ASIA PACIFIC ENERGY RESEARCH CENTRE ENERGY SUPPLY INFRASTRUCTURE DEVELOPMENT IN THE APEC REGION MARCH 2001 Published by Asia Pacific Energy Research Centre Institute of Energy Economics, Japan Shuwa-Kamiyacho Building, 4-3-13 Toranomon Minato-ku, Tokyo 105-0001 Japan Tel: (813) 5401-4551 Fax: (813) 5401-4555 Email: [email protected] (administration) ã 2001 Asia Pacific Energy Research Centre ISBN 4-931482-14-7 APEC#201-RE-01.2 FOREWORD I am pleased to present the final report of the study, Energy Supply Infrastructure Development in the APEC Region. This study is a follow-up of three previous studies undertaken by APERC, namely; Natural Gas Pipeline Development in Northeast Asia, Natural Gas Pipeline Development in Southeast Asia, and Power Interconnection in the APEC Region that were completed in March 2000. This merged study was initiated because energy infrastructure interconnections issues have become high on the energy policy agenda of most APEC economies, both developed and developing. The principal findings of the study are highlighted in the executive summary of this report. This report is published by APERC as an independent study and does not necessarily reflect the views or policies of the APEC Energy Working Group or of individual member economies. Finally, I would like to thank all those who have been involved in this major and I believe successful exercise including the staff at the Centre, both professional and administrative, the experts who have helped us through our conferences and workshops, and many others who have provided useful com- ments. I hope this report will be useful to a wide audience. Keiichi Yokobori President Asia Pacific Energy Research Centre ACKNOWLEDGEMENTS We would like to thank all of those who worked so hard on the project. The development of this report could not have been accomplished without the contributions of many individuals. We wish to express our appreciation to the APERC Conference and Workshop participants who met with us and provided invaluable insights into the issues. We also thank all members of the APEC Energy Working Group (EWG), APEC Expert Group on Energy Data and Analysis (EGEDA), APERC Advisory Board, energy officials and other experts for their stimulating comments and assistance with the study. Our thanks go also to the APERC adminis- trative staff for their help in administration and publication of this report. PROJECT LEADER: Dr Hassan Ibrahim (Malaysia) PROJECT PARTICIPANTS: Ahmad Haji Mohamad (Brunei Darussalam) Zhong-an Wang (China) Iman Santoso (Indonesia) Satya Zulfanitra (Indonesia) Naoko Doi (Japan) Dr Ki Joong Kim (Korea) Martin Bonou (Papua New Guinea) Edito Barcelona (Philippines) Dr Oleg Sinyugin (Russia) Dr Tran Thanh Lien (Viet Nam) EDITOR Dr David Cope (New Zealand) ADMINISTRATIVE SUPPORT Sutemi Arikawa, Shohei Okano, Sachi Goto, Emi Tomita, Yayoi Ito, and Erika Saeki. CONTENTS Foreword ii Acknowledgements iv List of Tables vi List of Figures vii List of Abbreviations vii Preface 1 Executive Summary 3 Chapter 1 Introduction 7 Chapter 2 Energy Infrastructure Trends 9 Chapter 3 Energy Demand and Supply in Asia 27 Chapter 4 Critical Decision-Making Factors and Issues 39 Chapter 5 Northeast Asia 53 Chapter 6 Southeast Asia 67 Chapter 7 Other APEC Natural Gas Pipeline Projects 95 Chapter 8 Conclusions and Policy Implications 99 References 103 Appendix 107 LIST OF TABLES Table 1 Gaseous emissions from fossil-fuelled power plants 14 Table 2 LNG demand outlook for Northeast Asia 24 Table 3 Existing LNG projects in the Asia Pacific region 25 Table 4 LNG projects for Asian markets 26 Table 5 Electricity demand forecast by region, Baseline ‘98 (B98) scenario 27 Table 6 APEC electricity generation fuel consumption forecast 28 Table 7 Natural gas and electricity demand projected to 2010 29 Table 8 Fuel input for power generation in Northeast Asia (for 1998) 31 Table 9 Fuel input for power generation for Southeast Asia (for 1998) 33 Table 10 Natural gas consumption by sector in Northeast Asia (for 1998) 34 Table 11 Natural gas consumption by sector in Southeast Asia (for 1998) 36 Table 12 Cross-border pipelines in Southeast Asia (2003) 71 Table 13 Existing interconnections in Southeast Asia 75 Table 14 Status of interconnection projects in SE Asia 79 Table 15 APEC economy natural energy resource potentials (for 1999) 81 Table 16 GMS interconnection projects 84 Table 17 Projected industrial energy demand in Thailand 87 Table 18 Possible natural gas markets in the industrial and electricity sectors 87 Table 19 Natural gas supply for Thailand 88 Table 20 Electricity cost comparisons 89 Table 21 Projected industrial energy demand in the Philippines 90 Table 22 Possible natural gas markets 91 Table 23 Projected sources of natural gas supply in the Philippines 91 Table 24 Electricity cost comparisons 92 Table 25 Energy demand forecast for Singapore 93 Table 26 Possible supplies of natural gas for Singapore 94 Table A 1 Isolated case 110 Table A 2 Connected Case 1 (Scheme 1) 110 Table A 3 Connected Case 2 (Scheme 2) 111 Table A 4 Connected Case 3 (Scheme 3) 111 Table A 5 Estimated reserve margins (for selected regions) 112 Table A 6 Estimated fuel ratios for APEC economies 113 Table A 7 Comparison between isolated and connected cases (Scheme 1) 114 Table A 8 Comparison between isolated and connected cases (Scheme 2) 115 Table A 9 Comparison between isolated and connected cases (Scheme 3) 115 Table A 10 Power exchange flows (2011-2020) 116 Table A 11 Outline of each interconnection plan 118 Table A 12 List of cost elements 118 Table A 13 Transmission line utilisation factors for Scheme 2 126 Table A 14 Cost-benefit for interconnection transmission line for Scheme 2 127 LIST OF FIGURES Figure 1 Interconnected European gas network 17 Figure 2 The European electricity network 18 Figure 3 Major gas transportation corridors in the US and Canada 21 Figure 4 Projected fuel demand for power generation in 2010 29 Figure 5 CO2 emissions from electricity generation (1995 - 2010) 31 Figure 6 Natural gas, hydropower and oil resources in Northeast Asia 40 Figure 7 Natural gas, hydropower and oil resources in Southeast Asia 40 Figure 8 Power generation decline in Siberia 55 Figure 9 Potential power grid interconnections in Northeast Asia 59 Figure 10 Proposed gas and power interconnection routes in Northeast Asia 63 Figure 11 Map showing existing and planned cross-border pipelines in SE Asia 72 Figure 12 Map showing proposed Trans-ASEAN Gas Pipeline in 1996 73 Figure 13 Electricity projections for SE Asia - Baseline Scenario 76 Figure 14 Electricity projections for SE Asia - Protracted Crisis Scenario 77 Figure 15 Southeast Asia power interconnection projects 78 Figure 16 GMS power interconnection projects 78 Figure 17 Proposed pipeline routes (PNG & East Timor to Australia) 96 Figure A 1 Demand forecast for B98 Scenario 112 Figure A 2 Power flow direction (Scheme 1) 116 Figure A 3 Power flow direction (Scheme 2) 117 Figure A 4 Power flow direction (Scheme 3) 117 Figure A 5 Power flow between Thailand and Peninsular Malaysia 119 Figure A 6 Energy flow between Thailand and Peninsular Malaysia 120 Figure A 7 Power flow between Peninsular Malaysia and Sumatra 120 Figure A 8 Energy flow between Peninsular Malaysia and Sumatra 121 Figure A 9 Power flow between Peninsular Malaysia and Sarawak 121 Figure A 10 Energy flow between Peninsular Malaysia and Sarawak 122 Figure A 11 Power flow between Sumatra and Java 122 Figure A 12 Energy flow between Sumatra and Java 123 Figure A 13 Power flow between Peninsular Malaysia and Singapore 123 Figure A 14 Energy flow between Peninsular Malaysia and Singapore 124 Figure A 15 Power flow between Sarawak and Brunei Darussalam 124 Figure A 16 Power flow between Brunei Darussalam and Sabah 125 Figure A 17 Power flow between Philippines and Sabah 125 LIST OF ABBREVIATIONS ABARE Australian Bureau of Agricultural and Resource Economic AC Alternating current ACE ASEAN Centre for Energy AEEMTRC ASEAN-EC Energy Management Training and Research Centre APEC Asia Pacific Economic Cooperation APERC Asia Pacific Energy Research Centre ASCOPE ASEAN Council on Petroleum ASEAN Association of Southeast Asian Nations B98 Baseline-1998 Scenario BAU Business-as-usual BCF Billion cubic feet BCM Billion cubic metres BCMY Billion cubic metres per year BP British Petroleum BTU British thermal unit CCGT Combined cycle gas turbine CEERD Centre for Energy-Environment R&D - Asian Institute of Technology CIGRE Conference Internationale des Grands Reseaux Electriques CLP China Light and Power Company CNPC China National Petroleum Corporation CO2 Carbon dioxide DC direct current DPRK Democratic People's Republic of Korea (or North Korea) EDF Electricite de France EDMC Energy Data and Modelling Centre (Japan) EFS Environmentally Friendly Scenario EGAT Electricity Generating Authority of Thailand EGEAS Electric Generation Expansion Analysis System EIA Energy Information Administration (USA) EPDC Electric Power Development Company (Japan) EPRI Electric Power Research Institute EPS Electric Power System ES Energy System ESPRIT Electric System Planning Program Reflecting Interconnection & Transmission EU European Union EVSL Early Voluntary Sectorial Liberalisation EWG Energy Working Group FERC Federal Energy Regulatory Commission (USA) FGD fuel gas desulphurised GDF Gaz de France GDP Gross domestic product GHG Greenhouse gas GJ Gigajoules GMS Great Mekong Sub-region GVA Gross Value Added GW Gigawatt (= one million kilowatt) GWh Gigawatt hour (= one million kilowatt hours) HAPUA