3. 3
About this project
About this project
As major energy market players are in the process of defining
their strategies for the decades ahead, Russia has so far lacked
its own forecast for long-term changes in global commodity
and technology markets, let alone technology shifts in energy
production and consumption. The present atlas devised by
the Center for Strategic Research “North-West” within the
framework of the “Long-Term Energy Foresight of the Russian
Federation” project aims to make up the lack of strategic vision
and to provide expertise to those involved in decision-making.
The atlas is divided into several sections containing an analysis
and a forecast for long-term trends, key challenges for further
development and unresolved issues for the future. They provide
a holistic understanding of global energy markets and potential
challenges for producers and consumers of resources.
First sections of the atlas are devoted to the external context of
the energy sector: trends in social and economic development,
core/ periphery areas of economic, demographic and industrial
growth, phases of population settlement and current forecasts
for energy resources demand growth by industry.
Next chapters deal with the analysis of the accessibility and
cost of high-carbon energy resources, such as natural gas, oil
and coal. They contain basic figures and forecasts for reserves,
production, consumption, export and import flows to 2030.
These chapters also analyze key advanced technologies and
innovation projects.
The atlas also features nuclear energy: the uranium market,
potential for the construction of new nuclear power plants,
information on currently operating plants and new technological
developments in the sector. The atlas analyzes several models of
the nuclear fuel cycle adopted by different countries.
The concluding part of the resources chapter is dedicated to
renewable energy. It provides forecasts for wind and solar
energy markets as the most lucrative sectors in terms of capital
attracted and technological growth. This section also focuses on
hydropower and biofuels.
In addition to the evaluation of key markets for energy resources
the atlas pays special attention to the institutional basis of the
sector. It contains sections on government policies in different
sectors, including environmental protection, phases of electricity
markets regulation and international organizations’ energy
initiatives.
Maps, diagrams and charts in the atlas are supplemented by
timelines of key developments that have occurred and events
that are set to happen in the opinion of most experts and
market forecasters. The timelines cover the period from 1980
to 2050. All the developments have been selected as to their
impact on the markets. Lifecycles for natural gas, oil, coal and
electric power markets have been drawn up to describe major
milestones in their development.
4. Center for Strategic Research “North-West” Foundation4
Introduction
This Atlas is one of the results of works on Russian energy
foresight. The project was implemented in 2010-2011.
Relevance of the project is caused by the fact that major
players in global markets choose different strategies to
develop their energy systems proceeding from the economic
and social development priorities. According to the currently
made decisions the technological growth policy, standards
and regulations, requirements to the related sectors and
consumers, the energy resource base development projects,
the external trading partnerships are worked out. The need for
its own forecast of long-term changes in the world and macro
regional trade and technology markets is obvious for Russia, as
well as forecast of technological shifts in the sectors of energy
production and consumption.
In the next 20 years the growth of the world national economies
will require much more energy resources than the current
production is able to provide. Increase of energy consumption
will be parallel to the economic growth, especially in developing
countries. The starting points of this study are questions about
the ability of energy resources markets to meet the growing
needs of the world economic system, about the ways of national
energy balances development in accordance with the principles
of safety and efficiency, about the trends in the field of energy
technologies, about the new ways of solving the problems of
energy security of the national economies.
During the energy forecasting to 2030, the authors discovered
several key trends that would shape the directions of the sector
development. It were they who made the basis for the atlas
formation:
1. Theglobalfuelandenergybalanceisexperiencingprofound
transformations.The resource limitations are more obvious
for carbon energy which is “doomed” to increase its cost:
a. Peaks of oil production have already been passed by
majority of countries;
• Global peak of coal production is planned for the next
10-20 years, the cost of its production is increasing;
• Prospects for gas are more favorable – natural gas reserves
have increased significantly in recent years, but mainly
due to non-conventional gas1
, which is considerably more
expensive yet. In particular, several states declared the
increase of reserves volume by assessing of shale gas pools;
• There will be a rise in cost of hydrocarbon extraction
projects, the development of deeper layers of the ocean
shelves, in Arctic areas, etc.;
• Heavy oil is much more expensive than high-gravity one. If
the growth of the resource cost continues, consumers will
seek to limit the oil consumption;
• New projects of the hydrocarbons extraction are so large-
scale that to pay for them in the current situation will be
possible only with the involvement of public funds, what is
rather difficult, taking into account the general complicated
situation with public finances.
b. The calculation of the full “lifecycle” of superbig non-carbon
technological complexes will be carried out not earlier
than 2020. These projects are so complicated, prolonged
in operation and scaled concerning the influence on the
ecosystems, that economists are not yet able to calculate
their real value:
• The first calculations of the “lifecycle” were conducted in the
nuclear industry, but the assessment of the consequences
of accidents at the “Fukushima-1” nuclear power plant (or
rather, the complexity of the calculation of these effects),
as well as long-term trend of increased cost of building
1 Such countries as Poland, the UK, France, Germany, etc., which are currently
engaged in geological exploration, could join the major holders of shale gas along with the U.S.
nuclear power plants shows that the “nuclear renaissance”,
proclaimed in the early 2000s, is strongly problematizated
now; the sector has to scale to new conditions in a short
terms – it means to reduce the cost and to improve
significantly the safety of the project;
• Hydropower has practically no estimates of “lifecycle” cost
yet, but there is an obvious conflict of large hydropower
plants and other industries, competing for resources, which
become the main “apple of discord” in many developing
regions – water2
and land. The growth of large hydropower
plants is also restricted by the scale of projects, while the
small hydropower plants demonstrate relatively poor
effectiveness;
• In the coming years the estimation of carbon energy
“lifecycles” can be expected, what could mean a significant
increase of cost for a number of resources. First of all,
the cost of carbon dioxide emissions for its issuers will be
assessed;
• The renewable sources are the only resources, for which
the reduction of generation cost is predicted. So far the
assessment of available resources exceeds technological
capabilities (there is a sense of infinity, low cost or even
free resource - “the sun light is free”). The terms of scaling
generationonrenewableenergysources(hereinafter–RES)
are a key factor that will influence on the transformation of
the existing balance in the next 20-30 years. However there
are significant difficulties with the widespread adoption
of these sources: to integrate the RES into the existing
power system or to build alternative networks? Whether
the competitiveness with conventional energy sources will
appear at the turn of 2030s? How long the systems of state
support will be available for the RES in high budget deficits?
2. Resource balance becomes more projected globally.
a. Today the world energy balance (hereinafter – WEB) is
sooner the object not for analytics, but for politics. WEB
management is implemented through a powerful state
intervention. Energy has become a key issue of both
domestic and foreign policy, big part of public expenses is
aimed at it.
b. At present the world has fragmented design of the future.
The general vision, construction of global markets can be
contour-formulated to 2030, there are also some forecasts
to 2100. But some states have already moved from a
scenario-alternative predicting of the future to the system
planning. It is still an open question whether the transition
from scenario predicting to the regulatory planning will be
realized by 2030.
c. The authors fixed the presence of the competing visions
of the future. Obviously, the interest groups, representing
various energy sectors, have a claim to the same resource
– private and public investment, and give different,
sometimes even contradictory forecasts as a proof. Due to
the lack of public finances it is extremely important to invest
in a sector that ensures the maximum economic returns
both in the medium-term and long term prospects.
3. New type of energy resources consumption appears, it will
require to change the architecture of power systems. The
structure of energy will depend on the economic growth
model realized by the largest consumers.
a. Asia claims to become the center of the world economic
system. China is the “attacking” leader, and the Asian
energy market is the one, closing and determinating the
demand and prices for the majority of resources. According
to a variety of energy resources China will be a major buyer
in the market, but still not the referee. The growth of China
2 Here it means “physical” reduction of hydro potential in some regions
due to the development for the needs of agriculture, and due to the climate warming.
5. 5Introduction
will go on as long as its urbanization will, and it likely will
not over to 2030.
b. The main increase in consumption will occur in the largest
urban areas, which are the key consumption centers.
But the type of demand is changing within the cities: the
“Prosumer model” becomes more widespread (it means
the combination of energy producers and consumers);
a number of megalopolises turned to the concept of
building green, energy efficient, intelligent, postcarbon
cities. The general sense of these concepts is the rejection
of the extensive growth of the resources consumption,
the transition to a new development quality. Many of the
metropolises either in developed or in developing countries
announced the transition to the superefficient type of
growth and the readiness to restructure the municipal
services, including construction sector and transport
infrastructure in the next 10-15 years, the energy resources
consumption will dramatically reduce.
c. The new consumption structure, its deconcentration,
will require to change the architecture of power systems
completely: requirements to networks flexibility are
declared, there are graphics of deployment of “Smart
Grids”.
4. The global nature of markets, institutional systems and
infrastructures building.
a. The globalization of decision-making process. Many
solutions are institutionalized due to the international
consensuses (agreements of the G20, the UN and many
other international organizations). First of all, it is about
achieving a global consent on the need to reduce carbon
emissions.
b. Overall institutional and trading systems, the globalization
ofmarkets,financesandinvestmentsurgeontheunification
of energy markets.
c. The globalization of fuels markets. The gas market is
globalized following the oil market (it is supported by the
LNG transportation projects). There is the globalization of
the coal market. Its elements are the growth of international
flows, the formation of several macro-regional centers of
pricing (markets’ centers), the transition to the short-term
contracts dominance, etc. All this new energy markets’
architecture is being formed right now.
d. The world leaders, outsourcing and equipment delivery
networks were defined in the technology markets, and the
key buyers / areas of technological transfer were marked
out as well. It is clear who and how will determine the
technological development of energy; there is a countable
number of contenders for leadership.
e. There is an enlargement of power systems, supported
by common infrastructure projects (transport corridors,
energy corridors, gas transportation infrastructure, etc.)
and by the convergence of legal regimes.
f. A common system of energy management can probably
begin to form by 2030s, but so far combined solutions are
planned in this area: global distribution networks and local
solutions.
6. Center for Strategic Research “North-West” Foundation6
The structure of the Atlas
The Atlas is divided into several sections containing an analysis
of long-term trends, key objectives for further development
and unresolved issues for the future. In complex they provide
a holistic understanding of the modern picture of the global
energy markets development and potential challenges for
producers and consumers of resources.
The first sections of the atlas are devoted to the analysis of
the external context for energy: trends of socio-economic
development, the core and peripheral areas of economic,
demographic and industrial growth, assessment of phases of
the settlement system in different regions, existing forecasts for
energy resources demand growth by industry.
Next chapters deal with the analysis of the accessibility and cost
of key resources of the existing carbon energy, such as natural
gas, oil and coal. They contain basic figures and forecasts for
reserves, production, consumption, export and import flows
to 2030. These chapters also analyze advanced groups of
technologies and innovation projects, which, in the authors’
opinion, will be claimed mostly by the fuel resources sector over
the next 20 years.
The atlas also features nuclear energy: the uranium markets,
potential for the construction of new nuclear power plants,
currently operating plants, new technological ways for sector
development. The Atlas analyzes the final part of the nuclear
fuel cycle, which has now several different versions, as well as
the decommissioning of active or stopped facilities.
The concluding part of the resources chapter is dedicated to
renewable energy. It provides the existing potential and forecasts
for markets, which recently have become the lucrative sectors in
terms of capital attracted and technological growth, - wind and
solar energy markets.
An estimation of technological maturity is given for these
markets. This section also focuses on hydropower – the most
technologically mature carbon-free energy sector; provides data
on the potential of biofuels as one of the most likely competitor
on motor fuel markets.
In addition to the estimation of key markets of energy resources
theatlaspaysspecialattentiontotheinvestmentandinstitutional
basis of the sector, as well as to the infrastructure. It contains
sections on government policies in different sectors, including
ecology; phases of electric power markets regulation; urban
energy policy; integration of electric power markets; policy and
international organizations’ initiatives in the sector.
Maps, diagrams and charts in the atlas are supplemented by
timelines of events that have occurred in the analyzed sector or
that are set to happen. The timelines cover the period for 70
years – from 1980 to 2050. All the events have been selected
due to the degree of their impact on the markets – “indicative”,
which illustrate the described trends, or “bifurcation points”,
which lead to the system changes.
Lifecycles for natural gas, oil, coal and electric power markets
have been drawn up to describe major trends of their
development in historical prospect. Lifecycles of technological
growth are described for a number of new technologies of the
carbon energy, solar, wind and bioenergetics sectors.
7. 7Economy and consumption
Consumption
Long-term trends in the sphere of energy
resources consumption
1. Sectors pretending to the maximum growth rate with the
high potential of resources demand are:
a. Transport sector. According to the IEA forecasts, energy
consumption by transport will increase by 50% by 2030,
by 2050 it will be 80% against 20083
. The growth of
consumption in the transport sector is caused by both the
automobilization and the placing of the transcontinental
traffics which will require a substantial expansion of sector
fuel base. Different world regions should singly answer the
question what fuel will be most widespread - benzine or
alternative motor fuel resources - biofuels, LNG, fuel from
coal or electricity.
3 Transport, Energy and CO2 // IEA/OECD, 2009
b. The housing sector is likely to experience radical
transformations over the next 20 years. There is a high
level of energy consumption at the household in modern
cities; this is caused by the features of the housing, utilities
and transport infrastructure functioning, by the specific of
consumption culture. At the same time a new investment
cycle is being launched in the real estate, the basis for this
cycle will be the efficient use technologies.
c. New industry. Among the industries that show the
maximum growth rate the following could be mentioned:
the petrochemical industry, production of composite
materials, electronics, sophisticated electronics, robotized
systems, production based on biotechnology, etc. It is
the regions that specialize in these sectors will require the
energy infrastructure.
21862
14167
7601060
242 54
0
5,000
10,000
15,000
20,000
25,000
Highways
Railways
Comparison of infrastructure
Source: China Metals
USAChina
162
152
59
12 11
6 3,4 1,8
0
20
40
60
80
100
120
140
160
180
China
India
Indonesia
M
exico
Brazil
South
Korea
EU
U
SA
People per 1 vehicle
Source: SMMT
(km per 1 million people)
Roads
1990 2005 2030 1990 2005 2030 1990 2005 2030
20
15
10
5
0
20
15
10
5
0
20
15
10
5
0
North America Europe Asia Pacific
Marine
Aviation
Rail
Heavy duty
Light duty
Light duty vehicle demand will decline
by about 20% in North America
and by one-third in Europe
In Asia Pacific, transportation
demand will nearly double
from 2005 to 2030
Transportation demand by region
(millions oil equivalent barrels per day)
8. Center for Strategic Research “North-West” Foundation8
2. Among the main changes, which can occur in transport
sector, the following can be mentioned:
a. Future volume of motor fuel demand. According to the
most of forecast centers an essential expansion of fuel
base of transport sector can be expected in the next 20
years. For instance, Exxon analysts consider economical
and hybrid cars the most quick-growing sector of transport
field: 1.2 billion economical cars will be used in 2030 (400
million more than now), and 80% of their demand will be
shared in South-East Asia, 1/3 from them — for China. In
North America the demand on economical cars will grow
by 20%, in Europe — by 30%. The share of traditional cars
will decline from 99% (now) to 85% (in 2030). 15% will
be shared by cars with different hybrid engines. The graphic
below shows the forecasts of sector growth for different
world regions. On the contrary the ВР Company consider
that though the new fuel types will become more popular,
they won’t change the situation radically. Traditional fuel
will remain the only important for the industry, but by 2030
the growth of its consumption will stop.
b. The change of principles and structure of transportation
organization (air traffic, rail transport mentioned earlier,
etc.).
c. The possible technological modernization of shipbuilding
(transition to significant lighter and more high-speed ships,
which reduce the cost of sea shipping).
3. Geographical centers of energy consumption have different
characteristics of demand:
a. Most analytic centers expect in BRICS, Mexico and the
Middle East maximum increase in energy resources
consumption to 2020-2025, and then the growth
slowdown is possible. Sectors, ensuring the demand, are –
traditional industry, transport and housing.
b. Europe, Japan and the USA show medium rates of
industrial production growth with the restructuring of
sector structure and production geography. This is the area
of localization of the most high-tech kinds of activity, which
concentrate in megalopolises or urban districts and have
demand characteristics different from the one of low limits
industry in developing regions. Some reduction in need in
energy resources is predicted in these regions even with the
positive economic growth rate.
c. Transition economies (postindustrial or just entering the
industrial stage states — East Europe, CIS, some states
of Asia, Latin America, the most of African states) are
yet a “blind” area for many forecasts. The volumes of
future energy resources demand will depend on the type
of economic development, which they turn to, which
industries they will specialize in.
4. The consumption pattern is changing in the largest cities:
a. Deregulated energy markets generate the “stochastic”
demand. It is connected with the spatial deconcentration
and change of economic activity character. The notions of
quality and energy accessibility, volumes and peak demand
localization are changing. In the postindustrial city the
daily schedule of citizens’ life and the periods of the main
services differ significantly from traditional notions of peak
hours in the city, the so-called “Fordist type”4
. In particular,
the consumption of energy and other resources increases in
the night time, and it is practically impossible to predict the
period and sources of peak demands.
b. The asymmetric demand growth is primary electric power
demand and reduction of need in heat. This is on the
one hand connected with new technological principals
of building: improvement of heat reservation systems in
buildings (heat insulation and recovery, etc.) and gradual
transition from heating to warming (through the air supply
systems and electric heat sources), and on the other hand
connected with the enhanced use of electricity in transport,
including private one.
c. The “digital energy” demand is the increasing volumes
of use of digital devices, which create a scale demand of
electric power (the value of this parameter is predicted
25% for separate states of America by 2020).
4 Cities with the traditional industry dominance.
Oil
10
20
30
40
2000 2010 2020 2030
2.6% p.a.
2.9% p.a.
World power generation
Renewables
Hydro
Nuclear
ThousandTWh
0 10 20 30
2
4
6
8
10
China
South KoreaThailand
Malaysia
2030
2009
1990
MWhpercapita
GDP per capita, $2009 PPP, thousands
Electricity and income since 1990
1990
0
Coal
Gas
9. 9
5. Increasing scale of involving “local” (or distributed) energy
sources and exploit them players into markets. Modern
technological solutions promote gradual increase of the
role of separate consumer in the market, and appearance
of “consumer-producer” in one.
6. Information support of networks is able to change the
system of relations “producer-consumer” significantly.
Enhancement of demand management from consumers’
side: the use of new methods of accounting and individual
control, including on-line. Creation of smart grid is the
answer to increasing decentralization (scale reduced) of
generation and consumption. Thus, the emergence of
electric cars and the local (house) generation formed a
need in integration of these utilities into a single network,
what, on the one hand, would favour the solving the
problems of uneven load distribution, on the other hand,
would stimulate the demand for equipment of local
generation or electric cars. For example, in the concept of
such technological corporation as Siemens electric vehicles
are considered not only as objects of consumption, but also
as a source of electricity.
7. There is a gradual removing of barrier between the
consumer and the producer and issue of new types
of players into the market – the seller of objects with
embedded power; owners of local generation facilities,
which can be connected to a single network.
Economy and consumption
10. 10 Center for Strategic Research “North-West” Foundation
19%
39%
32%
10%
2010
1,542
18%
37%
35%
10%
2030
1,574
24%
27%
37%
12%
ЕU 2010
1,219
24%
24%
42%
10%
ЕU 2030
1,242 27%
24%
36%
13%
2010
319
30%
16%41%
2030
296
34%
11%
47%
8%
2010
112
37%
14%
41%
2030
162
29%
22%
36%
13%
2010
436
30%
23%
34%
13%
2030
502
48%11%
31%
10%
2010
1,379
47%19%
26%
8%
2030
2,274
28%
11%48%
13%
2010
408
36%
19%32%
13%
2030
807
26%
28%
27%
19%
2010
388
24%
32%25%
19%
2030
645
17%
15%
63%
5%
2010
484
18%
16%
61%
5%
2030
642
35%
31%
22%
12%
2010
436
36%
31%
21%
12%
2030
624
29%
25%
31%
15%
OECD Asia-Pacific countries
2010
555
31%
19%34%
16%
2030
564
India: continuation of
basic industrialization
Japan: trend reversed:
economic growth with
falling resource
consumption
Russia: effeciency in consumption
with current consumption breakdown
China: consumption growth ensured by
rise in mobility.
Better energy efficiency in industry and
residential sector
The Caspian: maintenance
of current trends
Africa: Growth ensured by
South and North Africa.
Continent's industrialization
postponed?
Europe: Slight growth.
A new consumption paradigm?
Middle East: maintenance
of current trends
Unted States: Slight growth.
A new consumption paradigm?
Australia: growth ensured by
industry and residential sector
Latin America: further industrialization
and rise in mobility
Energy consumption by country and region,
IEA reference case scenario,
mtoe
Industry
Transport
Residential sector
Other
World energy consumption by sector,
IEA projections,
mtoe
11%10%
28%
27%
34%
2010
30%
28%
32%
2030
8,423 11,045
11% 10%
8%
13%
High-carbon
generation
Post-carbon
generation
Post-carbon
distributed generation
Centralized
asymmetric grids
Centralized
superconductive grids Symmetric grids
EnergyefficiencyQuota-basedconsumptionConsumptionmanagement
Industrial-like
energy systems
Energy efficiency+"
Carbon-free energy
sector
"New energy paradigm"
Resource-producing
cities
"Energy efficiency"
Russia
China
USA, EU
Japan?
India
Saving in consumption
efficient lighting
co- & trigeneration
Efficient and ecofriendly
solutions (higher
efficiency factors,
decreased ecosystem
load)
Energy consumer-
producer paradigm
Flexible system
architecture
Trends in energy consumption as defined by
respective strategy papers of several countries
ЕU–2030
USA–2030
China–2030?
Russia–2030
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Primary energy consumption, 2010
Primary energy consumption, 2030
Energy consumption,
IEA reference case scenario,
mtoe, 2010–2030
U
SA
China
EU
Russia
Africa
India
M
iddleEast
Latin
Am
erica
Japan
Brazil
Caspian
region
0
Breakdown of final energy consumption by industry,
2010–2030
Source: Center for Strategic Research “North-West”, based on
IEA World Energy Outlook 2010, DOE, national energy development strategies
11. 11Resource balance
Breakdown of primary energy consumption by source,
2010–2030
24%
37%
24%
10%
1%4%
2010
20%
32%23%
11%
1% 13%
2030
17%
35%25%
14%
2%
7%
2010
10%
28%
28%
14%
2% 18%
2030 43%
17%
14%
1%2%
15%
30%19%28%
2% 6%
2030
20%
17%60%
3%
2010
17%
17%
62%
1%2%1%
2030
17%
21%53%
6%
2%1%
2010
14%
18%
52%
9%
3% 4%
2030
66%
17%
3%
1%
3%
10%
2010
56%
19%
8%
6%
3% 8%
2030
42%
23%6%
1%
27%
2010
40%
25%
10%
3%
3%
19%
2030
2%
51%
47%
2010
2%
44%
51%
1%
2%
2030
16%
21%
13%
1%1%
48%
2010
13%
18%
16%
2%2%
49%
2030
6%
39%
9%1%
13%
32%
2010
4%
31%
15%3%11%
36%
2030
2010
2,281 2,353
1749 1831
496 482
169 241
688 781
2,131 3,568
620
1,204
596 940
655
868
245 386
44
20%
1%
10%
21%
2010
569
4%
36%
23%2%
10%
25%
2030
812
52%
28%
11%
3%
5%
2010
4,463
45%
24%
14%
7%
6%
4%
2030
7,434
of which Brazil
gas to gradually replace coal
India: switch to gas and rise
in oil consumption
Japan: removal of oil and coal,
growth of gas. Renewable
energy to replace nuclear?
Russia:
egologization of
the energy mix,
growth of
nuclear, hydro
and gas
China: slow transition to low-carbon
energy mixThe Caspian: conservation
of the current energy mix
Africa: switch from local
to global resources
Europe: transition to post-carbon
energy
United States: transition to post-carbon
energy
Asia Pacific (including China and Japan):
Latin America: switch to
gas and renewable energy
Middle East:
switch to gas
4%
5%
24%
Final energy consumption by country and region,
IEA reference case scenario,
mtoe
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Electricity generation by energy source,
2010, TWh
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Electricity generation by energy source,
2030, TWh
Wave
CSP
PV
Geothermal
Wind
Bio
Hydro
Nuclear
Gas
Oil
Coal
1%
U
SA
EU
Caspian
Japan
Asia
Pacific
Russia
India
China
South
Am
erica
Africa
M
iddleEast
Brazil
M
iddleEast
25%
29%
22%
7%
3%
14%
World
16,014 mtoe
2030
27%
33%
21%
6%
2%
11%
World
12,271 mtoe
2010
U
SA
EU
Caspian
Japan
Asia
Pacific
Russia
India
China
South
Am
erica
Аф
рика
Brazil
Oil
Gas
Coal
Nuclear
Hydro
Renewable
Source: Center for Strategic Research “North-West”, based on
IEA World Energy Outlook 2010, Russian Energy Ministry
12. Center for Strategic Research “North-West” Foundation12
Gas: 2010–2030
The dynamics of the energy resource base over
the last decade
1. The increase of absolute indicators of proven natural gas
reserves in recent years, mainly due to the new technologies
of production and spread of geological exploration to all
new territories. Between 1988 and 2010 the amount of
reserves grew to 185 trillion cubic meters or more than in
1.8 times.
2. Energy resource base enhancement. The growth of reserves
occurred mainly due to the following reasons:
a. After-estimation of nonconventional gas reserves. In
particular, the opening and scale commercial exploitation
of shale gas reserves in the USA. Shale gas and gas from
coal bed share already 57% of gas production in the USA.
At present there are 24 fields of shale gas on the territory of
North America, its reserves are evaluated at about 20–25
trillion cubic meters, what is compared to the Gazprom
reserves, evaluated in the volume of 33 trillion cubic
meters. It is the adoption of new technologies of shale
gas exploration and production what will let gas with its
reserves “distribution” overtake coal;
b. Offshore exploration;
c. Geological assessment of Arctic area reserves.
3. At the same time there is an exhaustion of conventional gas
resources in old fields. In the 2000s the peaks of production
were passed in number of major producing countries –
the USA, Azerbaijan, Algeria, Nigeria, etc. Other major
exporters (Russia, Iran, China, Saudi Arabia and others) can
still increase the volume of production.
4. The sophistication of the energy resource base has led to
the increase of diversity and expansion of the players on the
gas markets, rise in cost of field exploration, demand for a
whole complex of new technological solutions.
250
300
350
200
150
100
50
0
Norway
Poland
Denmark
Italy
Germany
Netherlands
United Kingdom
billioncubicmetersperannum
actual forecast
1970
1972
1974
1976
1978
1982
1980
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Source: The Oil Drum
13. 13
Gas proved reserves changes, 2000–2010
Russia– South
Korea
Proved gas reserves
trillion cubic meters, 2010
Brazil
Venezuela
Peru
Argentina
United States
Canada
Algeria
Libya Egypt
Saudi
Arabia
Iraq
Qatar
Kazakhstan
Russia
China
South Africa
India
Pakistan
Bangladesh
Australia
Ukraine
Norway
United Kingdom
Nigeria
4.6
6.8
47.6 47.04
29.2
8.4
3.4
5.13.9
4.9
4.4 4.4
1.24
3.08
25.1
1.71.7
0.70.3
2.2
1.7
2.3
1.8
Turkmenistan
2.8
7.4
1.11.0
5.7 7.3
1.60.91.51.3
1.3
2.9
1.00.6
2.9
2.0
1.1
Bolivia
Myanmar
Thailand
22.7
Iran
Reserves in 2010, trillion cubic meters
Reserves in 2000, trillion cubic meters
Gas reserves growth zones
Gas reserves decline zones
Major gas pipelines projects,
2010
NameRegion Destination Capacity, billion
cubic meters
Status Operational
Altai China 30 projected 2015
South Korea 10 projected 2015–2017
Nord Stream Northwestern Europe 27.5 underway 2011
Nord Stream-2 Northwestern Europe 27.5 projected 2012
South Stream Southeastern Europe 63 projected 2015
Nabucco Southeastern Europe 26–31 projected 2017
ITGI Southeastern Europe 12 projected 2017
TAP Italy 10+10 projected 2017
Igat 9 Europe 37 projected 2020+
CAGP China 30 underway 2012
CAGP expansion China 20 projected 2012+
TAPI Pakistan 30 projected 2015
IPI India 8 projected 2015
Arab Gas Pipeline Middle East/Turkey 10 partially
built н/д
Myanmar – China China 12 underway 2013
Galsi Europe 8 projected 2015
Russia
Caspian
region/
Middle East
Caspian
region
Middle
East/Turkey
Asia Pacific
Africa
< 5
5–15
15–30
> 30
LNG plants under construction
Plant Capacity, billion
cubic meters
Operational
Algeria Skikda 6.1 2013
Gassi Touil 6.4 2013
Angola Ангола 7.1 2012
Australia Pluto 6.5 2011
Gorgon 20.4 2014
Gladstone LNG 10.6 2014
Queensland Curtis 11.6 2015
Indonesia Donggi Senoro 2.7 2014
Papua New
Guinea
PNG LNG 9 2014
Peak gas by country
Canada
Azerbaijan
Uzbekistan
Turkmenistan
Kazakhstan
United States
United Kingdom
Russia
Romania
Netherlands
Italy
2007
2008
2009
2008
2009
2007
2000
2006
1976
2008
2001
1950 1960 1970 1980 1990 2000 2010
Indonesia
Netherlands
1.4
Source: Center for Strategic Research “North-West”, based on EIA DOE,
Forbes, IEA World Energy Outlook 2010, Russian Energy Ministry, Gazprom
Resource balance
14. Center for Strategic Research “North-West” Foundation14
Factors underlying the forecasts of the gas
resource base transformation
1. The evaluation of “effective” reserves will vary depending
on the market price for gas. Thus, in recent years the shale
gas has been considered more and more profitable for
production, and this gas was formerly among expensive
(inefficient) resources.
2. Technological progress will likely allow to change the
assessments of volumes of effective and produced reserves.
3. Reserves of nonconventional gas should be after-
estimated in countries, which are approaching the peak of
nonconventional gas production, in particular Russia. It will
likely allow to postpone the production peaks, which are
postponed to the period after 2030 in our country.
4. New regions with a huge gas reserves can appear on the
map. Thus, the UK, Israel, Poland and Germany joined this
group recently.
5. Rise in price and enlargement of investment projects can
be predicted.
6. Key questions: the development of the infrastructure for
gas transportation from new production fields; cost and
laboriousness of works on new fields.
15. 15
Gas proved reserves, 2010
Alaska
Gulf of Mexico
India’s
continental shelf
Sakhalin
US and Canadian
Atlantic continental shelf
Brazilian continental
shelf
West African continental
shelf
North Sea and
Arctic continental
shelf
gas reserves: 6.52
trillion cubic
meters
gas reserves: 3.7
trillion cubic meters
gas reserves: 135
trillion cubic meters
gas reserves: 0.39
trillion cubic meters
gas reserves: 0.5
trillion cubic meters
gas reserves: 3.7
trillion cubic
meters
gas reserves: 169.8
trillion cubic meters
gas reserves: 1.9
trillion cubic meters
gas reserves: 0.8
trillion cubic meters
Venezuela
Peru
Nigeria
Australia
Indonesia
China
Libya
Brazil
Algeria
Kazakhstan
Russia
South Africa
India
Australia’s continental
shelf
Source: Center for Strategic Research “North-West”, based on
EIA DOE, Forbes, Russian Energy Ministry, Gazprom
Gas proved reserves,
trillion cubic meters, 2010
< 5
5–10
15–30
> 30
Continental shelf oil and gas
Gas production costs,
US$ per 1,000 cubic meters
min max
0
50
100
150
200
250
300
350
Conventional
natural gas
Shale gas Offshore gas
Countries with the largest gas reserves,
trillion cubic meters, 2010
Norway
Kazakhstan
Malaysia
Indonesia
Australia
Iraq
Algeria
Venezuela
Nigeria
United Arab Emirates
United States
Saudi Arabia
Turkmenistan
Qatar
Iran
Russia
2.3
2.3
3.0
3.1
3.1
4.5
4.9
6.0
6.9
7.4
7.4
25.2
29.3
47.0
5.2
2.4
Resource balance
16. Center for Strategic Research “North-West” Foundation16
Shale gas recoverable resources,
its production and exploration areas, 2010
Source: Center for Strategic Research “North-West”, based on EIA, Oil and Gas Journal, USGS, Wood Mackenzie,
"TEK: Strategies of Development" Journal, Ukrainian Ministry of Energy and Coal Industry
Technically recoverable shale gas resources
as stated in official assessments
n.a.
< 5 billion cubic meters
5–10 billion cubic meters
> 10 billion cubic meters
Producing areas
Areas for which estimates
and exploration are carried out
Areas with shale gas potential
(preliminary geological assessments)
17. 17
Arctic gas potential, 2010
Source: Center for Strategic Research “North-West”, USGS,
Assessment of Undiscovered Oil and Gas in the Arctic, Gautier et al., Science, May 2009
Greenland
Canada
Russia
1
5
7
9
10
14
15
2
Thule
Murmansk
Тикси
Pevek
Barrow
Prudhoe Bay
1
2
Longyearbyen
WSB 1
AA 2
EBB 1
EGR 1
YK 2
AM 3
WGEC 1
LSS 1
NM 1
BP 2
EB 1
NKB 1
TPB 1
NGS 1
LM 1
SB 3
LA1
NCWF 1
VLK 1
NWLS1
LV 1
ZB1
ESS 1
HB 1
NWC 1
MZB 1
NZAA1
TUN 1
CB 1
LS 1
JMM 1
FS 1
AA 1
AM 2
AM 1
NWC 2
AM 4
SB 1
SB 2
FS 3
FS 2
WGEC 3
WGEC 2
WGEC 5
WGEC 7
NGS2
EGR 2
EGR 3
EGR 4
EGR 5
EGR 6
EGR 7
NM 2
BP 1
EBB 2
EBB 3
TPB 2
TPB 3
WSB 2
YK 1
LA2
LA3
LSS 2
LSS 3
EB 2
EB 3
EB 4
LM 2
LM 3
13
3
4
1211
6
8
1
Projects Operator
Pechora Sea (Russia) Lukoil/Conoco Phillips, Sevmorneftegaz
Barents Sea (Russia) Sevmorneftegaz, Gazprom, Total, Statoil Hydro
Barents Sea (Norway) Eni Norge AS, Statoil
Beaufort Sea (Canada) ConocoPhillips, Gulf Canada
Arctic Islands (Canada) Panarctic Oils, Suncor, ConocoPhillips, Gulf Canada
Beaufort Sea (Alaska) Shell, BP Exploration Alaska, Eni Petroleum, Pioneer natura
Chukchi Sea (Alaska) Shell
1211
13
1514
43
21
76
109
5
8
Undiscovered gas,
trillion cubic feet
Major oil and gas projects
Main Arctic ports
> 100
6–100
1–6
< 1
area not quantitatively assessed
area of low petroleum potential
Province code Province Resources
WSB West Siberian Basin 651,498
AA Arctic Alaska 221,397
EBB East Barents Basin 317,557
EGR East Greenland Rift Basins 86,180
YK Yenisey-Khatanga Basin 99,964
AM American Basin 56,891
WGEC West Greenland East Canada 51,818
LSS Laptev Sea Shelf 32,562
NM Norwegian Margin 32,281
BP Barents Platform 26,218
EB Eurasia Basin 19,475
NKB North Kara Basins and platforms 14,973
TPB Timan-Pechora Basin 9,062
NGS North Greenland Share Margin 10,207
LM Lomonosov - Makarov 7,156
SB Sverdrup basin 8,596
LA Lena-Anabar 2,106
NCWF North Chukchi-Wrangel Foreland Basin 6,065
VLK Vikitskii Basin 5,741
NWLS NorthWest Laptev Sea Shelf 4,488
LV Lena Vilyui Basin 1,335
ZB Zyryanka Basin 1,505
ESS East Siberian sea Basin 618
HB Hope Basin 648
NWC Northwest Canada Interior Basin 305
MZB Mezen' Basin NQA
NZAA Novaya Zemlya Basins and Admiralty Arch NQA
TUN Tunguska Basin NQA
CB Chuckhi Borderland NQA
YF Yukon Flats NQA
LS Long Strait NQA
JMM Jan Mayen Microcontinent NQA
Franklinian Shelf NQA
Resource appraisal,
billion cubic feet
FS
Resource balance
18. Center for Strategic Research “North-West” Foundation18
Recent tendencies in gas markets
1. Key experts increasingly define the current situation in
the energy sector as the beginning of “the gas era”. Gas
generation claims to leadership in power generation by
both – the volume of input capacities and the amount
of investments. Gas wins in competition with other
sources (nuclear, coal, renewables) as the most effective,
affordable, and reliable resource.
2. The entry of liquefied natural gas to the world market and
deployment of infrastructure to gain liquefied natural gas
(hereinafter – LNG) in the USA and the EU. The volumes
of gas carries construction increased significantly in 2006-
2010. There is a rise and enlargement of fleet for gas
transportation. According to IHS Fairplay, ships tonnage will
increase by 30% by 2020 in comparison to the 2009 and
will account 25 million cubic meters. The rise will be mainly
due to implementation of large ships with tonnage of
more than 50 thousand cubic meters. The minor increase
of gas carries fleet is expected to 2014, but after 2016
the fleet replenishment will begin, it is connected with the
implementation of new gas liquefaction facilities.
3. The expanding of the number of market participants
(geographical and corporate). The process of sector
restructuring has begun: new resource providers and
consumers are entering the markets. The deployment
of infrastructure for LNG gaining in the U.S. and the EU
allowed to form the global natural gas market, flexible,
balanced in terms of number and diversity of suppliers and
consumers5
, scaled and integrated, including American,
Asian and European “centers”.
5 In 1985 there was the only country-consumer – Japan, which dominated on the
global LNG market, providing more than 73% of world consumption; in 2002 Japan bought
50% of the world LNG volume, South Korea – 17% and the EU – 28%; in 2008 Japan provided
only 40% of the LNG consumption, the EU – 22%, South Korea – 17%, India and the U.S. –
5% each. In the last 10 years the traditional main suppliers of LNG – Indonesia, Malaysia and
Trinidad and Tobago – have been supplemented by Qatar, Nigeria, Australia, Oman, Algeria,
Egypt and several other suppliers.
4. The long upward trend of rise in gas prices, which have
somewhat corrected the world financial crisis during the
last three years, and the increase of supply of LNG and
shale gas to the market. Thus in 2009 the USA took the
lead in the world natural gas production, overtaking Russia.
This resulted in the redirection of LNG trade flows from
the United States to Europe. In particular, the Qatar LNG
suppliers, without the demand for their own production
in the U.S. market, have been forced to establish a market
in Europe. Thus, the shale gas entry to the markets has
provided a temporary reduction in the price of this fuel.
Experts predict a decline in price growth rates of the
resource in the next few years.
5. Gas conflicts, particularly between Russia and Ukraine,
have politicized the market. Gas has become a subject of
political debates. A whole range of new investment projects
and institutional initiatives has been launched in recent
years in order to minimize political risks and reduce the
pressure of gas suppliers and transit countries (duplicating
pipeline projects, the third energy package, etc.).
6. The growth of the volumes of spot and futures gas market,
the reduction of the market sector, where long-term
contract prices, tied to the oil price, are in force. In the last
10 years a smooth “decoupling” of oil and gas prices has
been happening.
19. 19
Gas production and consumption, 2010
7.0
92.4
20,9
9.4
9,8
17.3
5.5
6.5
10
16
54
105
32.0
72.030.3
26.97.1
44.1
8,8
0.85
1,8
2
8
Houston Hub
5.4
6.2
16
4.1
10.9
21
18.8
6.3
14.9
20.1
36.5
17.7
5.2
43.3
8.2
3.9
Brazil
Venezuela
Peru
Argentina
United States
Mexico
Canada
Algeria
Libya
Egypt Saudi Arabia
Iraq
Iran
Russia
China
Ukraine
Индия
Pakistan
Bangladesh
Myanmar
Thailand
Indonesia
Australia
Norway
Nigeria
Malaysia
Japan
Netherlands
United Kingdom
Italy
Trinidad
and Tobago
Bolivia
Colombia
Henry Hub
USA
Golden
Gate Center
Waha Hub
Alberta Heren NBP
index
German
market
Japanese
LNG market
611.0
683.4
650
138137
80.4
29
106.4
4.1
93.8
57
43.6
70.5
84 8445.161.3
97109
62
51
40.3
82
Qatar
116.7
20.4
2057
66.535.7
55.3 68.9
94.5
76.1
7.6
UAE
60.551
50
30.4
475
159.8
93.8
8.16.5
4,5
10.9
3.7
Source: Center for Strategic Research “North-West”, based on EIA DOE,
BP Statistical review 2010, Russian Energy Ministry, Gazprom, Rusenergo, Naftogaz
Top gas consuming countries,
billion cubic meters, 2010
Gas flows
2010
Main centers of price-setting
Gas net importers in 2010
Gas net exporters in 2010
Gas pipeline, billion cubic meters
LNG, billion cubic meters
Gas production in 2010, billion cubic meters
Gas consumption in 2010, billion cubic meters
Average gas prices in main markets, 2010, US$ per million BTUs
LNG average prices, 2010, US$ per million BTUs
Top gas producing countries,
billion cubic meters, 2010
Australia
India
United Arab Emirates
Egypt
Uzbekistan
United Kingdom
Mexico
Algeria
Netherlands
Malaysia
Indonesia
Saudi Arabia
China
Norway
Qatar
Iran
Canada
USA
Russia
Mexico
Germany
USA
Russia
Iran
China
Japan
Canada
Italy
India
United Kingdom
United Arab Emirates
Saudi Arabia
Ukraine
France
Uzbekistan
Egypt
Thailand
Netherlands
Argentina 43.3
43.6
45.1
45.1
45.5
46.9
57.6
61.9
60.5
68.9
76.1
81.3
83.9
93.8
93.8
94.5
109.0
136.9
475.0
683.4
50.4
50.9
51
55.3
57.1
59.1
61.3
66.5
70.5
80.4
82.0
83.9
96.8
106.4
116.7
138.5
159.8
611
650
Resource balance
20. Center for Strategic Research “North-West” Foundation20
The forecast of gas market transformation
1. Further growth of consumption. The gas can become the
dominant fuel in energy in the beginning investment cycle
(the period of large-scale investments in the modernization
of existing and construction of new facilities) as the
cheapest, low-carbon and available resource. In China,
the gas demand will be the largest in the world: by some
assessments it will rise up to 6 times by 2030 compared to
2005.6
It is necessary for China in coming years to reduce
dependence on coal in power industry and to carry out
the transition to more ecological types of generation. Gas
consumption in other Asian countries and the Middle East
will grow faster than on the traditional markets (4.6%
and 3.9% respectively).7
In Europe the key changes are
expected around 2020, when decline in conventional
gas reserves will occur, and Europe will have to double the
import of LNG and shale gas by 2030
2. The further globalization of the market at the cost of the
further growth of LNG delivery, but the assessments of the
market volume are different. According to the forecast of
JSC “Gazprom” the annual production of LNG will exceed
500 million tonnes, or about 700 billion cubic meters of
gas by 2020. The BP forecasts, that LNG production could
reach 476 billion cubic meters by 2020. Moreover m LNG
market gains a global character with the developed trade
infrastructure.
3. Since the early 2020s rapid growth of gas production is
expected in the Middle East, North America and countries
of the former Soviet Union. A key region in the LNG trade
in the next 10 years will be the Middle East, which will
have 40% of all LNG facilities by 2020. Indonesia, on the
contrary, may become a net importer of gas.
4. New gas transport routes. In 2011 it is planned to begin
the construction of trunk gas pipeline Nabucco, which will
transport gas from Turkmenistan and Azerbaijan, bypassing
Russia; later the following projects will be activated –
Persian Pipeline (pipeline from Syria, Iraq, Iran) gas pipeline
Nigeria - Algeria - Spain and others. Another aim of such
projects is the reduction of transit risks of Russian gas
delivery (primarily, Nord Stream and South Stream - 2). The
value of suppliers, focusing on the marine transportation of
gas, will increase on the natural gas market; thus, Australia
is claiming to the role of the leading player in the supply of
LNG.
6 The Outlook for Energy. A View to 2030. ExxonMobil.
7 Energy Outlook 2030. British Petroleum.
5. In the next 3-5 years the high competition among gas
sellers on the major markets at relatively low gas prices will
remain the same. In 2015 (according to some estimates, in
2020) gas prices rise will restore due to increased demand
pressures.
6. In the context of the global gas market establishment the
unconventional gas in the United States may play a role
similar to that played by the oil reserves in the North Sea and
the pipeline Texas - New York to form the modern structure
of the world oil market, where such sorts as Brent and WTI,
and the London and New York raw materials exchanges
are the basic elements of the pricing system. It should be
taken into consideration that the North American market
is the most competitive. Its rules can be used to form the
institutional base of the world market.
7. The increase in the amplitude of prices fluctuations, liability
to speculation. The emergence of new gas crisis is possible.
8. The gradual markets integration, with the important role of
regulators (the third energy package of the EU).
9. Consumer strategy is aimed at further liberalization and
expansion of the number of gas suppliers. The liberalization
and strategy of the number of gas suppliers expansion in
the EU8
has become the most notable process of the last
years; it means the development of a highly competitive
gas market. Gas transport systems of the EU countries
are transformed into a single network; there is a tougher
regulation, designed to ensure an equal access to the “tube”
and underground storage facilities; gas transport system
is already reversible and has on its western and southern
borders the chain of LNG regasification terminals.
10. The emergence of players who make a bet on the increase
of the sectors with gas use, especially in transportation.
How reasonable is the increasing number of vehicles,
working with LNG?
8 Since 2004 the EU has been introducing a rule of free choice of
gas suppliers for all industrial enterprises (since 2007 - for all consumers). The
opening of national gas markets creates new conditions for direct access for gas
producers to consumers, bypassing the vendors. Then a number of documents
aimed at forming a common EU energy market, reduction of the influence of
monopolies.
21. 21
Gas market lifecycle
EU’s 1st, 2nd and 3rd energy packages
Rules and standards on renewable
energyOil-linked
gas prices
National markets
- utilization of associated gas
from oil fields and coal mines
- first uses in everyday life
- absent transport infrastructure
Local resource
1880–1920
1930–1960
- expansion of transport network
- interregional trade
- stable/regulated prices
- expansion of the energy resource
base
- production growth
- stable or decreasing prices
- production growth
- low prices (?)
- expansion of the energy
resource base
- market integration
Liberalization
Globalization
1980–1990
2000–2010
Coalcrises
Emergenceofcheapoil
Oil turned into
main fuel resource
Asia’sindustrialization
Commoditysupercycle
Construction start of
LNG infrastructure
(Qatar, 1997)
Decisions on prices
deregulation adopted
(1979)
Gas industry recognized
as natural monopoly in
the United States (1938)
Establishment of OPEC
nationalization of oil
industries in some countries
First gas stoves
Depletion of West Texas
oil fields, oil peaks passed
in the United States
1973and1979oilcrises
politizationofoilsupply
Golden age
Decoupling of oil
and gas markets
RiseinM&Adeals; industry consolidation;
reinforcement of state-owned companies
Emergence of
shale gas markets
Widespread adoption of spot
market contracts
Emergence of new players
Discovery of oil fields
in the Netherlands
(1959)
Disputes between Russia
and gas transit countries
(Belarus, Ukraine)
First concepts of transport fuel
switching to natural gas
LNG drop in prices.
First LNG sea terminals
in the US and UK
Manufactured coal gas
for street lighting
US gas industry subsidies
Gas Exporting Countries Forum
Debate on OPEC-like organization
Resource balance
22. Center for Strategic Research “North-West” Foundation22
Gas production and consumption, 2030
Gas consuming countries,
2030
Others
29%
USA
16%
Middle East
13%
Russia
12%
China
6%
India 3%
Japan 3%
Canada 3%
Brazil 1%
Australia 1%
South Korea 1%
Source: Center for Strategic Research “North-West”, based EIA DOE, BP Statistical review 2011,
Gazprom, Novatek, Ukrainian Ministry of Energy and Coal Industry
Gas producing countries,
2030
Gas net importers in 2030
Gas net exporters in 2030
Gas pipeline, billion cubic meters
LNG, billion cubic meters
Gas production in 2030, billion cubic meters
Gas consumption in 2030, billion cubic meters
Gas flows
2030
Russia
20%
USA
15%
Middle East
15%
Africa
9%
Latin America
6%
Canada 4%
Australia 4%
China 3%
Mexico 2%
India 2%
Brazil 1%
Others 20%
Latin
America
5%
Mexico
3%
Africa
4%
7.0
92.4
20,9
9.4
9,8
17.3
5.5
6.5
10
16
54
105
32.0
72.030.3
26.97.1
44.1
8,8
0.85
1,8
2
8
Houston Hub
5.4
6.2
16
4.1
10.9
21
18.8
6.3
14.9
20.1
36.5
17.7
5.2
43.3
8.2
3.9
Brazil
Venezuela
Peru
Argentina
United States
Mexico
Canada
Algeria
Libya
Egypt Saudi Arabia
Iraq
Iran
Russia
China
Ukraine
Индия
Pakistan
Bangladesh
Myanmar
Thailand
Indonesia
Australia
Norway
Nigeria
Malaysia
Japan
Netherlands
United Kingdom
Italy
Trinidad
and Tobago
Bolivia
Colombia
Henry Hub
USA
Golden
Gate Center
Waha Hub
Alberta Heren NBP
index
German
market
Japanese
LNG market
611.0
683.4
650
138137
80.4
29
106.4
4.1
93.8
57
43.6
70.5
84 8445.161.3
97109
62
51
40.3
82
Qatar
116.7
20.4
2057
66.535.7
55.3 68.9
94.5
76.1
7.6
UAE
60.551
50
30.4
475
159.8
93.8
8.16.5
4,5
10.9
3.7
23. 23
The issues to be resolved
1. How reasonable is the “gas optimism”? Perhaps in the
coming years politicians and regulators will rise question
about the optimal share of gas generation in order to
ensure the “stability” of the energy balance.
2. How long the gas resources will be enough to ensure
the rapid growth of consumption? There are no accurate
predictions for these processes in the expert community
now. Will the new “gas crisis” occur? When will the world
Hubbert peaks9
on gas be passed?
3. Whether macroregional markets will close up together and
what rules they will obey? As an “ideal model” of the gas
market formation experts often take an example of the
USA, which has now a developed market infrastructure,
trading and rules of gas pricing.
4. What would be the prevalent form of agreements on natural
gas contracts: spot prices, stock trading or long-term
contracts? For example, the prices on the USA gas market,
becoming the world key market due to the consumption
growth, are traditionally defined exactly on the spot and
futures markets. Simultaneously there is a reduction of
market sector with long-term contract prices, tied to the oil
prices, around the world.
5. Will the number of market players grow due to LNG, shale
gas?
9 The Hubbert peaks on resource (oil, gas, etc.) – is the world production, which
was or will be achieved. The oil peak was first theoretically predicted by american geophysicist
King Hubbert, who created the model of known reserves. In 1956 Hubbert correctly predicted
that production of oil from conventional sources would peak in the continental United
States around 1965-1970, and the world production would reach its peak at 2000.
6. Whether there will be the nationalization or, on the
contrary, privatization (liberalization) of gas resources,
taking into account the high cost and scale of the projects?
Whether the concentration will increase or, on the contrary,
the restructure of the sector will begin?
7. Whether the gas is an independent resource or it exists as
part of the “ideal mix” with the renewable energy sources,
and gas generation plays only the role of peak suppliers? In
particular, the assessment of many states-consumers is that
the gas is a fuel, dominating only in the period of transition
to “renewable” energy balance, as due to technological
point of view, it is a perfect balancer for alternative energy
sources.
8. What kind of impact these processes have on Russia?
Russia, as a key gas supplier, will likely be under pressure
from a range of new solutions (institutional, technological,
design), that will be initiated and implemented primarily by
consumers.
9. What competences will be required by technologically
different? Are the labor markets of traditional gas market
players ready for technological sophistication of the sector?
10. Whether the rise of gas production in the Arctic will occur?
At the moment it strongly depends on the world prices on
raw materials and on the level of technologies development?
11. Whether the “ideal mix” will be created in power industry
basing on gas and the RES?
Resource balance
24. Center for Strategic Research “North-West” Foundation24
Oil: 2010–2030
The trends of energy resource base change
1. The peaks of oil production are already passed in some
countries, which play an important role in the provision
of world consumers. World production peak, according
to some estimates, has already been passed (2007),
according to the others – it will happen in 2050.
Assessments dispersion is very wide. In the USA, the largest
oil consumer, the peak production was passed in 1970.
In Russia, the independent from OPEC oil exporter, the
peak was probably in 2010. The largest OPEC exporters
– Saudi Arabia, Iran, Venezuela, Libya, Oman – have also
already passed the peak of raw materials production. In
combination with the growth of absolute consumption
that gives a long-term trend in growth of prices for this raw
material.
2. The shift of oil production projects in deep geological
structuresandfarouttothesea.Thereplenishmentofglobal
raw materials base is varied out due to the development of
non-conventional oil and offshore areas in countries, that
didn’t belong to the most important players in the market,
in particular Canada, Brazil. Deep-water fields are about a
half of the discovered oilfields since 2006. Since 2000, the
world deep-water oil production increased three times and
reached 5 million barrels per day, and by 2015 it will rise to
10 million barrels per day. The richest regions in terms of
deep-wateroil arethe Gulf ofMexico, coastof Braziland the
western coast of Africa. Growth of offshore developments
in recent years has led to increased demand for offshore
vessels. Thus, according to IHS Fairplay forecasts, in 2020
the number of offshore vessels will be about 9.3 thousand
units compared to 7.4 thousand units in 2010. The rate
of the vessels number growth will remain approximately
the same in all segments. By total deadweight the most
significant increase will be in the number of the fleet in the
segment of offshore platforms and vessels for their service
and in segment of drilling vessels.
3. Geographical distance of the deposits from customers, the
technical complexity of the projects lead to increased prime
costs, as well as to the growth of “nominal” of investment
projects. The volume of investment into new types of
projects is so high that they can only be carried out by the
international consortiums of mining companies, and the
question about the deposits is a crucial factor of mining
companies’ capitalization.
4. The non-conventional oil sources and relevant
technological solutions are invested mainly by the
developed countries. Geography of non-conventional oil
production growth: 83% of production in 2030 will belong
to the United States and Canada. Developing countries
(excluding China) are practically do not execute non-
conventional oil production and do not invest in exploration
of such deposits. Russia exploits the resources of the Soviet
developments. Mexico does not update its energy resource
base, etc.
5. Risks associated with the global shortage of hydrocarbon
resource base are still quite high. Experts point out that
the long-term trend of oil prices rise is connected with the
depletion of reserves.
6. The oil prices rise changes the conditions of competition
in motor fuel markets. Thus, the prices rise provides more
attractiveness of such segments as:
a. Liquefied gas for cars;
b. Biofuel;
c. Electric vehicles. There are the researches, which show
that the volumes of investments in electric transport
technologies correlate with the oil prices;
d. Synthetic fuel from coal and shale;
e. The increase of effectiveness of internal combustion engines
with the ensuring of motor fuel consumption reduction.
25. 25
Oil proved reserves changes, 2000–2010
Source: Center for Strategic Research “North-West”, based on EIA DOE, Bundesanstalt fuеr Geowissenschaften und Rohstoffe,
UKERC, The Global Oil Depletion Report, 2009, Sсhlumberger – Worldwide heavy oil by country
Oil proved reserves,
billion barrels, 2010
<10
10–50
50–100
>100
Oil reserves growth areas, 2000–2010
Estimated heavy oil reserves in 2010, billion barrels
Oil reserves decline areas, 2000–2010
Reserves in 2000, billion barrels
Reserves in 2010, billion barrels
date
Peak oil by country,
Yemen 2001
Syria 1996
Australia 2000
Colombia 1999
Argentina 1999
Egypt 1993
Oman 2001
Indonesia 1997
United Kingdom 1999
Libya 1970
Norway 2001
Venezuela 1970
Mexico 2003
Iran 1974
United States 1970
Russia 1987
Billion barrels per year
2000 2005
Shell
Total
UppsalaCampbel
Energyflies
Miller Meling
LBST
OPEC
US EIA
BGR
IEA
2010 2015 2020 2025 2030 2035 2040 2045 2050
Forecasts for peak oil and post-peak
production decline rates
8%
7%
6%
5%
4%
3%
2%
1%
0%
Forecastsforpost-peak
productiondeclinerate
Peak oil date
Peak Oil Consulting
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Canada
Iran
Russia
Brazil
Mexico
Ecuador
Argentina
United States
Algeria Libya
Egypt Saudi Arabia
Iraq
Kuwait
Kazakhstan
China
India
Nigeria
Indonesia
Australia
Norway
United Kingdom
Venezuela
72.6
48.5
7.3
30
253
5.4
12.29.2
37
454
22
104
190
96
24
5.64.8
3.0
5.1
3.32.8
2.7
262
190
263
44.2
29.5
28.4
21.7
6.610.7
175.2
2,550
4,9
112 137.6
89.7 76
0,00 500 1000 1500 2000 2500 3000 3500 4000 4500
2000 2005
Shell
Total
UppsalaCampbel
Energyflies
Miller Meling
Peak Oll Consulting
LBST
OPEC
US EIA
BGR
IEA
2010 2015 2020 2025 2030 2035 2040 2045 2050
19.1
125
10.4
137 296
2,200
12.8
16
2.5
115
447
60
264
20
402
Resource balance
26. Center for Strategic Research “North-West” Foundation26
Brazil
Peru
Argentina
United
States
Canada
Algeria Libya
Iran
Kazakhstan
China
India
Nigeria
Indonesia
Australia
Norway
Venezuela
Russia
Saudi Arabia
Iraq
262,4
175,2
137,6
115,0
104,0
296
97,8
60,0
44,3
37,2
30,0
25,4
20,4
19,1
12,8
12,2
73%10%
3%
3%
2%
9%
СШАРоссия
Конго
Бразилия
Италия
Остальные
страны
272
113,8
66,8
0
50
100
150
200
250
300
Канада Россия Казахстан 0
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
20
40
60
80
100
Неконвенционная нефть
Природный газоконденсат
Неразведанные месторождения нефти
Неразработанные месторождения нефти
Имеющиеся месторождения нефти
Gulf of Mexico
Oil reserves:
45 billion barrels
US and Canadian
Atlantic continental
shelf
Oil reserves:
3.82 billion barrels
Alaska
Oil reserves:
26.6 billion barrels
North Sea and
Arctic continental
shelf
Oil reserves:
74.8 billion barrels
West African
continental shelf
Mediterranean
Sea
Oil reserves: 33.8
billion barrels
Oil reserves:
11.8 billion barrels
Sakhalin
Oil reserves:
450 million tonnes
Brazilian
continental shelf
Oil reserves:
12 billion barrels
New oil producing areas, 2010
Oil proved reserves,
2010, billion barrels
<10
10–50
50–100
>100
Shale oil reserves
Continental shelf oil and gas
Oil sands and heavy oil reserves
Source: Center for Strategic Research “North-West”, based on EIA DOE, Bundesanstalt fuеr Geowissenschaften und Rohstoffe
U.S. Offshore Oil and Gas Resources, Oil and Gas Journal, IEA World Energy Outlook 2010
Oil production costs,
US$ per barrel
Middle East
and North
Africa oil
Conventional oil Deep oil Heavy oil Arctic oil Shale oil
min
max
Production by type of crude oil,
billion barrels per day
0
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
20
40
60
80
100
Unconventional oil
Natural gas liquids
Crude oil: fields yet to be found
Crude oil: fields yet to be developed
Crude oil: currently producing fields
Countries with the largest oil reserves,
billion barrels, 2010
Algeria
Brazil
USA
China
Qatar
Kazakhstan
Nigeria
Libya
Russia
UAE
Kuwait
Iraq
Iran
Canada
Saudi
Arabia
Venezuela
12.2
12.8
19.1
20.4
25.4
30.4
37.2
44.3
60.0
97.8
104.0
105.0
137.6
175.2
296
262.4
27. 27
Arctic oil potential, 2010
Greenland
Canada
Russia
1
5
6
7
9
10
14 15
2
8
Thule
Murmansk
Тикси
Pevek
Barrow
Prudhoe Bay
Longyearbyen
WSB 1
AA 2
EBB 1
EGR 1
YK 2
AM 3
WGEC 1
LSS 1
NM 1
BP 2
EB 1
NKB 1
TPB 1
NGS 1
LM 1
SB 3
LA1
NCWF 1
VLK 1
NWLS1
LV 1
ZB1
ESS 1
HB 1
NWC 1
MZB 1
NZAA1
TUN 1
CB 1
LS 1
JMM 1
FS 1
AA 1
AM 2
AM 1
NWC 2
AM 4
SB 1
SB 2
FS 3
FS 2
WGEC 3
WGEC 2
WGEC 5
WGEC 7
NGS2
EGR 2
EGR 3
EGR 4
EGR 5
EGR 6
EGR 7
NM 2
BP 1
EBB 2
EBB 3
TPB 2
TPB 3
WSB 2
YK 1
LA2
LA3
LSS 2
LSS 3
EB 2
EB 3
EB 4
LM 2
LM 3
13
3
4
12
11
2
1
Undiscovered oil,
billion barrels
Major oil and gas projects
Main Arctic ports
> 10
1–10
0,1–1
< 0,1
area not quantitatively assessed
area of low petroleum potential
Projects Operator
Pechora Sea (Russia) Lukoil/Conoco Phillips, Sevmorneftegaz
Barents Sea (Russia) Sevmorneftegaz, Gazprom, Total, Statoil Hydro
Barents Sea (Norway) Eni Norge AS, Statoil
Beaufort Sea (Canada) ConocoPhillips, Gulf Canada
Arctic Islands (Canada) Panarctic Oils, Suncor, ConocoPhillips, Gulf Canada
Beaufort Sea (Alaska) Shell, BP Exploration Alaska, Eni Petrolеum, Pioneer natura
Chukchi Sea (Alaska) Shell
1211
13
1514
43
21
76
109
5
8
Province code Province Resources
WSB West Siberian Basin
AA Arctic Alaska
EBB East Barents Basin
EGR East Greenland Rift Basins
YK Yenisey-Khatanga Basin
AM American Basin
WGEC West Greenland East Canada
LSS Laptev Sea Shelf
NM Norwegian Margin
BP Barents Platform
EB Eurasia Basin
NKB North Kara Basins and platforms
TPB Timan-Pechora Basin
NGS North Greenland Share Margin
LM Lomonosov-Makarov
SB Sverdrup basin
LA Lena-Anabar
NCWF North Chukchi-Wrangel Foreland Basin
VLK Vikitskii Basin
NWLS NorthWest Laptev Sea Shelf
LV Lena Vilyui Basin
ZB Zyryanka Basin
ESS East Siberian sea Basin
HB Hope Basin
NWC Northwest Canada Interior Basin
MZB Mezen' Basin
NZAA Novaya Zemlya Basins and Admiralty Arch
TUN Tunguska Basin
CB Chuckhi Borderland
YF Yukon Flats
LS Long Strait
JMM Jan Mayen Microcontinent
FS Franklinian Shelf
Resource appraisal,
million barrels of oil equivalent
3,659
29,960
7,406
8,902
5,583
9,723
7,274
3,115
1,437
2,055
1,342
1,807
1,667
1,349
1,106
851
1,912
85
98
172
376
47
19
2
23
NQA
NQA
NQA
NQA
NQA
NQA
NQA
NQA
Source: Center for Strategic Research “North-West”, based on USGS,
“Assessment of Undiscovered Oil and Gas in the Arctic”, Gautier et al., Science, May 2009
Resource balance
28. Center for Strategic Research “North-West” Foundation28
Canada Russia
Venezuela
Brazil
Mexico
United
States
Algeria
EU
Libya Egypt
Middle
East
Kazakhstan
China
India
Africa
Japan
Indonesia
Australia
360
876
1,314
2,299
839
2,183
1,533
1,533
438
3,577
4,000
1,500
1,300
4,000
5,584
1,715
3,467
11,424
7,847
3,978
985
547
1,569
401
599
308
1,680.8
975
1,028
553.6
1,043.1
400
438
433
200
1,128
1,533
1,168
1,614
1,314
20
438
192.6
1,171.7
765
Саудовская Аравия
13%
Россия
11%
США
10%
Бразилия
6%
Канада
6%Ирак
5%
Китай
5%
Каспийский регион
4%
Иран
3%
Кувейт
3%
ОАЭ
3%
Алжир
3%
Нигерия
3%
Катар
2%
Венесуэла
2%
Ангола
2%
Мексика
1%
Ливия
1%
Индия
1%
Остальной мир
13%
США
21%
Китай
15%
Индия
4%
Япония
4%
Южная Корея
3%
Россия
2%
М ексика
3%
Канада
2%
Австралия
1%
Ближний
Восток
9%
Латинская
Америка
7%
Африка
4%
Остальной мир
25%
Oil production and consumption, 2030
Source: Center for Strategic Research “North-West”, based on
EIA DOE, UKERC, The Global Oil Depletion Report 2009, BP Statistical Review 2011
Oil producing countries,
2030
Oil consuming countries,
2030
Oil net importers in 2030
Oil net exporters in 2030
Oil flows, million barrels, 2030
Oil consumption, 2030, million barrels
Oil production, 2030, million barrels
Saudi Arabia
13%
USA
21%
China
15%
India 4%
Japan 4%
Russia
2%
Canada
2%
South Korea 3%
Mexico 3%
Australia 1%
Middle East 9%
Latin America 7%
Africa 4%
Others 25%
Russia
11%
USA
10%
Brazil
6%
Canada
6%Iraq
5%
China
5%
Caspian
region
4%
Iran
3%
Kuwait
3%
Algeria 3%
Nigeria 3%
Qatar 2%
Venezuela 2%
Angola 2%
Mexico 1%
Libya 1%
India 1%
Others 13%
UAE 3%
29. 29
Coal: 2010–2030
The trends of energy resource base change
1. Volumes of proved reserves haven’t increased recently.
2. There are polar assessments of achievement of world production
peaksofeffectivelyproducedreserves:duetothemostpessimistic
forecasts - in 2014, due to more optimistic forecasts – in 2045.
3. If the existing production rates are kept, reserves will be enough
for more than 200 years for some countries (including large
consumers – the USA and Russia).
4. Localcoaldeficitsarealreadyvisible(e.g.,Chinawithitstransport
restrictions).
5. Enlargement of coal delivery requires the deployment of new
transport infrastructure.
The main long-term trends in coal markets
1. Total coal consumption will continue to grow in absolute
terms. The main factor of the consumption growth will be
the development of economies of South-East Asia, especially
Chinese one. However the prospect share of coal in the energy
balance is open to question now. The coal demand depends
on the growth rate of other basic energy resources prices: oil
and gas, as well as on the level of technological development,
investmentattractivenessandresourceavailabilityinotherenergy
sectors (first of all RES and nuclear power. If a number of expert
organizations. reported in the early 2000s about the occurrence
of“coalrenaissance”,basingontheperformancesoftheindustrial
growthinAsiaandgrowingattentionfromtheWesttocoalasthe
most reliable (compared to oil), safe (compared to the nuclear
generation), available (compared to gas) resources, in the last
few years most long-term forecasts of the global transformation
of the resource balance show a decline of the coal share. Thus,
the share of coal in primary energy production in the world can
reduce to 30%, the absolute volume of coal consumption in the
world will increase by 10%.
2. The consumption growth will occur up to 2030 in the countries
outsidetheOECD(2%ofgrowthperyear).Itispredictedthatthe
coaldemandindevelopingcountrieswillincreaseby60%,while
in developed, on the contrary, will fall by 30-50% in comparison
with 2005. Most of all the coal consumption will rise in China
(60%) and India (95%) At the same time India will consume
about 10% of the world coal, and its level of consumption will
meetEuropeandNorthAmericatakentogether.Theeffortsofthe
largest consumers – China and India – are increasingly focused
on reduction of dependence of national energy on coal. China
seeks to get away from coal dependence to other resources, and
in the decade 2020-2030 the growth of coal consumption in
China should be not more than 0.3% per year. According to the
BPafter2020thegrowthofcoalconsumptioninIndiaandChina
could slow down or even stop, and the drivers of the further
growth will be the poorest countries.
3. The reduction of consumption in the developed and some
developing countries is expected to be gradual. This will depend
on the introduction of ecological legislation and on the dynamics
of the prices of basic energy resources and the availability of
technological base. In OECD countries coal consumption will
decline (-1.2% in 2010-2030). There are recent data on the
removal of coal from the energy balance, even in states where
the electricity is largely built on coal (in particular, the USA and
Australia).InEuropeancountriesthedeclineincoalconsumption
has a long trend and is partly explained by the depletion of
reserves. Theregionbegantodependonimportedrawmaterials
before other major consumers, and it is now gradually moving
away from high-priced resource (the UK – from 1920). For
example, in 2009 the export of American energy coal decreased
in almost all European countries10
. Furthermore, it was the EU
countries who first prepared restrictions on emissions of carbon
dioxide, actually “discriminating” coal generation.
4. Overthepastfewyearstheglobalcoalmarkethasbeenfilledwith
a number of new net importers. In addition, state – traditional
coal exporters show increase of their own consumption with
the rate outstripping export growth. These are the countries
realizing the transition to an industrial economy and using for
the industrialization the existing (the most available) resources –
Colombia, Venezuela, Indonesia.
5. The expansion of sea coal trade. On the one hand it allows to
respond more flexibility to the increased demand. On the other
hand the development of the sea (spot) trade makes the market
more influenced by speculation and external factors, and leads
to a general increase in prices, as deposits are drifting away from
the main centers of consumption, and the cost of the resource
transportation increases. The energy coal shipping is rising
by an average of 7% annually. The volume of international
coal trade amounted 941 million tonnes in 2009 (16% of
consumption). There are two key regional markets:
a. The Atlantic Basin market – importing countries in Western
Europe, particularly France, Germany and Spain.
b. Pacific market, which consists of the Asian importers (Japan,
Korea and Taiwan). Pacific market is about 57% of world energy
coal shipping.
6. The pressure on coal generation continues to increase from the
environmental legislation. For example, in the USA more than
100 coal generation projects are currently canceled or delayed,
or canceled due to lack of sufficient funds (investors perceive
these investments as more risky than the investments in the
renewable energy sector), and to the uncertainty of the future of
coal generation.
7. There is a growing price competition with gas and other
energy resources, especially in terms of possible levy of tax on
carbon dioxide emissions. The terms of widespread dropout
of old generating capacities based on coal are coming in many
industrializedcountries.Theirdropoutissupposedtocompensate
with the gas generation, increasing the share of nuclear and
renewable energy. But at present there is no guarantee that it will
be coal plants that will be reinvested. In the period from 2004
to 2008 there was no growth of this resource consumption
under the absolute total growth of energy consumption in
most of developed countries with a large share of coal in energy
generation. Most of the countries, which energy is based on the
use of coal (the USA, China, Canada, Australia, Germany, Japan,
South Korea), have announced their strategies to move to a
new technological platform of energy and a gradual decline of
the share of generation by coal. Russia is one of the exceptions
here. In particular, the General scheme of electric power facilities
placing stipulates the increase of coal generation to 2030.
8. Clean coal power is open to question. It requires large
investments and subsidies from the government. “Clean coal”
is already available technologically, but economic effectiveness
of technologies will be estimated only after 2020. “Clean coal”
projects are subsidized by countries with large resource reserves
or share of coal generation.
10 In Great Britain it reduced by 36% (1.24 million tonnes) — to 2.24 million tonnes,
in Spain – by 85% (0.84 million tonnes) — to 0.15 million tonnes, in the Netherlands – by 18%
(0.6 million tonnes) — to 2.68 million tonnes, in Germany – by 42% (0.53 million tonnes) — to
0.73 million tonnes. The USA increased twice the export of energy coal only in Portugal — from
0.25 to 0.39 million tonnes.
Resource balance
30. Center for Strategic Research “North-West” Foundation30
Coal reserves changes, 2003–2010
China
109
129
3.5
3.1
3.5
3.1
7
3.1
28.1
49.1
107.9
36.8
39.4
52.3
62.2
54
4.6
49.1
107.9
115
134
82.3
2
42.5
39.5
52.3
62.2
3
31.3
11.9
49
30
6.6
238
249
6.6
34.331.2
157157
114.5114.5
58.6
84.3
76.2
82.9
United States
Canada
Colombia
Venezuela
Algeria
Nigeria
Egypt
Iran Pakistan
India
Thailand
Australia
Mozambique
Argentina
Chile
Brazil
Tanzania
Congo
South Africa
Japan
Mongolia
Kazakhstan
Indonesia
United Kingdom
Germany
Norway
Poland
Ukraine
Russia
Turkey
0
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
2 000
4 000
6 000
12 000
10 000
8 000
14 000 Uppsala high case
Uppsala high case
Source: Center for Strategic Research “North-West”, based on
BP Statistical Review of World Energy, EIA DOE, Energy Watch Group, IEA, Russian Ministry of Energy
Coal proved reserves,
billion tonnes, 2009
< 1
1–10
10–50
> 50
Hard coal reserves, 2009
Lignite reserves, 2009
Hard coal reserves, 2003
Lignite reserves, 2003
Coal reserves decline areas over
the last five years
Areas where coal reserves estimates
have not been revised since 2005
Peak coal by country, million tonnes
United Kingdom Germany Japan United Kingdom
(trend line)
Germany
(trend line)
Japan
(trend line)
0
1815
1825
1835
1845
1855
1865
1875
1885
1895
1905
1915
1925
1935
1945
1955
1965
1975
1985
1995
2005
100
150
100
300
250
200
350
Production,milliontonnesperyear
Forecasts for peak coal World coal production forecast,
million tonnes per year
Coalproduction,milliontonnesperyear
University of Texas
Uppsala standard case
14,000
14,000
Europe and
Eurasia
Major
exporters
South Africa
Australia
India
China
Russia
USA
12,000
12,000
10,000
10,000
8,000
8,000
6,000
6,000
4,0004,000
2,0002,000
31. 31
Coal market lifecycle
Stagnation
production growth
stable prices
key energy resource
Golden age
1850–1920
1940–1960
fluctuation in production
stable or decreasing prices
production growth
price instability
coal's closing role in the energy mix
competition with hydro and nuclear
production volatility
price volatility
competition with gas and
renewable
environmental regulatory pressure
transition to clean coal?
Coal renaissance
1980–1990
New round
of globalization
2000–2010
Coalcrises,lockoutsand
strikesintheUKandUS
Oil cheaper than
coal Open-pit mining:
generation cost-efficiency
growth
CCGT
widespread
adoption
1973and1979oilcrises
Asia'sindustrialization.
Commoditysupercycle
Coal removed
from energy use in
transportation
Intergovernmental Panel on Climate Change.
Ratification of the Kyoto Protocol.
Environmental pressure on coal
Nationalization of the UK mining industry
Mine privatization
programs adopted in
the UK.
Electricity market
liberalization
Industry consolidation in the United States
Depletion of traditional
basins in Germany,
the UK and several
US states
Coal removed
from energy use in
real estate
Resource balance
32. Center for Strategic Research “North-West” Foundation32
Coal production and consumption, 2010
Source: Center for Strategic Research “North-West”, based on
EIA DOE, BP Statistical review 2010, Indres and Pinchin-Lloyd, Rosinformugol, Russian Federal Statistics Service
Major coal net importers in 2010
Major coal net exporters in 2010
Coal flows, million short tons
(1 short ton = 0.907 metric tonne)
Largest coal exporting ports
Largest coal importing ports
China
USA
India
Australia
South Korea
South Africa
Japan
Germany
Poland
Kazakhstan
Turkey
500 1,000 1,500 2,000 2,500 3,000 3,500
Russia
Top coal consuming countries in 2010,
million tonnes
3,152.3
907.6
622
226.5
208
108.6
164.7
135.8
128
102.8
93
79.2
China
USA
India
Australia
Indonesia
South Africa
Germany
Poland
Kazakhstan
Turkey
Ukraine
500 1,000 1,500 2,000 2,500 3,000 3,500
Russia
Top coal producing countries in 2010,
million tonnes
3,050
973.2
557.6
409.2
323
252.5
250
183.7
135.1
101.5
84.3
73.7
10
3 050,0
973,2
557,6
409,2
323
252,5
250,0
183,7
135,1
101,5
84,3
73,7
3 152,3
907,6
622,0
226,5
208
108,6
164,7
135,8
128,0
102,8
93,0
79,2
Brazil
Venezuela
Chile
Argentina
United
States
Canada
Algeria
Egypt
Iran
Kazakhstan
Russia
China
India
Thailand
Indonesia
Australia
Poland
Germany
Ukraine
Romania
Norway
United Kingdom
Colombia
Albania
Spain
Serbia
South
Africa
Japan
Mongolia
37.5
47.5
51.5
7.2
23.2
62.0 22.4 5.3
275.6
28.5
12.3
42.7
12.1
218.8
9.1
29.7
8.4
4.5
2.2
41.4
2.1
Mexico
10
24.3
Newcastle
Richards Bay
Banjarmasin
Riga
Vostochny Port
RizhaoJacksonville
Yokohama
Ulsan
Mundra
Acapulco
Mobile
European coal market
Asian coal market
North American
coal market
33. 33
Coal production and consumption, 2030
Производители угля, 2030 год
Потребление Угля, 2030 год
Производство и потребление угля, 2030 год
Brazil
Venezuela
Chile
Argentina
United
States
Canada
Kazakhstan
Russia
China
India
Thailand
Indonesia
Australia
Poland
Germany
Ukraine
Romania
United Kingdom
Colombia
Albania
Spain
Serbia
South
Africa
Mozambique
Japan
Mongolia
34.8
14.6
46.5
70.5
3.7
22.6
87.1
399.4
2.8
60.8
13.5
42.7
12.1
217.2
17.2
18.3
11.3
7.0
9.5
63
Mexico
62.6
24.0
6.0
0.8
15
24.3
Newcastle
Richards Bay
Banjarmasin
Riga
Vostochny Port
RizhaoJacksonville
Mundra
Acapulco
Mobile
46.5 34.8
Yokohama
Ulsan
European coal market
Asian coal market
North American
coal market
Source: Center for Strategic Research “North-West”, based on EIA DOE, BP Statistical review 2010,
Rosinformugol, Russian Ministry of Energy, Russian Federal Statistics Service, Platz
Coal producing countries,
2030
Coal consuming countries,
2030
Major coal net importers in 2030
Major coal net exporters in 2030
Coal flows, million short tons
(1 short ton = 0.907 metric tonne)
China
48%
China
51%
USA
14%
USA
13%
India
6%
India
8%
Australia 6%
Australia 2%
Japan 2%
South Korea 1%
Canada 1%
Africa 3%
Latin America 1%
Others 15%
Russia 4%
Russia 3%
Africa 4%
Latin America 2%
Canada 1%
Others 15%
Largest coal exporting ports
Largest coal importing ports
Resource balance
34. Center for Strategic Research “North-West” Foundation34
Nuclear power: 2010–2030
The main long-term trends of nuclear power
generation development
1. Since the early 2000s a surge of interest in nuclear
power was observed in the world, it was called “nuclear
renaissance”. Currently 61 reactors are under construction,
about 500 reactors are designed or planned in the next
two decades. 49 countries intend to implement the nuclear
program in the next two decades. According to some
forecasts, the development of nuclear power could increase
up to 70% to 2030.
2. However in March 2011 an event occurred that can
significantly affect both on the economics of the project and
the long-term forecasts of nuclear power growth. It was
an accident at the “Fukushima-1” plant; a full assessment
of consequences of which have not still been carried out.
Also there sre no principle decisions on cancellation of
already announced projects. However several states stated
that they refused implementation of new nuclear reactors
(in particular, Germany, Switzerland, Italy, Venezuela).
Some time ago such decision was made by Japan, which
declared the gradual withdrawal of nuclear energy from
the energy balance. The prolongation of implementation
and increase of cost of new nuclear facilities should be
expected as an another significant consequence of the
accident at the plant. The requirements to the objects’
safety will be reviewed to toughening that may require to
correct the projects of stations’ construction. A number of
countries are implementing additional nuclear technology
audit for security objects. Requirements to strengthen
security measures are likely to lead to an increase in the
cost of nuclear generation and the projects of stations’
construction.
3. The accident at the Japanese nuclear power plant has again
demonstrated that nuclear technologies are extremely
dangerous. Destruction of such magnitude as a rule go
beyond the scope of a “national” case, and in any case
they cannot be handled by the companies, operating the
plant. The questions about the creating of a single global
security system, the transformation of the nuclear fuel
market into the centralized and about strengthening of
supranational governance arrangements of the sector
management are increasingly raised. In this case one of
the international organizations - the IAEA or WANO, set
up after the Chernobyl disaster, can claim to the role of
key player. Cooperative research and industrial projects will
become widespread. But while the international regime for
the sector has not received the institutional design.
4. The “nuclear renaissance” will continue at least in Asia.
China will continue to be the core of the growth. In 2010 the
country built facilities of nuclear generation in capacity of
10 GW, but it was claimed to rise the total nuclear capacity
up to 70-80 GW by 2020, it requires the construction
of six reactors per year during a decade. Currently, the
country is building nuclear reactors with a total capacity of
33 GW, it should be completed by 2015. Between 2015
and 2020 it is planned to reduce the construction of new
nuclear reactors from six to four years. It is supposed that
the accumulated power plant in China in 2030 will reach
200 GW, and by 2050 - 400 GW.
5. Thedecisionmarketinthenuclearsectorbecomesstationary,
mature. It is a widespread process of competencies
distribution. The threshold of the “newcomers” entry to
the markets has greatly decreased in recent years. Thus by
2016 China will be able to put the construction AP 1000
“on stream” (country has already made this decision.)
Most of the new technological projects, competing with
each other (AP 1000, EPR 1600, ATMEA-1, APR 1400,
ESBWR), belong to the III / III+ generation, with the similar
parameters of safety and reliability. Customers of such
projects focuse on the characteristics of cost and terms,
and the quality / flexibility of training project. The question
about the new nuclear power plant proposal economy,
and not about the unique technical skills, remains a key
in a medium term. The main reserve of economy is the
optimization of business processes: the cost and timing
of construction (including logistics), modern building
materials, etc.
6. Taking into account the high degree of uncertainty of capital
costs for the construction of nuclear power plants today,
a variety of risks of implementing nuclear projects and its
funding requires a broaden participation of the state. State
support of the nuclear power plants construction can be in
the form of direct government funding, loan guarantees
and guaranteed return on investment through the state-
regulated electric power markets.
In China the construction of nuclear power plants is carried
out by state companies on the centrally approved five-year
plans of national development. In France nuclear energy
market is dominated by two large state-owned companies
– AREVA and EDF. In Russia the development of nuclear
energy is managed by the State Corporation “Rosatom”
integrating the construction, operation of nuclear facilities
and fuel cycle. The country has a Federal target program
for the development of the nuclear industry. In Japan the
Government provides loan guarantees for foreign sales
of the reactor. In India the National Government funds
the construction of nuclear power plants. In 2005 the
USA Congress adopted the basic package of incentives,
including loans and guarantees for the construction of
nuclear facilities.
Technological trends in the nuclear sector
1. Nuclear power is a mature sector, the most important
technological component of which became the design
of the reactor and the station, rather than new scientific
developments. It is expressed, for example, by the fact
that the innovations are adopted most actively out of
the industry – in the area of new construction materials,
projecting, innovation in business processes, etc.
Traditional players increasingly take the management of
the supply chain upon themselves (technological chains),
leaving themselves the development of standards and
requirements for thousands of suppliers and configuration
of design partnerships. Such strategies are implemented
by AREVA, GE-Hitachi, Westinghouse.
2. There is recently a reconstruction of technological chain
of nuclear power, that is partly also connected with the
optimization of stations building technology. The main
directions of changes:
a. Modular assembly or assembly of the reactor on the site.
So Westinghouse AP 1000 uses a modular design of
construction, which involves the remote production of
building modules with the subsequent delivery to site and
installation, while AREVA EPR builts on the site.
b. The alignment of more flexible supply chain. Machinery and
equipment for nuclear power plant include high pressure
reactor and support equipment. Most of the support
equipment is similar to that required for non-nuclear (e.g.,
fossil fuel power stations and chemical plants).
35. 35
3. One of the key contenders for the future technology
leadership in the sector is China. The country quickly reaches
the technology copying, using the experience of others. It
stakes on the use of cheaper factors of production and the
optimization of business processes, and on the fact that the
whole technological chain is copied and optimized, and
not its separate elements. It is an integrated technological
chains that compete with foreign suppliers, and not the
individual suppliers.
4. Horizons of scientific research are the development of
new types of reactors. The implementation of these basic
researches is often based on cooperative projects.
5. The main investor in R & D is still the state. Nuclear science
programs continue to have primary (compared with other
energy researches and developments) access to budget
finances. During the last three decades nuclear R & D have
over 50% of public spending on research, development
and demonstration projects in the field of energy. The
same situation is common in Japan, which does not have
nuclear weapons. It should be noted, that according to the
International Energy Agency the cost of nuclear researches
in the field of nuclear synthesis reached its peak in around
1980, and since 1985 has been steadily declining. And the
most of the costs were attributable to Japan and France.
Nucleoelectrica Argentina SA 1PHWR, 1CANDU CONAUR SA
Haykakan Atomayin Electrakayan VVER TVEL
Electrabel PWR Areva
NEK EAD VVER ТVEL
Eletronuclear PWR Siemens
British Energy 14AGR, 4Magnox, 1PWR British Nuclear Fuels
MVM Group VVER TVEL
E.ON, EnBW, RWE, Vattenfall 11PWR, 6BWR Siemens
Nuclear Power Corporation of 18PHWR, 2BWR Nuclear Fuel Complex
ANAV, CNAT, Iberdrola, Nuclenor 6PWR, 2BWR ENUSA, Westinghouse
Ontario Power Generation, Bruce
Power, Hydro-Quebec, NB Power
CANDU Cameco
CGNPC , CNNC 4PWR, 4CNP, 2ВВЭР, Westinghouse, Areva, CNNC,
Comision Federal de Electricidad BWR General Electric
EPZ PWR Siemens
PAEC 2PWR, 1CANDU CNNC, PAEC
Rosenergoatom 16VVER, 11RBMK,4EGP-6 TVEL
Nuclearelectrica CANDU FCN
Slovenske elektrarne VVER TVEL
Nuklearna Elektrarna Krsko PWR Westinghouse
25 companies, largest are:
Exelon, Progress Energy,
FirstEnergy, Energy Future
69PWR, 35BWR Areva, Westinghouse,
Babcock & Wilcox, General
Electric
Taiwan Power Company 4BWR, 2PWR, General Electric,
Energoatom VVER TVEL
TVO, Fortum 2BWR, 2VVER Westinghouse, ТВЭЛ
Electricite de France PWR Areva
CEZ Group VVER TVEL
Swissnuclear 3PWR, 2BWR Westinghouse, General
Vattenfall 7BWR, 3PWR Westinghouse
Eskom PWR Westinghouse
KHNP 10PWR, 7OPR, 4CANDU Korea Nuclear Fuel
TEPCO, Kyushu , Chubu, Tohoku,
Shikoku, KEPCO, Hokuriku,
Chugoku, Hokkaido, JAPC
23BWR, 3ABWR, 24PWR Toshiba, JFNL, Mitsubishi
Heavy Industries, Hitachi,
Nuclear Fuel Industries
Country Operators Types of reactors Fuel suppliers
Argentinta
Armenia
Belgium
Bulgaria
Brazil
United Kingdom
Hungary
Germany
India
Spain
Canada
China
Mexico
Netherlands
Pakistan
Russia
Romania
Slovakia
Slovenia
Taiwan
Ukraine
Finland
France
Czech Rep.
Switzerland
Sweden
South Korea
Japan
South Africa
United States
Commissioning of new reactors as stated
by national strategy papers in 2011
0
20
40
60
80
100
120
Existing reactors
Reactors under construction
Reactors to be commissioned by 2030
Reactors whose commissioning by 2030
is under research
Brazil
CanadaChina
FranceG
erm
any
IndiaJapan
South
Korea
Russia
U
nited
Kingdom
U
nited
States
Resource balance
36. Center for Strategic Research “North-West” Foundation36
ABWR
Taipei
АР 1000
Zhejiang
(6)
АР 1000 (6)
Shandong
АР 1000
N. Carolina
АР 1000
S. Carolina
АР 1000
Georgia
АР 1000 (4)
FloridaАР 1000 (2)
Alabama
Dieppe
EPR
Olkiluoto
US-EPR (2)
Virginia, Maryland
EPR (6)
Jaitapur
EPR
Jaitapur
APR 1400
Shin Kori
APR 1400
APR 1400
Shin Kori
VVER1200
Leningrad obl.
VVER 1200
Akkuyu
VVER1200
Akkuyu
US-ABWR (2)
Texas
ABWR
Matsue
ATMEA
CANDU
Alberta
CANDU
Sinop
CIAE, INET
Beijing
“First Academy”
Chengdu
Geneva
Grenoble
Dubna
Obninsk
Mumbai
Hyderabad
MNRC
Sacramento
Nuclear Energy Institute
Washington, D.C.
SHERDI
Shanghai
NINT
Xian
Westinghouse
Pennsylvania
Toshiba, Tokyo
Areva, Paris
MIT, Boston
Max Planck Institute,
Heidelberg
Seversk
Dimitrovgrad
Sarov
EPR (2)
Wales,Gloucestershire
VHTR
SCWR
VHTR,GFR
SFR, SCWR
LFR, MSR
VHTR,GFR
SFR, SCWR
LFR, MSR.
VHTR, GFR,
SFR, MSR
VHTR, SFR
VHTR, SFR,
SCWR, MSR
GFR,
VHTR, SFR
VHTR, SFR,
GFR
VHTR, GFR
MSR,
GFR, SFR,
SVBR (LFR)
SFR
LFR
SFR
Japan
South Korea
France
Belgium
Switzerland
United Kingdom
IV generation reactors
VHTR
GFR
SFR
SCWR
LFR
MSR
Very high temperature reactor
Gas-cooled fast reactor
Sodium-cooled fast reactor
Supercritical water reactor
Lead-cooled fast reactor
Molten salt reactor
* ITER (International Thermonuclear Experimental Reactor) is
an international project to design and build an experimental fusion reactor
to address physical and technological challenges.
MNRC
Sacramento
Keytomapsymbols
Nuclear research centers
III+ generation reactors under construction
and on order, by type and number of units
ITER participating countries*
Countries conducting research on closed fuel cycle
VHTR, SFR IV generation experimental reactors, by type and country
АР 1000 (4)
Florida
Nuclear energy companies
by market segment
New technological
markets (water desalination,
back–end, standardization
etc.)
Construction of
reactors
and NPPs
Back–end,
R&D in
adjacent
spheres
2016
Unique
design
Modular
or standard design
Back–end,
adjacent
technologies
AREVA
HITACHI
AECL
KHNP
MITSUBISHI
WESTINGHOUSE
CNEIC
ROSATOM
New
materials
2020s
Atomic Energy of Canada Limited (Canada)
Areva (France)
General Electric – Hitachi (USA – Japan)
Korea Hydro and Nuclear Power Company (South Korea)
Westinghouse (USA)
Rosatom State Nuclear Power Corporation (Russia)
China Nuclear Energy Industry Corporation (China)
Mitsubishi Nuclear Energy Systems (Japan)
Logos and names of nuclear energy companies
on the map
Euratom
ABWR (6)
Matsue, Higashidori, etc.
EPR
VVER1200
Novovoronezh
HITACHI
HITACHI
HITACHI
HITACHI
Nuclear research centers, R&D and new-generation reactors
Source: Center for Strategic Research “North-West”, based on Areva, IEA, IAEA, ITER, Mitsubishi, GE-Hitachi, KHNP, NTI, NEI, Clean
Energy Info Portal, Westinghouse, Generation IV International Forum, WNA, Rosatom, Bochvar VNIINM
37. 37
The back-end of the nuclear fuel cycle
The back-end of the nuclear fuel cycle is a series of
technological processes that take place after the production of
electric power from nuclear power plant, it covers management
of spent nuclear fuel, including its recycling, radioactive waste
(air conditioning, disposal). The market will grow, but its
economy is still not known.
Spent nuclear fuel
Several models of treatment with spent nuclear fuel are
accepted in the world.
1. Some countries – Russia, Japan, France, the UK, India,
China – chose a closed nuclear fuel cycle, that means that
the discharged from the reactor fuel is recycled to extract
uranium and plutonium for re-fuel production. These
countries have their own production capacity of fuel.
2. Some countries do not recycle the spent nuclear fuel,
equating it to the high-level waste and thus keep it on
bystation or centralized storage, suggesting further bury of
them in geological formations. Many countries, that pursue
such policy, have previously recycled the spent fuel on their
territory or abroad – the USA, Canada, Sweden, South
Korea, Finland, Slovakia, the Czech Republic, Hungary,
Germany, Spain, Romania, Lithuania, Taiwan
3. Some countries do not have their own capacities for fuel
recycling, but it is processed at facilities of Russia, UK and
France. They are the Netherlands, Italy, Bulgaria.
4. A number of countries haven’t made a final decision in
favor of a closed or open cycle (“delayed decision”). For the
present they keep the spent fuel at bystation or centralized
storage, waiting for the moment when the advantages
and disadvantages of the two types of cycle become more
obvious and when the term of the possible storage of
spent fuel will expire and will need to decide for recycling
or disposal in geological formations. These countries are
Armenia, Argentina, Mexico, Pakistan.
5. There are countries that, developing its nuclear power,
expect to take the nuclear fuel on lease, and therefore
they do not need to create an infrastructure for spent fuel
and high-level waste (Belarus, Turkey, Jordan, Vietnam,
Bangladesh, Egypt, Iran).
6. The last group of countries, while conducting a particular
policy, seeks to change it in the future or find different
combinations. We are talking about Belgium, Ukraine,
Slovenia, South Africa, Brazil, the United Kingdom.
Shut down reactors, 1960–2009
by country total
0
5
10
15
20
25
2,000
4,000
6,000
8,000
10,000
Units
Netcapacity,MWe
1960–1964
1965–1969
1970–1974
1975–1979
1980–1984
1985–1989
1990–1994
1995–1999
2000–2004
2005–2009
Armenia
Belgium
Kazakhstan
Lithuania
Netherlands
Spain
Canada
Slovak Rep.
Sweden
Japan
1 each
2
3 each
4 each
Bulgaria
Ukraine
Italy
Russia 5 each
11France
19Germany
United Kingdom 26
United States 29
Source: Center for Strategic Research “North-West”, based on IAEA, World Nuclear Association, International Panel on Fissile Materials,
Commissariat a l’Energie Atomique
Resource balance