1. Long-term modeling of resilience and flexibility of European gas transportation system: integrated factors Dresden, April 3, 2009 Vitaly Protasov, Expert, Institute for Energy and Finance, v_protasov@fief.ru

2.  24% of primary energy sources now  Up to 27-30% by 2030  Hungary (39.8%), UK (36.1%), Slovak Republic (28.1%)  Germany (22.9%)

3.  2009 Ukrainian gas crisis: ◦ huge gas supply disruption ◦ lack of analysis of its probability and consequences ◦ changes in EU energy policy  2008 - … World economy crisis: ◦ gas infrastructure investments ◦ changes in energy demand and its structure  Long-term modeling

4.  Levels of simulation: ◦ balances in various scenarios; ◦ representation of integrated infrastructure links; ◦ detailed simulation of flows and system requirements in various scenarios; ◦ specific design level. Element models Object models National GTS models EU GTS model

5. Finland case:  100% import dependance from Russia  No UGS But:  6 bcm long-term contract by 2025  Share of interruptible sales – 93%  Nevskoye and Gatchinskoe UGS (1,5 bcm capacity) Indicators of resilience and flexibility

6.  Small number of indicators  System of factors => modeling

7.  Probability effect: negative shock of one factor catalyzes influence of another factor. Thereby a probability of the second factor negative shock rises  Consequence effect: combined influence of two or more factors causes new consequences

8. Type of factorBasic factors Clusters InfrastructureContractsSystem Economic- gas demand - domestic gas productions - volume and timing of LTC - season peaks of demand - volume and location of alternative fuels reserves - investment plans (construction, expanding, modernization) - cost/benefit ratio of contractual obligation breaking - share of LTC - potential gas supply - TSO dispatching coordination - plans for interconnections constructions - differences between season demand fluctuations Political and social - national energy policy and legislation - counteraction for project realization - minimal volumes for socially important objects - transit countries problem - political stability of suppliers - agreements about way of system development - common gas TSO - EU energy policy and legislation Technological- capacity of pipelines, UGS, LNG terminals - resilience of objects and elements of GTS - deterioration and breakdown rate - peak output for each type of UGS and its location - share of interruptible customers - utilization level of gas infrastructure - bottle necks - cross-border capacities - strategic (or system) UGS capacities and its location - reverse capacities Juridical- national requirements for gas, oil and petroleum product stocks - third party access - possibilities for volume fluctuation - period of monitoring of delivery volume - ownership and rules for operation of strategic UGS - EU strategic gas, oil and petroleum product stocks requirements

9.  interruptible consumers;  non-interruptible consumers;  socially important consumers;

10.  Spain – 12 days (20 days in winter)  France – 6 month disappearance of the main source, 3 days of extremely low temperature  Denmark – 3 days of cold weather and 60 days of normal winter conditions

11. Country Working capacity, bcm Peak UGS output, mcm/day Peak demand, mcm/day Peak output to peak demand Annual consumption, bcm Capacity to consumption, % Capacity to peak demand, days Austria 4,151,237,2 1,4 8,4 48,6110,2 Belgium 0,723,057,80,417,4 3,811,3 Czech Republic 2,345,640,61,18,626,556,2 Denmark 0,813,020,30,64,616,737,5 France 10,8189,3210,90,942,725,351,2 Germany 19,1462,9383,21,297,419,649,9 Hungary 3,851,063,90,813,428,659,8 Ireland 0,22,817,1 0,2 5,0 4,011,6 Italy 12,9296,1334,00,984,915,238,6 Netherlands 2,5171,0193,00,946,45,312,8 Poland 1,721,361,50,316,410,628,3 Portugal 0,17,014,20,54,13,39,4 Slovakia 2,634,429,7 1,2 6,2 41,887,6 Spain 2,412,5117,6 0,1 34,46,920,1 UK 4,4128,5363,30,496,14,512,0

12.  counteraction for project realization – Nord Stream  bottle necks  national energy policy and legislation ◦ Third party access ◦ Slovakia example

13.  volume fluctuation +/- 20%  period of monitoring of delivery volume (monthly – daily)  Synergy effect: gas resonance (demand peak + supply threat)

14.  Transit countries problem: Ukraine, Belarus, Poland, Morocco and Tunisia, Bulgaria  Political stability of suppliers: Algeria, Libya  Cost/benefit ratio of contractual obligation breaking (high spot price vs penalty and reputation costs)

15.  Interconnectors  Strategic (system) storages  Reverse capacities  TSO dispatching coordination  Agreements about way of system development  Common gas TSO

16.  The next step is the model developing  We found several significant political, juridical, social, technological and economic factors which are usually ignored  A danger of underestimation of factors