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Global Energy Sector

ERI RAS is a leading Russian research organisation in the area of analysing and forecasting global energy sector development.
A wide range of projects is consistently undertaken in the following directions:
• Regular monitoring of global energy markets.
• Maintaining databases and knowledge databases for the fuel and energy sectors of the largest countries, major energy companies and projects.
• Analysing and forecasting geopolitical and macro economic trends, preparing mutually coordinated global energy sector development scenarios.
• Analysis of national energy policies and the specifics of energy sector regulation.
• Forecasting energy sector development for the world’s regions and countries; forecasting market conditions, including developing a projected energy balance and estimating energy trade globally and for specific macro regions and the largest countries.
• Regional and country specific oil and gas production and consumption forecasts, regional and country forecasts of spot and contractual gas prices, projected pipeline gas and LNG deliveries in specific directions. Determining future market niches for Russian hydrocarbons in the external markets, while taking into account their competitive ability.
• Developing recommendations for optimum business strategies in the global energy markets.
A unit for global energy forecasts was developed within the ERI RAS modelling complex (ссылка на описание блока) to ensure that research is both in-depth and reliable. A high degree of detail (all macro regions and 62 largest countries, including all European and CIS countries) enables to undertake precise research on both the global market and individual regions and countries. Depending on the requirements, computations can be made both for the entire energy balance and separately for individual industries.
The unit for global energy forecasts is integrated with the rest of ERI RAS’s modelling complex, enabling to account for changes in the Russian and global energy sectors in a mutually interlinked way.
Since 2011 ERI RAS has been producing a global energy forecast to 2030. It will be updated every six months (in spring and autumn), which will enable to promptly account for any changes.

ERI RAS performs extensive work in the area of analysing and forecasting the development of world energy markets for the government authorities and the leading companies, including the Ministry of Energy of the Russian Federation, the Ministry of Natural Resources of the Russian Federation, NOVATEK, RSPP (Russian Union of Industrialists and Entrepreneurs), etc.
ERI RAS takes an active part in large international research projects. They include the following: SECURE, “Security of Energy Considering Its Uncertainties, Risks and Economic Implications” (an international research project funded by the European Commission under the Seventh Framework Programme), CERA research project entitled “Securing the Future: Making Gas Interdependence Work”, a project of the International Gas Union on “Gas Supply and Demand Outlook to 2030” and others.
ERI RAS is an active member of the International Gas Union, IAEA (International Atomic Energy Agency), the World Energy Council, the International Association for Energy Economics, The Worldwide Independent Energy Network (WIEN), also known as the Baden-Baden Group. ERI RAS is the founder of the non-profit partnership on Energy Policy and Energy Economics, the Russian branch of the IAEE (International Association for Energy Economics).

Our foreign partners and clients include:

• The World Bank
• The European Commission
• The United Nations Economic Commission for Europe
• The US Ministry of Energy
• IEA (International Energy Agency)
• Japan’s Ministry of International Trade and Industry
• Atlantic Council of the United States
• Wintershall Holding AG (Germany)
• IIASA (International Institute for Applied Systems Analysis), Austria
• IEPE (France)
• ECN (the Netherlands)
• Hagler Bailly (US)
• Wood MacKenzie (Great Britain)
• Korea Energy Economics Institute (KEEI)
• IEEJ (Japan)
• APERC (Japan)
• The Gas Exporting Countries Forum (GECF)
• GDF-SUEZ (France)
• Statoil (Norway)

Unit for Global Energy Forecasts
Reliability of the information used is crucially important for putting together an integrated picture of the development of global energy markets. The process of constant monitoring of the energy markets is the foundation for the system of collecting and processing of information on the global energy sector, used at ERI RAS. Information on the resource base and energy production costs, the national energy policy, government assignments and patents, technologies and their costs, projects, current performance indicators and companies’ plans (Picture 1). Databases and knowledge databases are established on the basis of statistical, analytical and news information. These databases contain statistics on the energy sector, the condition of the fuel and energy sector and energy policies of individual countries, leading energy companies and top energy projects. Generated information acts as input information in the unit for global energy sector modelling within the SCANER modelling complex. Surveys of global expert opinions are made to verify objectivity of the results and consensus forecasts are made. As a result, production and consumption forecasts are produced for primary energy and individual fuel types with a breakdown for the world, main regions, countries and sectors. An evaluation of market niches for Russian hydrocarbons in the external markets taking into account their competitive ability is important from the viewpoint of business and international cooperation.

Picture 1 – The System for collecting and processing information on the global energy sector used at ERI RAS.

The main task for this system is to offer reliable information for experts and for use within the modelling complex. This information relates to the current situation and fundamental trends in the development of global energy markets.

A computation of projected parameters is made within the modelling complex based on the input information and scenario premises (Picture 2).

Picture 2 – Methodology for global energy forecasts within the unit for global energy forecasts, SCANER complex
It is appropriate to highlight some main specific features of the ERI RAS system for global energy forecasts:

- A high degree of detail. This is the first Russian system that forecasts global energy demand in detail for macro regions and 62 large countries, including 13 CIS countries and 33 countries in Europe, Russia’s main external market.
- The system takes account of inter-fuel competition. Electric power sector and motor fuel modules make it possible to analyse economic conditions and potential inter-fuel competition.
- The entire global nuclear industry is represented on a unit-by-unit basis, including nuclear power units under construction, those planned for construction and potential projects. Changes in the energy policies of various countries are taken into consideration.
- Renewable energy sector module includes detailed information on all national plans to develop the renewable energy sector, which are adjusted taking into account economic indicators of the “green” technologies.
- Optimisation model of the global gas market —for the first time in Russia this model reviews world pipeline gas and LNG markets across all of the countries producing and consuming gas. The model is equipped with an extensive database on foreign gas projects, gas fields, LNG plants, transport infrastructure and contracts. It is possible to account for the parallel operation of the long term contract system and spot gas markets.
- Research technology considers non-economic limitations which describe group collusion and market barriers. This makes it possible to analyse the impact of imperfect competition on gas markets and consider geopolitical factors influencing the development of gas markets (transit conflicts, armed conflicts, regulatory changes, changes in the energy and environmental policies of consumer countries and transit countries).
- Flexibility of the modelling unit in revisions to reflect the setting of the problem, changes to forecast horizons and the level of detail in the description of the research target (products/regions/countries etc.).

Currently the gas industry module is the most developed one and includes an optimisation model of the global gas market. This module builds a forecast of gas industry development using results generated by the model for forecasting global energy consumption. These results are adjusted by considering the reverse relationships. Gas production and consumption volumes are determined, taking into account inter-fuel competition with other energy sources, spot gas prices and long term contract prices across countries and regions, as well as volumes of gas supplies on certain routes.

Picture 3 – A simplified flowchart of calculations within the optimisation model of the global gas market.
This modelling complex enables to analyse various directions of global energy sector development, observe consequences of implementing environmental agreements, changes in the energy policy, appearance of new technologies, and review various economic conflicts and geopolitical confrontation.
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