, capital-intensive

projects -- “Sakhalin-1”, “Sakhalin-2”, Bureiskaya hydropower power plant

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L E G E N D

MONGOLIA

ЯПОНИЯ

CHINA

MAJOR CENTRES OF POWER GENERATION Installed generating capacity, MW

Fuel and energy types Coal Fuel Oil Natural gas

Nuclear Geothermal Hydro

Yuzhno-Primorsky centre

Viluyskiy "energy district"

Petropavlovskiy "energy district"

Bureyskaya HPP

under construction) (

1

2 3

Primorskaya TPP

Mayskaya TPP

Komsomolsky centre Zeyskaya HPP

Nerungrinskaya TPP

Sakhalinskaya TPP

Yuzhno-Sakhalinsk Khabarovsk

Kharanorskaya TPP Chita

Gusinoozerskaya TPP

Nikolaevsk-on-Amur

Okha

Yakutsk

Magadan

Kolymskaya HPP

Arkagalinskaya

TPP

Bilibino

Anadir'

50-100

200-500

500-1000

More than 1000

BACKBONE TRANSMISSION LINES

500 кV 220 кV

ZONES AND REGIONS OF CENTRALIZED POWER SUPPLY

OES Sibiri OES Vostoka Autonomous energy regions

ELECTRICITY SUPPLIES OUTSIDE THE REGION Operating Planned for construction

Numbered: 1 – Krasnokamensk CHP, 2 - Blagoveschenskaya CHP, 3 - Raychikhinskaya TPP

Bratsk

Ulan-Ude

Figure 9-1: Energy Sector Pattern in the Russian Far East

100-200

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RFE'2002 Primary Energy Production29.7 mln tce

Nuclear 0.2%

Natural Gas 13.8%

Coal 59.7%

Renewables 8.6%

Crude Oil 17.7%

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RFE'2002 Primary Energy Consumption37.6 mln tce

Oil&Oil Products

38.0%

Nuclear0.2%

Hydropower3.2%

Other Renewables

3.6%

Coal 44.1%

Natural Gas10.9%

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RFE ENERGY SITUATION, RECENT TRENDS

Growing signs of stabilization in current energy supplies in RFE since 2002, due to solution of financial problems related to payments for energy products and services

2003-2004, ratio of RFE and Russian average tariffs stabilized at 1.6 for electricity, 1.8 for heating Regional energy companies operated at a profit in 2004 Cross-subsidies between consumer groups, inter-regional

subsidies in wholesale electricity sales still exist Coal industry stabilizing gradually with closing of

unprofitable mines; share of coal in underground mines in RFE in 2004 fell to 10% from 26.1 % in 1991

Increasing demand in energy industries for equipment renovation of outdated and obsolete equipment

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Bureiskaya HPP (designed capacity of 2000 MW, average generation 7.1 TWh/yr) unit additions to total of 1005 MW To transfer power from Bureiskaya HPP, construction of high

voltage transmission lines continues Increasing electric load on TPP in “OES Vostoka” grid,

increased Bureiskaya HPP output by 2007 will decrease average electricity prices

Mergers, takeovers and processes of vertical integration of assets, restructuring of RFE coal and power industries

2005-2007--Unified holding company created for RFE electricity sector (existing and new) controlled (over 52%) by Federal government

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Phase out of coal facilities in some territories of RFE and Transbaikalia as Sakhalin gas comes to market

Northern/NE territories of RFE self-sufficient in coal supply, import petroleum as refined products from Khabarovsk area

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Highly likely that major projects in the energy sector will shift the trade balance of primary energy towards export supplies to international and interregional markets of crude oil, LNG and coking coal, and electricity to “isolated districts” in Northeast China.

Despite overall good prospects for supply in RFE, there are continuing problems of “small” communal utilities (electricity and heat supply) Neglect and malfunctioning of production facilities

and engineering infrastructure, unresolved financial problems

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Stationary “small” power industry varies both technologically and in respect to its manageability. For communal heat supply alone in the RFE there are more than 5300 municipal heating plants, which generate about 25 million gigacalories. Positive examples of vertical integration of communal energy

utilities, form basis for structural reforms in communal services.

Strategic position of RFE in North-East Asia energy sector is being restructured, strengthened Construction/investment activities for implementing the

“Sakhalin-1” and “Sakhalin-2” projects mean doubling primary energy production in RFE by 2008 net energy exporter, supplying crude oil, LNG to energy markets of Northeast Asia

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End 2004 RF Government approved a framework project for construction of Taishet – Scovorodino – Perevoznaya Bay Oil Pipeline (the East Siberia – Pacific Ocean Project – ESPO project) first section is to be completed by second half of 2008, with throughput of 30 Mte crude oil

Oil terminal in Perevoznaya Bay is to be finished by second half of 2008, with similar throughput

2005, RF Government of Russia Federation re-orienting Kovyktinskoye gas project to meet domestic gas needs in W. RF, thus excluding it from NEA market, probably meaning a focus on the triangle "Sakhalin shelf – Northeast China – the Korean Peninsula“ for exports

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2004 and 2005 Exxon Neftegas (operator of the Sakhalin-1 project) in commercial negotiations on pipeline gas supply to Northeast China via Khabarovsk Krai, 8-10 BCM/year

Gazprom negotiating with operator of the Sakhalin-1 project to obtain 25% share, which may speed development of international connections

Completion of Bureiskaya HPP construction, power availability in “OES Vostoka” created preconditions for export-oriented power industry, but so far only strong activities in near-border power trade (negotiations on 600 MW power lines from Blagoveschensk to Kheikhe)

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POSSIBLE COOPERATIVE INITIATIVES: RFE AND NEA

"Amur Arc" Project: Planned specialized infrastructure for fuel and energy

resources transit, goods transit Oil and gas pipelines High-voltage power lines Trans-Siberian Railway Arc-like energy corridor on the route "Eastern Siberia –

Skovorodino – Blagoveshchensk – Khabarovsk and Komsomolsk-on-Amur – south of Primorskiy Krai“

Economic concept of industrial-service development of energy corridor

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"Amur Arc" Project: Oil-and-gas projects of the Sakhalin shelf—Sakhalin 1

and 2, onshore and offshore, extraction/processing Oil pipeline “Eastern Siberia – Pacific Ocean” (ESPO) Integrated system of gas production and transportation

in Eastern Siberia and the Far East Prospects for electricity cooperation with China: the

“Small China” project--Export electricity into “loading islands” – near-border areas/cities of NE China

Prospects for electricity cooperation with China: the “Big China” project—25-30 TWh/yr into integrated energy systems of Northeastern and Eastern Chinese provinces

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"Amur Arc" Project: Energy bridge "Far East – Korean Peninsula Project induces important external benefits:

Improved investment climate in region New technological opportunities for development of

joint enterprises for hydrocarbons processing Energy-intensive enterprises based on new efficient

hydroelectric power plants, gas- and coal-fired power plants

In view of the large scales, investments required, complex effects, planning, implementation, the power supply and pipeline sections of Project require support and coordination of Russian Government

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LEAP MODELING OF RFE ENERGY SYSTEM

Information Sources: Current Accounts State Statistics in Russian Far East for Petroleum,

electricity product supply and balances Customs data on imports and exports Statistics on social and economic indicators Russia’s regional fuel and energy complexes Provincial government data sources Data from private companies; such as "Unified Power

Grid of Russia“ Information from experts in Energy Departments of

territorial administrations of subregions of RFE Estimates of research fellows of Institutes in region

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Information Sources: Paths/Scenarios Official materials from government authorities, private

companies Economic and social development projections Demographic forecasts Plans for energy and other infrastructure

Reports and papers on futures of energy industries of RFE (Russian and International publications)

Coal, gas, petroleum extraction industries Hydroelectric development

Other materials: RF-wide projections/futures documents, regional experts, company publications

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Data Gaps and ChallengesLittle demand data except for electricity—no

energy balance since 1990, errors in data that do exist

Energy supply data good for most sources, with the exception of heat production units

International export and import data available, but information on imports/export to/from other parts of RF lacking

Cost data generally had to be estimated

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Structure of RFE LEAP dataset General economic assumptions (exogenous parameters)

GDP growth rates, industrial output growth rates population dynamics, Economic cooperation: RFE (and RF), other NEA countries

Driving factors of energy policy (key variables) Necessary and cost-effective energy supply/demand in RFE Regional energy cooperation Environmental standards and constraints, Investment limitations, availability of advanced energy

technologies Energy conservation/energy efficiency policy Role of renewable sources of energy Diversification of primary energy demand and supply in RFE

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Structure of RFE LEAP dataset Demand: no sectoral structure, just final demand by fuel, with fuel

demand by geographic area for natural gas, heat, electricity, crude oil (sector division planned)

Transformation (multiple modules for geographic areas): Heat and Electricity T&D modules 5 Export Transmission Line modules 6 Electricity Generation modules, alternating with 6 Heat

Generation modules Pipeline Oil Export, 4 Oil Refining modules Coal Washing, Gas Processing, LNG Production Modules Natural Gas T&D, 2 Crude Oil Production modules Pipeline Gas Export, 4 Natural Gas Extraction Modules Modules for Bituminous and Lignite Coal Production

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Structure of RFE LEAP dataset: Paths

Moderate GDP growth, No Real international cooperation

Intensive introducing

energy-efficient technologies Wide use of renewables

Switching to natural gas

Cool attitude to energy-efficient technologies Weak deployment of renewables Coal dominance

Not available

Reference Scenario

National Alternative

Regional Alternative

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LEAP MODEL OF RFE ENERGY SYSTEM: PATHS AND RESULTS

LEAP Paths (“Scenarios”) Reference Case: extrapolation of currently evolving

economy/energy sector trends Moderate economic growth, slowing of population

decrease Energy supply priorities sufficient production of

energy and fuels at minimal costs self-sufficient energy balance

Coal and petroleum products will remain balance compensators

Stagnation in the sphere of international economic cooperation with NEA and Pacific Rim: only Sakhalin-1 and Sakhalin-2 projects realized

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Reference Primary Energy Demand

0

10

20

30

40

50

60

70

2005 2010 2015 2020 2030

mln

TC

E Others

Hydro

Natural Gas

Coal

Petroleum

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Reference Primary Energy Production

0

10

20

30

40

50

60

70

80

90

100

2002 2005 2010 2015 2020 2030

mln

TC

E

Others

Crude Oil

Hydropower

Natural Gas

Solid Fuels

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LEAP Paths (“Scenarios”) National Alternative Case: Similar to Reference

Case: extrapolation of currently evolving economy/energy sector trends, but…

More dynamic development of renewable energy sources, more active energy efficiency policy, switching from oil and coal to natural gas

New energy priorities nominally supposed to be supported with legislative acts, administrative directives but regional and local business unable to carry out in full

Stagnation in the sphere of international economic cooperation with NEA and Pacific Rim: only Sakhalin-1 and Sakhalin-2 projects realized

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NA Primary Energy Demand

0

10

20

30

40

50

60

2005 2010 2015 2020 2030

mln

TC

E

Others

Hydro

Natural Gas

Coal

Petroleum

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LEAP Paths (“Scenarios”) Regional Alternative Case: Fast integration/ transformation of

RFE into "the Russian center of fuel and energy production and supplies within NEA“

Implement energy integration of Russia into NEA Projects in the southern zone of RFE core source for

optimization of energy usage in the territory International cooperation, sound domestic policy yield rapid

economic growth, slowing of the rate of population decrease increase from 2015 due to migration and international labor

Priorities of energy policy: sufficient production of energy and fuels at acceptable costs, large-scale energy export, active diversification of energy consumption to hydro and other renewables, intensive switching to natural gas; joint regional programs on energy efficiency, environmental protection.

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RA Primary Energy Demand

0

10

20

30

40

50

60

70

80

90

2005 2010 2015 2020 2030

mln

TC

E Others

Hydro

Natural Gas

Coal

Petroleum

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RA Primary Energy Production

0

50

100

150

200

250

2005 2010 2015 2020 2030

mln

TC

E Others

Crude Oil

Hydropower

Natural Gas

Solid Fuels

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Final Energy Demand by Scenarios

0

10

20

30

40

50

60

2005 2010 2015 2020 2030

mln

TC

E

Reference ScenarioNational AlternativeRegional Alternative

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Primary Energy Production by Scenarios

0

50

100

150

200

250

2005 2010 2015 2020 2030

mln

TC

E


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Electricity Net Output by Scenarios

0

20

40

60

80

100

120

140

160

2005 2010 2015 2020 2030

bill

ion

kW

h


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Total Greenhouse Gas Emissions by Scenarios

0

20

40

60

80

100

120

140

160

2005 2010 2015 2020 2030

mln

to

ne

s C

O2

Eq

uiv

ale

nt


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Cumulative Discounted Costs by Scenarios

0

100

200

300

400

500

600

700

800

900

2005 2010 2015 2020 2030

bil

lio

n U

SD

2

00

2


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Energy Supply & Demand

Economic Technological Environmental Social and Cultural

Military / Security

Total Primary Energy

Total Energy System Internal Costs

Diversification Indices for key industries by technology type

GHG emissions (tonnes CO2,

CH4

Exposure to Risk of Social, Cultural Conflict over energy systems

Exposure to Military / Security Risks

Lower in NA Lower in BAU

Higher in RA Lower in NA Likely lower in BAU

Likely lower in RA

Fraction of Primary Energy as Imports

Total Fuel Costs

Diversity of R&D Spending

Acid gas emissions (tonnes SOx, NOx)

Relative spending on energy-related security

Lower in RA Lower in RA Likely higher in RA

Lower in NA scenario

Likely lower in BAU, NA

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Military / Security

Diversity of supply by fuel and supplier

Import Fuel Costs

Reliance on Proven Technologies

Ecosystem and Aesthetic Impacts

Higher in NA and RA

Lower in NA Higher in BAU Lower in BAU

Energy Intensity (TPES /GDP)

Technological Adaptability

Ecology Intensity (GHG/GDP)

Lower in NA and RA

Higher in RA Lower in RA

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Military / Security

Diversity of supply by fuel and supplier

Import Fuel Costs

Reliance on Proven Technologies

Ecosystem and Aesthetic Impacts

Higher in NA and RA

Lower in NA Higher in BAU Lower in BAU

Energy Intensity (TPES /GDP)

Technological Adaptability

Ecology Intensity (GHG/GDP)

Lower in NA and RA

Higher in RA Lower in RA

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THANK YOU!THANK YOU!

russian far east team contribution to aes project

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