E3S Web of Conferences 209, 05010 (2020) https://doi.org/10.1051/e3sconf/202020905010 ENERGY-21 Modelling gas supply systems with a high role of autonomous consumers (the case of Mongolia) Darya Maksakova1,*, and Sergei Popov1 1Melentiev Energy Systems Institute of Siberian Branch of the Russian Academy of Sciences, Department of Complex and Regional Problems in Energy, 664033 130 Lermontov St., Irkutsk, Russia Abstract. The paper presents a tool to optimize gas infrastructure systems and analyses some aspects of modelling related to autonomous gas consumers. A model of national gas infrastructure creation in Mongolia is proposed. The model is linked with the model of the regional Northeast Asian gas market and the financial models of gas infrastructure facilities. The model determines the optimal design of the national gas infrastructure system, i.e. the number of the facilities, their capacities, locations and the transport modes for connecting the consumption centres. The role of autonomous consumers is considered by introducing the demand for liquefied natural gas separately from the demand for pipeline gas. The scope of the model application is demonstrated by an illustrative example. The results show the rational natural gas import and distribution patterns. The need for expanding the energy cooperation between Mongolia and the other Northeast Asian countries to create gas industry in Mongolia is highlighted. Keywords. Mongolia, Northeast Asia, gas supply infrastructure, modelling. 1 Introduction at the sessions of the Northeast Asian Natural Gas & Pipeline Forum (NAGPF). As a result of the researches Mongolia has rich coal, crude oil, solar and wind energy conducted by the NAGPF, the demand for gas in resources. In the cities, Combined Heat and Power Plants Mongolia was estimated and the institutional and (CHPPs) fuelled by coal represent the basis of the energy infrastructural requirements were indicated. Finally, the supply systems. About a half of the county population pipeline was included in “A Long-Term Vision of Natural resides in the capital city Ulaanbaatar. It is worth noting Gas Infrastructure in Northeast Asia” [5]. that more than 60 percent of Ulaanbaatar’s population The gas pipeline from Russia to China across Mongolia lives in traditional Mongolian houses (gers) equipped was discussed at the Shanghai Cooperation Organisation with stoves, which burn coal and are harmful to the summits in 2018 [6,7] and 2019 [8] and at the Eastern environment [1]. The high air pollution level raise the Economic Forum in 2019 [9]. In September 2019 the problem of coal-to-gas switching in the energy production President of Russia gave the assignment to the state- and petroleum-to-gas switching in the transport sector, owned gas company Gazprom to analyse the including railways and special purpose vehicles in opportunities to use the gas resources of Irkutsk Region, mining. Besides, mobile gers in agriculture can Krasnoyarsk Territory and the Yamal Peninsula for gas contribute to the demand for gas. supplies to China across Mongolia [10]. In August 2020 The country has no conventional gas resources, while Gazprom and the Government of Mongolia agreed to set there are significant coal-bed methane resources up a special-purpose company for conducting a feasibility estimated at 3.2 trillion cubic meters [2]. Nevertheless, in study for the construction and operation of the pipeline spite of technical feasibility, high costs and capital [11]. investments, water supply issues and the lack of gas In 2018 by starting LNG (liquefied natural gas) imports supply infrastructure are the barriers for the large-scale from China and later in 2019 from Russia, the country exploration and production of natural gas in Mongolia. made its first steps on the way to the gas industry creation. The issue of gas supply to Mongolia has been discussed The construction of the gas pipeline from Russia to China for a long time since the end of the XX century. In 1998 passing Mongolia’s territory “Irkutsk-Ulaanbaatar- Melentiev Energy Systems Institute carried out the Beijing” is to form the basis to meet total country’s research “The concept for development of the oil and gas demand for gas and expand Mongolia’s opportunities to industry in eastern regions of Russia and study on the participate in the regional Northeast Asian energy possibility to export hydrocarbon resources to the APR cooperation initiatives. Currently, the energy cooperation countries” [3,4]. According to the concept, the gas of Mongolia with the other countries of Northeast Asia pipeline “Irkutsk-Ulaanbaatar-Beijing” ought to have (NEA) is limited to export of coal and crude oil, import become a part of the unified gas supply system in the of petroleum products, liquefied petroleum gases (LPG) eastern regions of Russia. The pipeline has been discussed * Corresponding author: [email protected] © The Authors, published by EDP Sciences. This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0 (http://creativecommons.org/licenses/by/4.0/). E3S Web of Conferences 209, 05010 (2020) https://doi.org/10.1051/e3sconf/202020905010 ENERGY-21 and a small amount of LNG, and electricity trade with the competitive and abundant gas reserves and China being only neighbours Russia and China. expected to become the driver of the global gas market. The structure of energy export of Mongolia to NEA is The aim of the paper is to propose a modelling represented in Table 1. China is a major export market for framework to research the national gas supply system Mongolia’s coal resources and a sole importer of creation opportunities in Mongolia and to provide an Mongolia’s crude oil. Besides, China provides transit illustrative example showing the opportunities of the services for Mongolian coal. described tools. The objectives include: Table 1. Energy export of Mongolia to the other NEA analysing the opportunities and limits of the existent countries in 2019, million US dollars. model of Gas Infrastructure Development in the East Total Asian Region (GEAR), Importer Coal Crude oil Electricity energy highlighting the special characteristics of the future gas export infrastructure in Mongolia, formulating a model of the national gas infrastructure China 3 073 306 - 3 379 system of Mongolia interacting with the GEAR model, running an illustrative scenario to demonstrate the Russia † - † † model opportunities and identify the areas for improvement. Republic of † - - † Korea 2 Modelling tools Total world 3 073 306 † 3 379 Mongolia’s participation in the regional Northeast Asian gas market can be analysed by employing the GEAR † Less than 0.5. model. The GEAR model is a linear programming Source: [12]. problem that minimizes total costs to satisfy the demand for imported gas in China, Japan, the Republic of Korea As Table 2 shows, almost all of the energy import and Mongolia subject to balance and infrastructure comes to Mongolia from NEA. Russia is the major constraints [14]. supplier of petroleum products and China provides most It is a static model, i.e. it describes the Northeast Asian of the electricity import. gas market for a specific year. The main inputs are gas Mongolia plans to launch its first refinery with the production, pipeline transportation, marine and railway capacity of 1.5 million tonnes of crude oil per year in 2022 LNG transportation, liquefaction and regasification costs [13]. Thus, the trade flows will be reshaped, as Mongolia and aggregated demand for gas in the gas consumption will be able to stop petroleum products (including LPG) centres (nodes). imports. The production and transportation optimisation Table 2. Energy import of Mongolia from the other NEA problem GEAR allows identifying the most competitive countries in 2019, million US dollars. gas suppliers and gas supply routes, estimating gas transportation volumes for the each route as well as the Total Petroleum rent revenues, which are the difference between the dual Exporter Electricity LPG LNG energy products (shadow) prices in the nodes and costs to supply gas to the import nodes. The GEAR model analyses the different scenarios to Russia 1 065 28 14 † 1 107 supply Mongolia with gas, namely, LNG import from Russia or China and the construction of the gas pipeline China 53 118 - † 171 “Irkutsk-Ulaanbaatar-Beijing”. The demand for gas is aggregated in Ulaanbaatar. Republic Analysing the role of Mongolia in the regional gas 24 - 3 - 26 of Korea market described by the GEAR model is the first stage of the study. This model allows estimating the Japan 2 - - - 2 competitiveness of the supply sources and routes subject to limited capacities and provides with gas import costs Total estimations. 1 164 145 16 † 1 325 world However, due to the fact that the country’s demand is † Less than 0.5. aggregated only in the single node, the necessity to build Source: [12]. the national gas infrastructure, which would be different in the different import scenarios, is not taken into account. Russia and China are the key Mongolia’s trade partners. That is why a special model of the national gas Moreover, the existent experience of energy trade and infrastructure creation is developed for Mongolia. The cooperation can be expanded further to exploit the model considers the optimal directions of LNG or pipeline advantages of bordering with Russia owning highly gas import and the construction of gas infrastructure facilities to satisfy the demand across the entire territory 2 E3S Web of Conferences 209, 05010 (2020) https://doi.org/10.1051/e3sconf/202020905010 ENERGY-21 of Mongolia. The infrastructure facilities comprise create and operate gas infrastructure and to import LNG pipelines, vehicles with a cryogenic cistern for LNG and pipeline gas during the modelling interval. transportation, liquefaction plants and regasification The model has three types of the constraints: facilities. 1) balance constraints, The GEAR model supplies the model of the national 2) capacity constraints, gas infrastructure with such parameters as import costs 3) existing infrastructure constraints.