NGV Market in Russia. Today and Tomorrow



                                                                   Stepanov Ki...
enough oil reserves to last for 42 years, while gas reserves are sufficient for 60
years. Russia is currently developing n...
Figure 2         NGV Growth in Russia
 120 000


                                                                         ...
Figure 2            NGV Numbers in Russia and Europe



            Italy                                                 ...
Figure 3          NGVCS in Russia and Europe

        Germany                                                             ...
Russian Sector Overview
      The Russian Federation Transport Strategy until 2030 approved in 2008 [5]
contains sections ...
Being a major energy company, Gazprom is also playing a significant part in
the process. One of the areas of Gazprom envir...
costs and many locations do not have main pipelines to tie a gas filling station.
Proposed designs for such locations incl...
The Vernadsky Foundation is continuing to progress the Blue Corridor with
particular focus on environmental aspects of usi...
Bibliography:


   1) Security of Supplies and Respective Investments. Report by Alexei Miller at
      the XXIV World Gas...
[Electronic resource]. – Electronic data. – Access: http://www.encharter.org/
   index.php?id=229
9) Green Paper: A Europe...
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NGV Market in Russia. Today and Tomorrow.doc

  1. 1. NGV Market in Russia. Today and Tomorrow Stepanov Kirill Rantsev Nikolay EBC Ecology and Healthcare Working Committee Meeting, September 30, 2009 Introduction In 2001 the European Commission adopted the White Paper, European Transport Policy for 2010: Time to Decide. [13] The document contains development guidelines for various types of transport in Europe. The European Union energy saving policy is described in the Green Paper. [9] One of the objectives the Green Paper sets forth for 2020 is to transfer 20% of automobile transport to alternative fuels. It is worthy of note than the White Paper envisaged a wide scale use of bio- fuels in the short-term, natural gas was projected for the medium-term while hydrogen fuel was regarded as a long-term prospect. The new transport policy adopted by the European Commission in 2009 largely focuses on fuels produced from renewable energy sources. The new transport policy has been set out in a comprehensive study on transport development towards 2050 – TRANSvisions. [10] This major research paper describes five transport development scenarios. The high case envisages a 20.4% share of alternative fuels from renewable energy sources by 2020. As for traditional fuels, close attention is given to the reduction of carbon dioxide emissions. The reserves of natural gas considerably exceed oil reserves. The most widely used source of data on the world oil reserves - British Petroleum Statistical Review of World Energy, 2009 [12] - cites the following data. The world has
  2. 2. enough oil reserves to last for 42 years, while gas reserves are sufficient for 60 years. Russia is currently developing new gas fields in the Yamal Peninsula, with forecasted annual production of 300 BCM of natural gas [2]. This is almost double the volumes that Russia is currently selling to Europe. Now, nearly ten years after the White Paper adoption, the gas engine sector is developing rapidly in Europe. New fuel efficient methane light vehicles came into being and major manufacturers of freight carriers launched serial production of natural gas powered vehicles. Sector Structure in Russia and Europe Russia and Europe are experiencing a major growth in the number of gas powered vehicles. Figure 1 NGV Growth in Europe 3 000 000 2800065 2 500 000 2125212 1977818 1879827 2 000 000 1853039 1749868 1556470 1557142 1331223 1 500 000 1317205 1228567 1174940 1185176 1185221 1 000 000 500 000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: NGVA Europe, 2009 [11]
  3. 3. Figure 2 NGV Growth in Russia 120 000 103000 100 000 95000 80 000 60000 60 000 40500 41780 36000 40 000 31000 31000 30000 20500 20500 20500 20500 20500 20 000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Italy is the European leader in the number of gas powered automobiles, with 523 thousand gas powered vehicles. Russia comes third with 103 thousand GPA.
  4. 4. Figure 2 NGV Numbers in Russia and Europe Italy 523 100 Germany 76 747 Russia 61 000 Bulgaria 60 226 Sweden 16 900 France 12 450 Switzerland 7 062 Austria 4 041 Spain 1 820 Czech Republic 1 278 Poland 1 200 Netherlands 1 110 Slovakia 564 Finland 470 Greece 416 Portugal 407 Latvia 227 United Kingdom 221 Norway 180 Luxembourg 179 Belgium 143 Liechtenstein 101 Hungary 72 Lithuania 17 Ireland 2 1 10 100 1 000 10 000 100 000 1 000 000 Source: NGVA Europe, 2009 [11] Developing the fleet of natural gas vehicles requires an infrastructure of NGV-filling compressor stations (Refueling stations). The average gas supply coverage in Russia is 62% and one of the major tasks Gazprom is facing at this time is gasification of East Siberia and the Far East. The development of gas transportation network will help expand the structure of refueling stations. Russia currently comes third in terms of the refueling station numbers.
  5. 5. Figure 3 NGVCS in Russia and Europe Germany 804 Italy 700 Russia 226 Austria 181 France 125 Sweden 122 Switzerland 109 Bulgaria 74 Spain 37 Czech Republic 35 Poland 30 Netherlands 21 United Kingdom 14 Finland 13 Norway 9 Belgium 9 Slovakia 7 Portugal 5 Luxembourg 5 Latvia 4 Hungary 4 Liechtenstein 3 Lithuania 1 Ireland 1 Greece 1 0 100 200 300 400 500 600 700 800 900 Source: NGVA Europe, 2009 [11] Many European countries have introduced incentives for small-sized and medium-sized businesses, as well as for private vehicle owners to transfer to natural gas vehicles. The incentives include restrictions on the use of hydrocarbon motor fuels except for municipal buses and refuse collection vehicles (France); granting priority rights for municipal contracts to companies using compressed natural gas (France, Italy); allocating grants and subsidies for purchase of natural gas vehicles and gas bottles (Australia, the UK) etc. [4].
  6. 6. Russian Sector Overview The Russian Federation Transport Strategy until 2030 approved in 2008 [5] contains sections on alternative fuels transport development: “Reducing the harmful impact of transport on the environment and ensuing damage requires: - promoting the use of transportation vehicles powered by alternative fuels (non-petroleum fuels).” Speaking of government actions to support the gas motor sector, one should specially mention the RF Government Resolution ‘On Immediate Measures to Promote Replacement of Motor Fuels by Natural Gas’ of January 15, 1993 No 31 [3]. The Resolution sets a cap on the natural gas price - not exceeding 50% of the price for grade А-76 gasoline. The step offers a major incentive to transfer vehicles to natural gas. Based on the operational practice of private transportation companies dealing in passenger traffic, the payback period of new gas powered buses is less than one year. Companies save millions of rubles on fuel annually. The draft Federal Law ‘On Alternative Fuels’ has been introduced for review to the State Duma. Adoption of the law would entail multiple benefits for the whole sector. The Russian National Gas Vehicle Association is an affiliated organization of the International Gas Union (IGU) and a member of the European Business Congress (EBC). The Association incorporates companies and organizations dealing in various areas of business: • Transportation and sale of gas fuels; • Design, construction, assembly, start-up and operation of gas filling stations; • Manufacturing gas operating and gas filling equipment; • Design and manufacturing of bottles and tanks for various types of gas; • Manufacturing automobiles and buses; • Retrofitting automobiles for gas operation as well as non-governmental and public organizations.
  7. 7. Being a major energy company, Gazprom is also playing a significant part in the process. One of the areas of Gazprom environmental protection activities is the use of gas an environmentally clean motor fuel [6]. Gazprom is making a significant contribution to the development of gas powered transport in Russia. Almost all NGVCS in Russia are owned by Gazprom. In March 2007 Gazprom approved the Special Comprehensive Program for the Development of Gas Filling Networks and Natural Gas Powered Equipment for 2007–2015 envisaging: — Construction of additional 200 NGVCS financed by Gazprom; — Adding 50.000 natural gas vehicles to the current vehicle fleet; — Complete gas supply coverage for federal and regional highways. The official company site carries information about the number of vehicles that Gazprom transferred to natural gas [6]. In 2007, 444 vehicles were transferred to gas operation, including Gazprom’s own commercial transport. Gazprom Board Chairman Alexei Miller speaking at the XXIV World Gas Congress (October 5–9, 2009, Buenos Aires, Argentina) said: “However, the wide use of natural gas in this sphere will help free the mankind from toxic emissions of gasoline and diesel engines without losses, like the losses from withdrawal of fertile land resources from agricultural use to produce bio-diesel fuel.” Gas may and should be used in automobile engines as compressed gas or as synthetic motor fuel. This will make another contribution to ensuring sustainable development. Russia is conducting theoretical and applied research in the area of natural gas use as motor fuel. The leading institute in the area is Gazprom subsidiary VNIIGAZ. A number of educational and research institutions are involved in mathematical modeling of the processes occurring in gas powered engines. New technical methods to improve engine operation are developed in research laboratories. Each year private companies and research organizations develop designs for NGVCS infrastructure. Construction of stationary NGVCS involves significant
  8. 8. costs and many locations do not have main pipelines to tie a gas filling station. Proposed designs for such locations include mobile fuel stations and modular container compressed gas filling units. Special mention should be made of research on the use of liquefied natural gas (LNG). Tests are underway to improve the technical and economic parameters of fuel tanks. The increased interest in this research is due to physical properties of LPG enabling gas transportation and efficient use as motor fuel and political reasons. The first LPG plant started operation in Sakhalin in February 2009 opening new prospects for natural gas use. Russia has set up batch production of natural gas vehicles (Open Joint Stock Company KamAZ, OJSC NefAZ, DVS-ECO LLC., Likinsk Bus LLC., bus manufacturing plant Skania-Peter LLC.), gas bottle and gas filling equipment, stationary and mobile compressed gas filling units and bottle certification equipment. In other words, Russia covers the full cycle from research and development to commercial production of all the technical facilities required to support the industry operations. Information support is handled by industrial periodicals, scientific and engineering journals and books. Private businesses and non-governmental organizations are showing increase activity. Annual conferences are held on the subject of the efficient use of natural gas. In 2000 V.I. Vernadsky Non-Governmental Ecological Foundation developed the Blue Corridor Project. The Project focused on the establishment of heavy transport corridors between Russia and Europe. Natural gas was proposed as fuel for heavy-truck transport instead of conventional diesel fuel. The Project included estimates of economic efficiency and demonstrated the environmental benefits of the natural gas as fuel. The number of refueling stations to support operation of the corridors was estimated. The Project implementation would reduce annual fuel costs by 37.1 million euro and cut toxic Economic Commission for Europe but has come on stream so far.
  9. 9. The Vernadsky Foundation is continuing to progress the Blue Corridor with particular focus on environmental aspects of using natural gas as motor fuel in long-distance road haulage. The forthcoming 2014 Olympic Games in Sochi offer new prospects for developing the gas vehicle industry in Russia. To improve its gas supply system, Sochi is planning construction of the gas pipeline Dzubga – Lazarevskoe – Sochi. The 2 BCM pipeline will have an offshore section of about 160 km. The regional gasification program is now well underway and may give a good impetus to the gas vehicle sector development. Large scale projects have been launched recently involving automobile freight transportation from East to West. Saving on fuel in long-distance haulage will offer considerable competitive advantage to transportation companies. Multiple stakeholders will see a clear manifestation of the benefits from the use of methane by municipal transportation companies. Many important issues remain outstanding today in the Russian gas vehicle industry. There is a long road yet to cover, but the prospects of using gas in transport are enormous. Russia possesses huge natural gas reserves and sooner or later gas powered vehicles will become an everyday occurrence.
  10. 10. Bibliography: 1) Security of Supplies and Respective Investments. Report by Alexei Miller at the XXIV World Gas Congress. // Gazprom - [Electronic resource] – Electronic data – Access: http://gazprom.ru/press/miller/speeches/24WGC/ 2) Yamal Megaproject. // Gazprom - [Electronic resource] – Electronic data – Access: http://gazprom.ru/production/projects/mega-yamal/ 3) On Immediate Measures to Promote Replacement of Motor Fuels by Natural Gas, RF Government Resolution // Law Library [Electronic resource] – Electronic data – Access: http://www.pravoteka.ru/pst/725/362422.html 4) A.N. Tokarev. When Will We ‘Rev the Engine?’ Social and Economic Aspects of Gas Fuel Use / A.N. Tokarev // ECO. – 2008. – No 10. - Pp. 20-38 5) The Russian Federation Transport Strategy until 2030. – Approved by the Russian Federation Government Decree of November 22, 2008 No 1734-r // Ministry of Transportation - [Electronic resource] – Electronic data – Access: http://www.mintrans.ru/ 6) Clean Fuel. // Gazprom- [Electronic resource] – Electronic data – Access: http://gazprom.ru/nature/fuel/ 7) Blue Corridor Project. UNECE 2003. - [Electronic resource]. – Electronic data. – Access: www.unece.org/ie/pub/blue1.pdf 8) DRIVING WITHOUT PETROLEUM? A Comparative Guide to Biofuels, Gas-to-Liquids and Coal-to-Liquids as Fuels for Transportation. 2007-
  11. 11. [Electronic resource]. – Electronic data. – Access: http://www.encharter.org/ index.php?id=229 9) Green Paper: A European strategy for sustainable, competitive and secure energy. 2006 - [Electronic resource]. – Electronic data. – Access: http://europa.eu/legislation_summaries/energy/european_energy_policy/l270 62_en.htm 10)Mobility scenarios toward a post-carbon society. TRANSvisions Task 2 Quantitative Scenarios. March 2009. - [Electronic resource]. – Electronic data. – Access: http://ec.europa.eu/transport/strategies/2009_future_of_transport_en.htm 11)NGVA Europe [Electronic resource]. – Electronic data. – Access: http://www.ngvaeurope.eu/european-ngv-statistics 12)Statistical Review of World Energy 2009. BP. 2009- [Electronic resource]. – Electronic data. – Access: http://www.bp.com/subsection.do? categoryId=9023762&contentId=7044550 13)WHITE PAPER European Transport Policy for 2010: Time to Decide. [Electronic resource]. – Electronic data. – Access: http://ec.europa.eu/transport/strategies/2001_white_paper_en.htm

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