27 April27 April 2007 2007

State University – Higher School of EconomicsInstitute for Statistical Studies and Economics of KnowledgeInternational Foresight Centre

Energy sector in Russia:Energy sector in Russia:trends and prospectstrends and prospects

Alexander Sokolov

Second BRICS Workshop, Rio de Second BRICS Workshop, Rio de JaneiroJaneiro

22

CONTENTSCONTENTS

Energy sector in Russia: basic figures and trends

Future challenges

A Foresight Study: Power engineering machine building

33

Oil

Russia is the largest oil producer in the non-OPEC countries, and second biggest in the world after Saudi Arabia.12% of the global oil production 2006 - 9.7 mln barrels per day (b/d). (2000 – 6.5 mln) Export – 5 mln b/d of oil, 2 mln b/d of refined products All oil trunk pipelines are owned and operated by the state-owned monopolies

44

Major oil producing regions and pipelines

55

Crude oil output in Russia 2003-2006,mln barrel a day

66

Oil sector performance

77

Capital investment by Russian oil companies

88

Gas

The world biggest natural gas reserves and producer (21.8% of total).The biggest exporter (24.0% of total). Gazprom (94% of Russia´s natural gas production, 25% of the world´s known gas reserves) has a monopoly for the natural gas pipelines and has exclusive right to export natural gas, granted by the federal law On Gas Export.

99

Major gas producing regions and pipelines

1010

Coal

The world’s leader by 375 billion tonnes of geologic reserves (250 - economically recoverable, including 140 billion tonnes of lignite). The seventh largest coal producer in the world (3.8% of total), and the third largest exporter (9.9% of total)

1111

Major coal reserves

1212

Nuclear energy

Nuclear energy supply in Russia counted 137 TWh (16% of total Russian electricity output and 5% of global nuclear energy production). Total installed capacity of nuclear reactors is 21,244 MWh. There are plans to increase the number of commercial reactors from 31 to 51.All civil nuclear industry is operated by a holding company Atomprom.

1313

Major nuclear power plants

1414

Share of nuclear power in total electricity

Source: OECD

1515

Thermal and Hydro Energy

The world fourth largest electricity producer after the USA, China, and Japan. In 2004, Russia produced 930 TWh and exported 20 TWh of electricity. 63% - thermal plants, 21% - hydropower, 16% -nuclear reactors.Russian energy market is dominated by the Unified Energy System. While production and sale will be opened up to competition, transmission and distribution remain under state control

1616

Major Thermal and Hydro Power Plants

1717

Structural reforms - UES

72 regional companies + 32 federal power plants

Network companies (state owned)

Generating companies (private)

Distributing companies (state owned)

7 large exterritorial generating companies + 14 regional ones

1818

Recent trends and future Recent trends and future challengeschallenges

Fast growth of electricity consumption (5-7% a year)

Increasing domestic gas prices (now – 4 times lower)

Liberalisation of electricity market (2007 – 10%, 2008 – 25%, 2009 – 50%, 2010 – 80%, 2011 – 100%)

1919

Recent trends and future Recent trends and future challengeschallenges

Investment programmes

Unified Energy System:

23 TW by 2010

100 TW by 2015

83 bln USD in 2007-2011

2020

Challenges for domestic Challenges for domestic producers of energy-related producers of energy-related

equipmentequipment

Huge investment expected, but:

Currently up to 50% of production capacities are conserved

Highly deteriorated production facilities (up to 50% of fixed assets, 75% of equipments and machines, 90% of testing equipment)

Lack of skilled engineers and workers

Age gap in researchers population

2121

Challenges for domestic Challenges for domestic producers of energy-related producers of energy-related

equipmentequipment

Competition at global markets

More open domestic markets

Diversification of fuels used and shift from gas to other fuels

Demand for energy saving and other modern technologies

Energy networks development

Joining WTO

Kyoto protocol

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R&D and innovation prioritiesR&D and innovation priorities

National socio-economic priorities

Critical technologies

Sectoral strategies

Sector specific S&T priorities

National S&T priorities

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Identification of national S&T Identification of national S&T prioritiespriorities

Livigsystems

Nanosystems andmaterial

ICT

Critical technologies

Economic growth, technology safety

Transport, aviationand spaceEnergyRational use

of nature

Critical technologies

2424

National critical technologies: National critical technologies: EnergyEnergy

Technologies of nuclear power engineering, nuclear fuel cycle, safe use of nuclear waste and used nuclear fuel

Hydrogen power engineering

New and renewable sources of energy

Energy production from organic raw materials

Energy saving systems for transportation, distribution and utilisation of heat and electricity

Technologies for development of energy efficient engines for transportation systems

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Foresight – a technology roadmap Foresight – a technology roadmap for power engineering machine for power engineering machine

buildingbuilding

Building a model in a form of a road map leading step-by-step to a preset targets (via intermediate targets)

Normative method: from the future to the present

Consensus on milestones for measures and events

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Technology roadmap: major Technology roadmap: major goalsgoals

To extract expert knowledge

To build a consensus on future visions

To involve businesses and government

To promote R&D and innovation

2727

Technology roadmap: major Technology roadmap: major modulesmodules

1. Targeting, scaling2. Planning of workshops, selection of experts3. Workshops4. Discussion, dissemination and utilisation of results

2828

Technology roadmapTechnology roadmap:: standard standard approachapproach

Market Challenges, external factors, emerging markets, products and services

Products Major characteristics, impact on the market. Alternative productsTechnologie

sAlternative technologies, impact on products. Streamlining parameters for technologies and products

Visualisation

Integration of market-product-technology chains

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Technology RoadmapTechnology Roadmap : :power engineering machine power engineering machine

buildingbuildingMarkets

Products/services

Technologies

Challenges

2006 2010 2015 2020 2025 2030

Resources

Key components

Limitations

3030

Sources of information

Analysis of trends in the energy sector Forecast of energy consumption and production facilities (demand)Analysis of capacities of power engineering machine building (supply)•Equipment and technologies•Human resourcesEquipment for the futureMaterials, technologies and R&D for the future

3131

Power engineering machine building: the sector’s specific features

Concentration in few big companies

Separate R&D institutes

Traditional orientation towards foreign markets (mostly in developing countries incl. BrICS)

Strong presence of the state

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Power engineering machine building: identification of innovation priorities

Trends analysis

Major challenges

Future markets

Innovation priorities

Technological prioritiesSector specific vs National critical technologies

3333

Major factorsMajor factors

Oil and gas prices

National energy balance (till 2030)

Lack of clear government policies

Deterioration of construction capacities

Human resources

Lack of standards

Explicit demand from business and government

3434

Major trends: Domestic markets

Demand for electricity – growth 20-35% by 2010; 40-80% by 2020

Increasing production facilitiesReplacing obsolete equipmentModernisation of fixed assets on the basis of new technologies for energy and heat productionR&D and new technologiesCompetition at domestic markets with foreign companies “General Electric”, “ABB”, “Siemens”, “Westinghouse” et al.

3535

Major trends: World markets

Competition with foreign companies at traditional markets (CIS, Asia) Regaining positions at world markets of equipment for thermal and hydro power plants; increasing exports of hydro turbines Increasing exports of equipment for foreign nuclear plants Development of prospective materials, technologies and equipmentDevelopment of export oriented production facilitiesIntegration with foreign companies New policies for foreign markets Key-turn schemes of products sales, services “construction-ownership-exploitation”

3636

Most important market segment and products

Market segments Products

Coal power plants with circulating boiling layer

Steam boiler with circulating boiling layer

Coal power plants with super critical steam parameters

Steam-gas power equipment

450 MWh

540 MWh

Gas turbines

Inter-cycle gasification of coal

Water-water power reactors – 1200, 1500-1750

Turbogenerators

Gas turbines

Steam generators

Containers for transportation and storage of nuclear fuel

3737

Most important market segment and productsMarket segments ProductsFast neutrons reactor 1800 Steam generators

Turbine island

Hydro power generation Hydraulic turbine

Hydro generator

Hydroaccumulation power plants

High power diesel power plants

Tide power plant

Low scale power generation (up to 50 MWt)

Gas piston engines

Geothermal plants

Gas turbines

Steam turbines

Power generation from non-conventional (local) fuels

Wind power generation

Waste processing power plants

Low scale nuclear power station

Hydrogen fuel elements

3838

Most important market segment and products

Market segments ProductsFloating nuclear power plants

Control equipment, decreasing lost of energy

CAD/CAM, CALS

Diagnostics systems

Boiler utilisators

Turbines

Generators

Critical construction materials

Nickel alloys for gas turbines

Chrome steels for steam pipelines

Rotors for gas turbines

Welding materials

Fuel elements

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4040

National vs sectoral critical National vs sectoral critical technologiestechnologies

Technologies of nuclear power engineering, nuclear fuel cycle, safe use of nuclear waste and used nuclear fuel

Hydrogen power engineering

New and renewable sources of energy

Energy production from organic raw materials

Energy saving systems for transportation, distribution and utilisation of heat and electricity

Technologies for development of energy efficient engines for transportation systems

4141

Follow up: a national Follow up: a national Foresight programmeForesight programme

Expert assessment of strategic Expert assessment of strategic prospects of innovation developmentprospects of innovation development,, identification identification of potential of potential technological breakthroughs with a technological breakthroughs with a maximal impact on economy and maximal impact on economy and society in the mid and long termsociety in the mid and long term

4242

Russian ForesightRussian Foresight

Measures to promote S&T and innovation

development in priority areas

Basic research

Breakthrough technologies

Innovation products and services

New markets

S&T and innovation capacities of Russia,

competitive strengths and weaknesses

Trends of global trends of innovation

development

Analysis of major national socio-

economic problems up to 2030

S&T&I for priorities

implementation

System of national priorities

4343

Implications for BRICS countries

Comparison of national S&T and innovation priorities: indicators, strengths and weaknesses, policies

An international Foresight study on priorities for co-operation

Coordination of cooperation policies

Thank youThank you!!

sokolov@hse.rusokolov@hse.ru

Thank youThank you!!

sokolov@hse.rusokolov@hse.ru