Vitaly Protasov, Expert, Institute for Energy and Finance, v_protasov@fief.ru

1. Long-term modeling of resilience and flexibility of European gas transportation system: integrated factors Dresden, April3, 2009 Vitaly Protasov, Expert, Institute for Energy and Finance, v_protasov@fief.ru

2. Importance of natural gas • 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. Resilience of natural gas supply • 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. Modeling • Levels of simulation: • balances in various scenarios; • representation of integrated infrastructure links; • detailed simulation of flows and system requirements in various scenarios; • specific design level.

5. Indicators of resilience and flexibility 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)

6. Indicators of resilience and flexibility • Small number of indicators • System of factors => modeling

7. Synergy effect • 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. Factor matrix

9. Infrastructure cluster • interruptible consumers; • non-interruptible consumers; • socially important consumers;

10. National standards of gas stocks • 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. UGS storage

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

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

14. Contract cluster • 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. System cluster • Interconnectors • Strategic (system) storages • Reverse capacities • TSO dispatching coordination • Agreements about way of system development • Common gas TSO

16. Conclutions • 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

17. Thank you for your attention!