Modelling based analysis of UA transmission scenarios

Transcription

1 Modelling based analysis of UA transmission scenarios III. Central and Eastern European Energy Policy Forum Challenges and opportunities of the Eu-Ukrainian gas market integration Borbála Takácsné Tóth Budapest, 31 May, 2018

2 Outline 1. Ukrainian gas market summary 2. Scenario definition 3. Modelling results 4. Recommendations to be discussed 2

3 3 Market summary Production is stagnating around ~20 bcm/yr Consumption at bcm Aggregate capacity of Western interconnectors (SK, HU, PL) is 23 bcm, which is sufficient to cover the 15 bcm import need Plans to reduce gas import need to zero for UA (possible increase in production?) Consumption: considerable fallback in 2014, huge potential in energy efficiency Supply: no direct purchase of RU gas since 26 November 2015 Flexible trade, short term options used, make good use of reverse flow on Western interconnectors Arbitration did not result in renewed direct trade with Gazprom see March 2018 price hike

4 Scenario building Current situation as of Jan 2018 TurkStream 1 string built by 2020 PCI projects UA domestic production? Renewal of deliveries with Russia? Nord Stream 2 is not commissioned Nord Stream 2 is commissioned No transit Only LTC No transit Only LTC Spot trade to EU +LTC Spot trade to EU&shortterm UA +LTC Spot trade to EU +LTC Spot trade to EU&shortterm UA +LTC 4

5 Competing infrastructure reduces flows 5 Source:Naftogaz TS 2020 NS bcm/year TS 2020 NS bcm/year TurkStream string 1 Nord Stream 2

6 Results EU welfare, M RU profit M UA TSO M UA transit TWh No transit Only LTC NS2 LTC + spot to EU LTC + spot to EU and short term UA No transit Only LTC No NS2 LTC + spot to EU LTC + spot to EU and short term UA n.a n.a n.a n.a UA welfare n.a No transit via Ukraine is the worst outcome for the EU welfare, for Ukraine and even for Russian profits If Nord Stream 2 is commissioned, Ukraine is not an attractive transit route for spot Russian deliveries; however, If NS2 is not in place, additional trade to Europe from Russia utilises the Ukrainian system to the benefit of all (like ) Renewal of direct trade from Russia to Ukraine might have been the best outcome for all 6

7 UA WF Summary of modelling results TS NS2 TS & UA shortterm NS2 & UA shortterm If UA is self-sufficient, Russian infrastructure decision is not affecting the total welfare in Ukraine (YELLOW) If UA is net importer,ua welfare is considerably lower (BLUE) NS2 commissioning hurts UA transit flows (SIZE OF CIRCLE) Both RU and UA are always better off when short-term trade flows are transiting Ukraine TS & UA shortterm NS2 & UA shortterm TS Without spot With spot NS transit transit RU profit Ukraine is self-sufficient Ukraine is net importer Transit size 7

8 Modelling Russia is conducting a profit maximizing strategy, and wants to keep its market share in Europe at the same time (in all or reference scenarios Russian profit max is at 15 /MWh selling price by 2020) With the Turkish Stream already built by 2020 Russian transit falls by 12 bcm/year to 87 bcm/year Nord Stream would be a cheaper transmission route for RU 3,49 /MWh tariff while through UA the same cost to DE is: 3,55 /MWh. The investment cost would be recovered in 30 years for the NS2 investment of 9,5 billion. Ukrainian route would not be utilized for transiting Russian gas to Europe even if UA reduces its tariff as signaled transit falls back to (~54 bcm/year) Pancaking hinders flows on the Ukrainian transit route (SK, AT, CZ) > European TSOs can contribute and ensure flows by cutting their tariffs With only slight decrease of tariffs on the current route in the EU MSs (10%), the investment into NS2 could be sparred for Russia. 8

9 PCIs and PECIs that might have an effect on UA gas market 9

10 10 Storage utilisation NS TS Storage util - Storage util - Storage util - Storage util - wd fill-up wd fill-up no transit PCI 20 55% 47% n.a. n.a. no transit PCI 35 75% 50% n.a. n.a. no transit nopci 20 67% 53% n.a. n.a. no transit nopci 35 75% 54% n.a. n.a. LTC only PCI 20 76% 56% 73% 73% LTC only PCI 35 51% 44% 51% 51% LTC only nopci 20 58% 43% 56% 56% LTC only nopci 35 64% 47% 50% 50% LTC+spot EU PCI 20 75% 54% 47% 47% LTC+spot EU PCI 35 51% 43% 50% 50% LTC+spot EU nopci 20 58% 43% 75% 75% LTC+spot EU nopci 35 64% 47% 51% 51% LTC + spot EU+short t UA PCI % 95% 100% 100% LTC + spot EU+short t UA PCI % 95% 100% 100% LTC + spot EU+short t UA nopci % 95% 100% 100% LTC + spot EU+short t UA nopci % 95% 100% 100%

11 Main results Scenario results are determined by the Russian infrastructure investments and use Ukraine has limited options to react: to set more attractive tariffs for transit to adjust the regulatory framework and to encourage investment into domestic production and energy efficiency. Russian profit and Ukrainian total welfare can change by ~8%. Both of them are at their local maximum in the scenario, when NS 2 is not build, but tranzit of Russian gas is allowed through the Ukrainian pipeline system and there are direct deliveries from Russia to the Ukraine. European welfare is not sensitive to any of the analysed factors when third package rules are implemented and European gas consumption is stagnating. EU PCI infrastructure investments seem not to be effective 11

12 12 Recommendations to be discussed Ukraine should concentrate efforts on incentivizing upstream production (production entry to TSO tariffs are exceptionally high; transparency and fair distribution of licenses is key) Energy efficiency to close consumption-production gap Tariff competition of routes requires cooperation and contribution of neighbors Rebuilding trust to enable direct trade from Russia to Ukraine and the option of spot trade on the Ukrainian transmission system is by far the best outcome for all parties (UA, EU, RU)

13 13 Thank you! REKK Péter Kaderják Director of REKK REKK (REKK Kft.) Po. Box Budapest Hungary Phone:

14 BACKUP SLIDES 14

15 15 Net import need, bcm/yr NS TS no transit PCI n.a. no transit PCI n.a. no transit nopci n.a. no transit nopci n.a. LTC only PCI LTC only PCI LTC only nopci LTC only nopci LTC+spot EU PCI LTC+spot EU PCI LTC+spot EU nopci LTC+spot EU nopci LTC + spot EU+short t UA PCI LTC + spot EU+short t UA PCI LTC + spot EU+short t UA nopci LTC + spot EU+short t UA nopci

16 Tariff reduction scenarios Without NS2, LTC+ spot to EU -10% -20% -30% -40% -50% UA Transit TWh UA TSO profit M /year SK TSO profit M /year CZ TSO profit M /year AT TSO profit M /year DE TSO profit M /year RU profit M /year EU welfare M /year EU cons. surplus M /year By cutting the entry/exit tariffs in SK, CZ, AT and DE > More transit flows via UA, but small TSO profit increase. Russian profits increase considerably, due delivery point of LTCs RU profits are increasing as much as they would with NS2 commissioning Setting a competitive tariffwith the potential NS2 could lead to maintaining flows on the traditional transit route (a 10% decrease is already sufficient) Investment cost is spared by tariff setting (PCI+NS2) 16

17 Payout (with NS2) With NS2 No transit LTC only LTC +spot to EU LTC +spot to EU, short term UA PCI No PCI PCI No PCI PCI No PCI PCI No PCI RU pr UA wf

18 18 Payout (without NS2) RU profit UA wf With out NS2 LTC only LTC +spot EU PCI No PCI PCI No PCI LTC +spot EU, short term UA PCI No PCI