Installation of Gas Services in Krasnoyarsk: Dreams Delayed

Installation of Gas Services in Krasnoyarsk: Dreams Delayed


The authorities of the Krasnoyarsk territory have come up with claims that the cost of the regional project for development of gas distribution networks in the region is still high. They are looking for its implementation options but are unlikely to find them in the next few years.

The general plan for gas supplies and provision of gas services in the Krasnoyarsk territory has existed on paper for several years. However, construction works will start only when these plans are officially included in Gazprom's investment program. Three configurations of the gas project have been discussed. The first scenario presupposed the use of resources located in the Evenkiysky municipal district in the Krasnoyarsk territory. The second scenario implies the use of Gazprom's existing gas transmission infrastructure in the neighboring Kemerovo region. One more way is to use the prospective transportation infrastructure of the Altai gas pipeline in the Tomsk region, also adjacent to the Krasnoyarsk territory.

According to the officials' statement, the simplest option is that of the Kemerovo region. Since gas from there is already of marketable quality, it will not require construction of processing plants. However, there is no money for it. The projected length of a pipeline is 570 km and the cost will stand at over 120 billion rubles. “When the final decision on the feasibility of gas supplies to Krasnoyarsk is made, then we will raise this issue with the government of the Russian Federation,” said Krasnoyarsk Governor Alexander Uss in late December. “This sum is enormous, and if it is included in the fees, and so there will be no economic sense in getting connected to the gas network. We have to receive these funds in another way not only at the expense of consumers. Alas, no one promised gas this year. I'm afraid it's rather difficult to expect the installation of gas services in the Krasnoyarsk territory over the next three years. Today, the needs of the Krasnoyarsk territory [for gas] have been computed with a view to the possible fees and consumers. They amount to about 5 bln cubic meters a year."

As the press service of Gazprom Mezhregiongaz company explained earlier to, there will be no gas pipeline without state support. Otherwise, the project will make any investor bankrupt, it added. "None of the options in the general plan ensures a competitive price for gas with respect to the cost of existing energy resources in the region. First of all, coal. In addition, considerable costs will be required to prepare consumers for getting gas. Complementary to the main gas pipeline, pipelines between townships should also be laid, and it is about another 3,000 kilometers.

"In fact, the governor gave a reasonable assessment of this issue. The idea is not to give up on this task but to move away from the position of blatant populism, to develop a strategy, to create a road map and to think seriously about the sources of financing,” Evgeniy Boyko, head of department of thermal power stations at the Polytechnic Institute of the Siberia Federal University said in an interview with “It is necessary to organize coherent work correctly. Many vital projects in the region are "going down" because of unprofessional actions."

The topic of gas supplies infrastructure development is especially actively discussed in Krasnoyarsk. Mainly due to the fact that its thermal power stations are expected to significantly improve the environmental situation. It is the burning of brown coal that makes a significant contribution to the permanent smog over Krasnoyarsk. According to experts' estimates, emissions of nitrogen oxides by thermal stations will decrease by a factor of almost five when the changeover from coal to natural gas takes place. The emissions of benzapyrene will drop by about 13.4 times. The question is how to combine the interests of oligarch Andrey Melnichenko, the owner of the station and the Borodino coal mine with those of Gazprom and people.

Five years ago the SFU professionals drafted a research report on the prospects of changing the Krasnoyarsk heat sources over to gas. The costs of re-equipment of the three main city сentral heating and power plants (not complete but with account of a possibility of using coal as a reserve fuel) were estimated at about 6 bln rubles. "The cost of heat and electric energy production with gas significantly exceeds the cost of energy production with coal. Given the existing rates, the payback period cannot be reached when converting to gas. The payback period for gas equipment requires an increase of the rates,” the report says. This means there is no sense for heat and power companies to invest in re-equipment of their plants. The whole process has been well-adjusted for so long bringing stable profits. Moreover, at the beginning of the year, it became known that the Siberian Generating Company owned by the Forbes-rated businessman Andrei Melnichenko is buying another asset in the Krasnoyarsk territory -- the regional hydroelectric power plant-2 located in the town of Zelenogorsk. Today, it belongs to OGK-2, a branch of Gazprom Energoholding Group. The value of the deal is10 bln rubles. The Siberian Generating Company will start the operational management of the new asset within a year.

"The company is consistently fulfilling its strategic goal in terms of increasing energy assets in the presence regions,” said Roman Kazakov, a Krasnoyarsk public figure. “Demand for coal in the world market may fluctuate. In this sense, its generating capability ensures stable sales. For Krasnoyarsk, it looks like a signal that Gazprom does not see our territory in its plans in the medium-term. Therefore, the prospects for gas supplies are also in limbo."