Gdmp model ray tomkins (formatted)

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Gdmp model ray tomkins (formatted)

  1. 1. Gas Development Master PlanOutline of Indonesia GDMP ModelConsensus Building WorkshopPresented by:Ray TomkinsEconomic Consulting Associates, UKShangri-La Hotel, Jakarta21 June 2012
  2. 2. Overview• Purpose of the Indonesia GDMP Model • What will the model be used for? • What should be the key outputs of the model?• Structure of the Indonesia GDMP Model • Detailed and comprehensive vs simple and user friendly• Scope of the Indonesia GDMP Model • What time horizon should be used in the model? • What should be the inputs of the model? • What policy assumptions should be considered? • What scenarios should be included in the model? • How are the scenarios assessed and analysed? 2
  3. 3. Purpose of the Model will determine keyoutputs• What will the model be used for: • During the GDMP study • After the GDMP study• The model can be designed to assist policy makers in developing policies to achieve certain outcomes• The purpose of the Indonesia GDMP Model (the ‘IGM’) will determine the scope of the model 3
  4. 4. What will the model do? INDONESIA INPUTS GDMP OUTPUTS MODELIntegrate outputs Analyze alternative Provide a range offrom other parts of scenarios: output indicators:the study: • Assumptions on • Cost, financial• Supply supply and demand impacts• Demand • Alternative • Other gas policy• Projects and their investment projects indicators, eg: assessments • Economic value of gas (value of gas consumed, Government revenues) • Carbon dioxide (CO2) emissions reduction 4
  5. 5. Structure of the Model Inputs Scenarios and projections Outputs List of potentialDemand scenarios investments for given• Electricity scenarios• Others Price impacts Total cost of projects for given scenarios Price scenarios • Scenario / Financial and economic programme analysis of projects development Supply scenarios, • Supply demandresources, fiscal terms balancing Total gas cost, • Project selection Government financial • Financial and returns economic Transportation calculations scenarios • Other indicators Other policy indicators 5
  6. 6. Price modeling issues• Prices as input: – International price scenarios – Domestic price scenarios  Demand scenarios – fixed per scenarios, use RUPTL• Prices calculated in model: SUPPLY • International price scenarios • Supply / fiscal terms – domestic gas price PRICE  Demand scenarios: DEMAND − Electricity price depends on electricity demand − Simple electricity dispatch model − Gas demand price elasticity• Latter may be too complex unless timeframe and scope extended 6
  7. 7. Time horizon of the IGM• The Gas Master Plan is developed for the time period of 2012 – 2025• For the model to simulate realistic investments, longer time period should be used, e.g. up to 2050 or 2060• Economic gas prices should ultimately reflect Long Run Marginal Cost (LRMC), which is affected by the backstop price when there is shortfall in gas supply 7
  8. 8. Options for modeling gas demand in electricity• A simple electricity model to be included in the IGM• The electricity demand analysis could take into account price sensitivity of electricity demand by: • Taking into account changes to gas prices in calculating the electricity demand, and then re-calculate gas prices based on changes in demand (iterative calculation) • Based on a simplified approach to electricity dispatch, eg dispatch curve • Making gas prices exogenous to the model, i.e. price sensitivity will be modeled as different scenarios • Or use the RUPTL for electricity sector demand 8
  9. 9. Model component – Demand DG MIGAS regional gas demand Industrial demand mmscfd 4,000 Other industries Flat Glass 3,500 Ceramics Metal Pulp and paper 3,000 Petrochem - energy Petrochem - feedstock 2,500 Fertiliser - feedstockElectricity demand 2,000 1,500 1,000 Export demands 500 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Demand calculations Demand scenarios 9
  10. 10. Model component – Demand scenarios• Demand scenarios could include: • Different levels of electricity demand (base case, high and low) • In-build demand elasticity (model will re-calculate demand based on price scenarios) • Different levels of export demand, based on contracted amount, possible contract extensions, new contracts, etc • Possible changes to domestic market obligations • Separate demand scenarios for each regions as well as national demand • Other policy issues 10
  11. 11. Model component – Prices Domestic pricesData Prices of Premium 33.00 Kerosene 31.01 Upstream and HSD 30.76 MDF/IDO (Diesel) 29.07 competitive International Transport MFO 24.28 LPG Bulk 18.29 export gas LPG 50kg Unsubsidised 18.11 LPG 12kg Unsubsidised 14.35 gas prices project costs PGN West Java Price (May 2012) 10.13 LPG 3kg Subsidised 10.05 fuels (coal, oil) prices PGN Average Sales Price 6.95 0 5 10 15 20 25 30 35 $/mmbtuCalculations Price calculations and transportation costsModel parameters Delivered gas Price scenarios prices 11
  12. 12. Model component – Price scenarios• Price scenarios could include: • Different levels of international gas price forecasts (base case, high and low) • Domestic price calculation based on costs (upstream, LNG, transportation, distribution) • Subsidized and unsubsidized domestic prices • Changes in other competitive fuel prices (e.g. removal of coal and fuel oil subsidies) • Long run convergence to economic prices 12
  13. 13. Model component – Supply DG MIGAS regional Resources existing gas supply Unconventional gasData Imports (?)Calculations • Supply projection • Balancing annual supply and demand • Allocation of production by resourceModel parameters Supply scenarios 13
  14. 14. Model component – Supply, gas production• Each group of fields Fields (name) Fully or partly contracted? (0-fully, 1-partly) modeled separately: Initial reserve in 2011 (bcm) • Proven, in Depletion policy (years) Start of development (year) production CAPEX - exploration (US$ m) • Probable, possible, CAPEX - development (US$ m) yet to find OPEX - fixed (% of CAPEX) OPEX - variable (US$/mmbtu)• Model allocates Start production ( year) Initial production volume (bcm) production and start Maximum production volume (bcm) date for each new Time to reach max prod. vol (years) Domestic sales via Ashdod (% of production) field Pipeline export via Northern terminal (% of production)• Example of LNG export via Northern terminal (% of production) Parameters for each LNG export via Ashdod (% of production) LNG export via Cyprus (% of production) field 14
  15. 15. Model component – Supply scenarios• Supply scenarios could include: • Probability of new supply • Ultimately recoverable resource • Year when fields are being developed and when production starts • Exploitation of unconventional gas • Different depletion policies (DMO, export policies) • Production rates of each filed (determined in the model) 15
  16. 16. Model component – Transportation and infrastructure Transmission & Distribution Master PlanData Existing transportation New projects modesCalculations Transportation project selection and costs calculationsModel parameters Transportation scenarios 16
  17. 17. Model component – Gas transportationoptions• Gas can be transported between regions through: • Gas pipelines • LNG • Electricity• Model could include different transport scenarios using the different options• A generic interconnector between each region for existing capacity will be included, plus• New interconnector for added capacity: • Combine projects’ capacities for each mode of transportation between regions• Financial appraisal based on expected utilisation 17
  18. 18. Model component – Infrastructure projects• Project sheet (example): • Each project will have a Capacity of pipe to shore bcm sheet within the IGM with Capacity of LNG terminal bcm Capacity of transport to market bcm its parameters and Distance to terminal km evaluation Distance to market km Lifetime of assets years • Financial and economic Pipeline costs US$ m / km evaluations: LNG transport costs US$ m / km CAPEX - pipe to shore US$ m • Netback costs CAPEX - LNG terminal US$ m CAPEX - transport to market US$ m • NPV (at start date) Annuatised CAPEX - pipe to shore US$ m / year Annuatised CAPEX - LNG terminal Annuatised CAPEX - transport to market US$ m / year US$ m / year • Rate of return OPEX % of CAPEX Pipe capacity utilisation % LNG terminal capacity utilisation % Transport to market capacity utilisation % Netback costs US$ m/bcm US$/mbtu 18
  19. 19. Model component – Policy assumptions• Domestic market obligation policy will continue• Discount rate assumptions• Exchange rate• Transmission and distribution master plan• PLN’s RUPTL as base case for electricity demand forecast• Other policy issues? 19
  20. 20. How the Model worksDemand scenarios + Gas balanceSupply scenarios Supply projects + Transportation Transportation scenarios projects + Key Total costs and Price scenarios outputs other indicators 20
  21. 21. Model outputs, indicatorsKey model outputs:• Least cost set of investment projects• Financial and economic values of projects• List of investment projects to meet a set of indicators, including: • Costs • Percentage split between export and domestic consumption • Remaining reserves at a certain year (eg 2030)• Government revenues / economic value from gas • Minimize costs, or • Maximize value of gas• Emissions • Change in CO2 emissions from power sector 21
  22. 22. Summary of key questions• What is the main purpose of the model?• What should be the time horizon for the model?• What policy assumptions should be considered?• What scenarios should be developed?• What are the key outputs/indicators the model should produce? • Least cost investment projects? • Set of investment projects to meet certain indicators? • Maximize economic value of gas use? 22
  23. 23. Next steps and time frames• Agree on scope of the model• Gather key parameters for model inputs• Develop model• Modify and update model as project progressTimeframe depends on scope of the model 23

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