Energy Infrastructures Modeling:

1
Energy Infrastructures Modeling

• Gas Pipelines System in Eurasia
• Arkadii Kryazhimsky
• Oleg Nikonov
• Yaroslav Minullin

2
Russian NMO-SponsoredEnergy Group

• Oleg Nikonov, Yaroslav Minullin
• Urals State Technical University
• Yurii Kononov, Dmitry Kononov
• Energy Institute of Siberian Branch of RAS
• Olga Golovina
• Moscow State University
• NMO National Members Organization

3
Contents

• Research History
• Turkeys Gas Market
• Chinas Gas Market
• Supply Game
• Game of Timing
• Conclusion

4
Research History

• 2000 Great Caspian Pipeline Game, IGOR model
• 2001 Game of Timing (G-TIME) model
• 2002 G-TIME China model

5
Four-level Dynamic Optimization

• Assessment of the market potential innovation
• Selection of innovation scenarios
• Regulation of the future supply
• Optimization of the current investments

6
Turkeys Gas Market
Bulgarpipe
Blue Stream
Transcaspian
Ekarum
7
Turkeys Gas Market
8
IGOR Model
Investment into pipeline 1
Investment into pipeline 2
Investment into pipeline N
Gas field 1 (overall costs of delivering gas to
the market)
Gas field 2 (overall costs of delivering gas to
the market)
Gas field N (overall costs of delivering gas to
the market)
supply
supply
supply
Gas market
9
IGOR Model
10
IGOR Model
Iranpipe
Blue Stream
Ekarum
Trans-Balcan
Transcaspian
11
G-TIME Model
12
G-TIME Model
13
Chinas Gas Market
14
Chinas Energy SectorSpecific Features

• Not quite market conditions
• Lack of econometric data
• Low correlation between GDP and sectors incomes

15
Price formation
16
Gas Market Model
extraction
extraction
deposit 1
project 1
deposit 2
project 2
transportation
transportation
supply
forecasted demand
natural gas market
forecasted price
forecasted price elasticity
pp(d0,p0,ep,y)
17
Supply Game (a player occupies market solely)
maximal payoff
?i
?i max
t - fixed

• ?i(y,yi) p(d0,p0,ep,y)-c(yi)yi

D
ymin
Mi
d0
yi

• At each instant of time the player maximizes his
  payoff
• ?i(y,yi) ? max
• yi?D
• and gets an optimal value for supply

18
Supply Game (both players are on the market)
y2
Nash equilibrium point (y1 (y2) y2 (y1))
best response y2 (y1)
d0
M2
ymin
best response y1 (y2)
D
M1
y1
19
Supply Game
20
Supply Game in time
yi
d0(t)
ymin(t)
yi1(t)
Mi
yi2(t)
t
Each player gets an optimal supply plan in
time yi1(t) and yi2(t)
21
Supply Game benefits
upper benefit rate, bi1(t)
bi1(t) bi2(t)
lower benefit rate, bi2(t)
Bi(t,t-i)
t, t-i
t-i
Substituting optimal supply the player gets
upper benefit rate, bi1(t) ?i(t,y(t),yi1(t)) and
lower benefit rate, bi2(t) ?i(t,y(t),yi2(t))
22
Game of Timing
Pi(t)
start of making investments
start of operation
return of investments
ti
ti0
Ci
t, ti
tiROI
t1ROI (t10 , t20) t0 ? min
t10 t2ROI (t20 , t10) t0 ? min
t20
Nash equilibrium point of starting construction
times (t10 t20)
23
Simulations
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Natural Gas Demand ForecastBase case
25
Natural Gas Price and LNG Price Forecast Base
case
26
Gas Demand Price Elasticity Forecast Base case
27
Results of Simulations base case
28
Results of Simulations base case