Long-term modeling of resilience and flexibility of European gas transportation system:

integrated factorsDresden, April 3 , 2009

Vitaly Protasov, Expert, Institute for Energy and Finance,

v_protasov@fief.ru

24% of primary energy sources now Up to 27-30% by 2030 Hungary (39.8%), UK (36.1%), Slovak Republic

(28.1%) Germany (22.9%)

2009 Ukrainian gas crisis:◦ huge gas supply disruption ◦ lack of analysis of its probability and consequences◦ changes in EU energy policy

2008 - … World economy crisis:◦ gas infrastructure investments ◦ changes in energy demand and its structure

Long-term modeling

Levels of simulation:◦ balances in various scenarios;◦ representation of integrated infrastructure links;◦ detailed simulation of flows and system

requirements in various scenarios;◦ specific design level.

Finland case: 100% import dependance from Russia No UGS

But: 6 bcm long-term contract by 2025 Share of interruptible sales – 93% Nevskoye and Gatchinskoe UGS (1,5 bcm

capacity)

Small number of indicators System of factors => modeling

Probability effect: negative shock of one factor catalyzes influence of another factor. Thereby a probability of the second factor negative shock rises

Consequence effect: combined influence of two or more factors causes new consequences

Type of factor Basic factorsClusters

Infrastructure Contracts SystemEconomic - gas demand

- domestic gas productions- volume and timing of LTC- season peaks of demand

- volume and location of alternative fuels reserves- investment plans (construction, expanding, modernization)

- cost/benefit ratio of contractual obligation breaking- share of LTC- potential gas supply

- TSO dispatching coordination - plans for interconnections constructions- differences between season demand fluctuations

Political and social

- national energy policy and legislation- counteraction for project realization- minimal volumes for socially important objects

- transit countries problem- political stability of suppliers

- agreements about way of system development- common gas TSO - EU energy policy and legislation

Technological - capacity of pipelines, UGS, LNG terminals- resilience of objects and elements of GTS- deterioration and breakdown rate

- peak output for each type of UGS and its location- share of interruptible customers- utilization level of gas infrastructure- bottle necks

- cross-border capacities- strategic (or system) UGS capacities and its location- reverse capacities

Juridical - national requirements for gas, oil and petroleum product stocks- third party access

- possibilities for volume fluctuation- period of monitoring of delivery volume

- ownership and rules for operation of strategic UGS- EU strategic gas, oil and petroleum product stocks requirements

interruptible consumers; non-interruptible consumers; socially important consumers;

Spain – 12 days (20 days in winter)

France – 6 month disappearance of the main source, 3 days of extremely low temperature

Denmark – 3 days of cold weather and 60 days of normal winter conditions

Country Working capacity,

bcm

Peak UGS output,

mcm/day

Peak demand, mcm/day

Peak output to peak demand

Annual consumption,

bcmCapacity to

consumption, %Capacity to peak

demand, days

Austria 4,1 51,2 37,2 1,4 8,4 48,6 110,2

Belgium 0,7 23,0 57,8 0,4 17,4 3,8 11,3

Czech Republic2,3 45,6 40,6 1,1 8,6 26,5 56,2

Denmark 0,8 13,0 20,3 0,6 4,6 16,7 37,5

France 10,8 189,3 210,9 0,9 42,7 25,3 51,2

Germany 19,1 462,9 383,2 1,2 97,4 19,6 49,9

Hungary 3,8 51,0 63,9 0,8 13,4 28,6 59,8

Ireland 0,2 2,8 17,1 0,2 5,0 4,0 11,6

Italy 12,9 296,1 334,0 0,9 84,9 15,2 38,6

Netherlands 2,5 171,0 193,0 0,9 46,4 5,3 12,8

Poland 1,7 21,3 61,5 0,3 16,4 10,6 28,3

Portugal 0,1 7,0 14,2 0,5 4,1 3,3 9,4

Slovakia 2,6 34,4 29,7 1,2 6,2 41,8 87,6

Spain 2,4 12,5 117,6 0,1 34,4 6,9 20,1

UK 4,4 128,5 363,3 0,4 96,1 4,5 12,0

counteraction for project realization – Nord Stream

bottle necks

national energy policy and legislation◦ Third party access◦ Slovakia example

volume fluctuation +/- 20% period of monitoring of delivery volume

(monthly – daily) Synergy effect: gas resonance (demand peak +

supply threat)

Transit countries problem: Ukraine, Belarus, Poland, Morocco and Tunisia, Bulgaria

Political stability of suppliers: Algeria, Libya

Cost/benefit ratio of contractual obligation breaking (high spot price vs penalty and reputation costs)

Interconnectors Strategic (system) storages Reverse capacities

TSO dispatching coordination Agreements about way of system

development Common gas TSO

The next step is the model developing

We found several significant political, juridical, social, technological and economic factors which are usually ignored

A danger of underestimation of factors