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This presentation highlights main points of Ukrainain Energy Strategy till 2030 as adopted by the Ukrainain government and published in February 2014.
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25 | 03 | 2014 www.marchenkodanevych.com © 2014 ALL RIGHTS RESERVED. MARCHENKO DANEVYCH LAW FIRM
Presentation on Main Points of Energy Strategy of Ukraine till 2030
25 | 03 | 2014
Adoption
Energy Strategy approved by Resolution of Cabinet
of Ministers of 24.07.2013 № 1071
Both Energy Strategy and Resolution were
published only in February 2014
Text of Energy Strategy is available at Ministry of
Fuel and Energy of Ukraine
http://mpe.kmu.gov.ua/fuel/control/uk/doccatalog/lis
t?currDir=50358
25 | 03 | 2014
Goals of the Strategy
Reliable and qualitative satisfaction of demand in
energy resources at the lowest expenses
Increase of the level of the state energy security
Efficient consumption and use of energy products
Decrease of pressure on the environment
Securing civil protection in the sphere of
technogenic safety of energy sector
25 | 03 | 2014
Directions of the Strategy
Implementation
Liberalization of energy markets
Development of competition in energy markets
Reduction of energy consumption
Increase of extraction and production of own
energy sources
Increase of volumes of energy and energy products
from non-conventional and renewable energy
Diversification of external supplies of energy
products
Securing civil protection in the
sphere of technogenic safety of energy sector
25 | 03 | 2014
Expected electricity industry
development
Expected demand in electricity in 2030 will be
from 244 to 315 TWT/hours
By 91 TWT/hours or 50% more than in 2010
mostly due to growth in industrial, commercial
and residential consumption
This will require development of electricity
generation
25 | 03 | 2014
The perspectives of development
of the electric power industry
The major steps to be taken by the state:
Modernization of the existing generating
facilities
Modernization and development of
transmission and distribution networks
Hydro power projects up to 5 gW
Extension of NPP operation
till 20 years
25 | 03 | 2014
Investments for development of
generation
Required amount of investments UAH 1 trillion
attracted due to
Transition to a new model of electricity market
which will adequately compensate production costs, including investments
Tariff system guarantying return of investments in
natural monopolies
Transparent procedures for permits construction of
generating facilities
Tender approaches towards state construction
25 | 03 | 2014
Growth of electricity generation
Types of generating
facilities
2012 2030
Capacity, gW Output, tW•h Capacity, gW Output, tW•h
Total 53,8 198 66,5 282
Nuclear power stations 13,8 90 17,8 133
Large hydro power
stations 4,5 10 5,8 14
Large hydro accumulative
power stations 0,9 1 4,7 7
Thermal power stations –
coal 22,0 79 19,7 91
Thermal power stations –
gas 5,4 - 3,8 2
Thermal Power Centers
and block stations 6,6 18 6,3 21
Renewables 0,6 1 8,4 14
25 | 03 | 2014
Main points on generation
development till 2030
9 GW of commissioned coal fired thermal power stations (UAH 132 billions)
Increasing power capacity of hydro by 245 mW of Dniper cascade (UAH 5 billions)
Total large hydro should reach 16% in the balance (UAH 55 billions)
2 nuclear blocks (8 gW, UAH 156 billions)
25 | 03 | 2014
Development of the transmission
and distribution network
Till 2030 the development of transmission grid is based lines with power of 330 and 750 kV
Enhancing the system, new construction and modernization
Secure output and stable consumption Increase quality and reliability UAH 134 billons of investments in distribution grids and UAH 53 in transmission grid
25 | 03 | 2014
Structure of ownership in
electricity sector
Large hydro, nuclear power, transmission and interstate grids should be owned by state
Thermal power stations and centers, distribution networks should be fully privatized till the end of 2014
25 | 03 | 2014
Tariffs in electricity sector
Transfer to market prices fully compensating expenses for production and distribution
Decrease and full cancelation of cross subsidies among consumers
Stimulating tariffs
25 | 03 | 2014
Heating industry
Increase of consumption with energy efficiency measures by 15% (271 mln. gigacalories)
Average energy efficiency increase by 20% Reduction of gas consumption, energy
efficiency, use of coal and renewables Reconstruction of heat electoropower stations
25 | 03 | 2014
Renewables in 2030
8 gW (14 gW with large hydro), 12,6% in energy balance, production 14 tW/h (18 tW/h with large hydro)
Potential 1-1,5 gW of bioenergy (10-15 gW of heat) 3-4 gW of wind farms 4 gW of solar farms 4 gW of small hydro
25 | 03 | 2014
Coal industry
Spheres of
consumption
2010
mln.t
2030
mln.t
Energy
companies
34,2 48,7
Metallurgic
companies
1,7 2,9
Households 1,0 3,8
Other
spheres
1,4 2,4
Total 38,3 57,8
Synthesis gas and hydrocoal fuel – 6,4 billion cub. m of gas 12 mln. tons of coal annually
Privatization and modernization of mining facilities
Liberalization of coal market Total increase of coal production
up to 115 mln. tons (UAH 50 billons investments)
Brown coal production
Energy coal (basic scenario)
25 | 03 | 2014
Consumption in gas industry
Consumption in 2010 57 billion m3 (60% households and 40% industries) Targets till 2030 Modernization of the industry Decrease waste of gas and heat Substantial increase of energy efficiency by
people and municipalities Planned consumption in 2030 – 49 billion m3
25 | 03 | 2014
Production in gas industry
Last 15 years annual production is from 18 to 21 billion m3 (mostly state companies)
Potential resources 5,4 billion m3 (balance deposits – 1,1 billion m3)
Potential deposits of unconvential gas are from 20 to 50 billion m3
25 | 03 | 2014
Planned production of natural gas
till 2030
Expected annual production 20 billion m3 New drilling on shore (including up to 1
billion deposits) Off shore drilling (up to 350 m), 1 billon m3
annually Deep drilling (6-7 km) Increase of productivit by available wells Investments till 2030 UAH 110-125 billion
25 | 03 | 2014
Expected production of
unconventional gas till 2030
Deep shelf (more than 350 m) total deposits - 4-13 trillion m3 since 2020 7-9 billion m3 annually investments - UAH 80-90 billion Tight gas total deposits - 2-8 trillion m3 since 2017 7-9billion m3 annually investments - UAH 55-65 billion
25 | 03 | 2014
Expected production of
unconventional gas till 2030
Shale gas total deposit 5-8 trillion m3 since 2022 7-9 billion m3 annually investments UAH 35-45 billion Coal-bed methane potential resources 12-25 trillion m3 since 2025 1-3 billion m3 annually investments - UAH 12-15 billion
25 | 03 | 2014
Expected production of gas till
2030 and import dependency
Total expected production of all gas is from 30 billion m3 to 47 billion m3 in 2030 Import dependency as of 2011 44,8 billion m3 (40 billion m3
from Russia) as of 2020 up to 28 billion m3 as of 2030 up to 17 billion m3
25 | 03 | 2014
Import diversification
Import of LNG from EG, QA etc (investments - US$ 1 billion)
Import of LNG from AZ (investments in construction US $ 5-8 billion)
Import through from AZ “White Flow” (investments in construction US $ 7-10 billion)
Reverse supplies from EU Dependency on one supplier not more than
35% of all consumption in 2020 (35% of all import in 2030)
25 | 03 | 2014
Oil products
In 2010 demand in oil products is 10,3 mln. tons In 2030 demand in oil products will be from 13,1 to 20,8 mln. tons, includling (in mln. tons) petroleum up to 6,3, diesel up to 10,1
kerosene up to 1 propane and butane up to 2,2 mln. tons,
methane up to 1,3 bioethanol up to 1,1 (10% blending in 2020,
15% in 2030) and biodiesel up to 0,8
25 | 03 | 2014
Oil refinery
In 2011 9 mln. tons refined (90% Lysychansk and Kremenchug oil refinery plants)
In 2020 11,7 mln. tons refined (80% - light oil products)
In 2030 14,4 mln. tons refined (85% - light oil products)
Investments in the sector – UAH 29-44 billion
25 | 03 | 2014
Oil and gas condensate
production
In 2010 production of 3,6 million tons Till 2030 average production will be from 2,7
to 4,5 million tons (subject to investments UAH 30-40 billions)
Shelf deposits - 1 billion tons (possible production since 2020-2022)
In 2030 possible production off shore is 3,5 mln. tons (subject to investments UAH 55-60 billions)
25 | 03 | 2014
State support for exploration and
production of oil & gas
EITI full membership Constant planning for resources exploration,
activate exploration by state companies Increase number of permits and PSAs Simplification of issuing permits and
conclusion of PSAs Security of land rights for investors
25 | 03 | 2014
State support for production of
unconventional hydrocarbons
Diversified resource payments depending on costs for production
Indirect support, including special tax regime, for exploration, drilling, machinery
State financing construction of most important infrastructure
State support for education of specialists in the industry
Special stimulating program to be adopted
25 | 03 | 2014
State measures for distribution of
gas
Unified principles for tariffs and elimination of subsidies for certain consumers’ groups
Gradual liberalization of natural gas market with remaining state control
More effective natural gas consumption (up to 40% till 2030)
25 | 03 | 2014
State measures for oil products
Maintenance and development of competition in wholesale and retail markets
Stimulation of efficient use of fuel and increased use of alternative types of fuels
Stimulation of use of liquid biofuels Planned transfer to higher standards of fuel
quality
25 | 03 | 2014
Energy efficiency
Energy consumption 0,21 tones of coal equivalent for UAH 1000 of GDP (the highest in Europe)
In 2030 the index should be 0,1 Average potential for energy efficiency 30-
35% The main measure to increase efficiency of
consumption, state incentives, introduction of changes per EU requirements
Direction 2012-2030
ELECTRICITY AND HEATING, INCLUDING 785
ELECTRICAL GRIDS 187
HEAT GENERATION 324
HYDRO 60
RENEWABLES 130
HEATING SYSTEM 84
NUCLEAR 391
COAL INDUSTRY 83
OIL & GAS INDUSTRY, INCLUDING 562
GAS TRANSPORTATION SYSTEM 52
GAS DISTRIBUTION SYSTEM 50
OIL TRANSPORTATION SYSTEM 7
PRODUCTION OF GAS 316
PRODUCTION OF OIL 93
DEVELOPMENT OF BIOFUELS 7
OIL REFINERY 37
TOTAL INVESTMENTS 1821
25 | 03 | 2014
Total investments in energy sector
in 2012-2030
Direction 2012-2030
ELECTRICITY AND HEATING, INCLUDING 785
ELECTRICAL GRIDS 187
HEAT GENERATION 324
HYDRO 60
RENEWABLES 130
HEATING SYSTEM 84
NUCLEAR 391
COAL INDUSTRY 83
OIL & GAS INDUSTRY, INCLUDING 562
GAS TRANSPORTATION SYSTEM 52
GAS DISTRIBUTION SYSTEM 50
OIL TRANSPORTATION SYSTEM 7
PRODUCTION OF GAS 316
PRODUCTION OF OIL 93
DEVELOPMENT OF BIOFUELS 7
OIL REFINERY 37
TOTAL INVESTMENTS 1821
In UAH billions, prices as of 2010
14 | 02 | 2014
4-B Ivana Franka Street, office 49
Kyiv 01054, Ukraine
+38 044 220 07 11
+38 044 220 07 11
marchenkodanevych.com
Thank you for attention!
Maksym Sysoiev LL.M., Attorney-at-law, Counsel