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Russia's Thermal Coal Demand Seen Tripling by 2020

Date: 19-Jun-07
Country: RUSSIA
Author: Robin Paxton

Thermal coal supply would rise by more than 50 percent and the proportion of exports in overall output from the world's third-biggest coal exporter would fall, said Vladimir Shchadov, deputy director of Rosenergo, an agency within the Energy Ministry.

"The considerable increase in forecast demand for Russian thermal coal -- from 98.4 million tonnes to 342 million tonnes in 2020 -- will motivate coal producers to increase production at a faster pace," Shchadov told the 3rd Coaltrans conference.

Former power monopoly Unified Energy System is investing US$119 billion by 2010 to upgrade Russia's grid. By 2020, coal-fired power will have risen and possibly doubled its share of the country's overall energy output, officials said.

Sergei Shatirov, first deputy chairman of Russia's industrial policy committee, said coal's share in Russian energy production would rise to 38-40 percent by 2020.

Geoff Crocker, chairman of SUEK AG, the trading arm of Russia's largest coal producer, gave a similar percentage and said rising coal output would be required to meet the addition of 40-80 gigawatts of new coal-fired power capacity by 2020.

Most Russian energy is generated from gas. Officials have given coal's current share in energy output at either side of 20 percent, well below the world average.

"The general picture is clear: increasing dependence will be on coal-fired generation and the coal share in the fuel market will increase," he said.

INCREASED SUPPLY

Russia trails China, the United States, Indonesia and Australia in terms of coal output. It is the third-largest exporter behind Australia and Indonesia.

Coal supply in Russia, comprising production and imports, rose 3.2 percent last year to 289 million tonnes, Shchadov said. Of this, thermal coal accounted for 235 million tonnes and coking coal -- used in steel making -- 54 million tonnes.

A modest forecast by his agency showed supply reaching 440 million tonnes -- 357 million tonnes of thermal and 83 million tonnes of coking coal -- by 2020. The maximum projection showed an extra 20 million tonnes of thermal coal.

Shchadov told Reuters he expected Russia's total coal exports to reach about 100 million tonnes by 2020. This is up from 92 million tonnes in 2006, 81.3 million tonnes of which was thermal coal.

But as a proportion of supply, total coal exports would fall to 22.7 percent of the modest forecast compared with 31.8 percent based on last year's figures.

Crocker said Russia would require between 46 million and 58 million tonnes more coal by 2010. The country would build new capacity but could also make up the shortfall by improving productivity from existing resources, he said.

"The main message is that the numbers are large and there is a huge challenge for the power generation industry to invest," he said. "It's a country-wide phenomenon requiring significant investment."

He added Russia must employ state-of-the-art technology from foreign suppliers to ensure the efficiency of this new capacity.

None of the speakers mentioned the impact of the expansion on Russia's emissions of the greenhouse gas carbon dioxide.

Russian greenhouse gas emissions rose by 2.2 percent in 2005 to 2.13 billion tonnes, which was still nearly 30 percent below levels when the Soviet Union and its smokestack industries collapsed.

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Reuters
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