| 2008-04-18 |
Published: The Moskovski Komsomolets Newspaper. |
It seems unusual when a company basing its business on production and sale of natural gas, suddenly begins investing considerably into projects related to alternative power engineering, including production of bio-fuels and conversion of solar energy into electricity. An oil and gas producer is expected to oppose in every possible way the use of any other sources of energy, because they are a way to reduced profit and, as a consequence, to consequential self-expulsion from the market.
However, the obvious trend of rising prices persistently encourages us to look for projects linked to renewable energy sources and economical energy use. This, in turn, will slow down the global warming process and improve ecological situation and, finally, generate an economic boom related to transition of world power engineering to the "green" rails.
A ÌÊ correspondent asked Igor Makarov, Head of ITERA, a Russian oil and gas company, involved in financing scientific studies of alternative energy sources, construction of bio-ethanol and solar power plants, about the current state and prospects for those unique projects.
- ITERA is quite a success in the gas market of the country. What made you, Igor Victorovich, get involved in alternative power engineering projects?
- Just like ten years ago, I repeat again: natural gas is underestimated. It is true, that its reserves are huge in our country. However, it is necessary to spend very economically this most valuable raw material and the most harmless fuel. It is not a renewable source of energy. This is why development of new ecologically clean sources of energy became a concern for many countries. Production of bio-fuels from various vegetative cultures is now among the promising research and production areas. Those fuels are becoming popular in the world market. The annual growth in consumption of this ecologically clean fuel exceeds 25 %. Say, Germany, Australia, the USA increase by 5-7 % a year the content of bio-additives in fuel. There is a sort of propellant that consists of bio-ethanol by 85 % and of gasoline by 15 % in Brazil.
- You are so enthusiastic about the advantages of bio-fuels that one may wonder is you are going to give up natural gas business?
- No, by no means! ITERA has been involved in supplying natural gas since 1994. Our initial projects were the supply of gas from Turkmenistan to Transcaucasia and the CIS countries. So far, the Company has commissioned nine gas fields in Russia, supplied over 500 billion cu m of natural gas. We have a long-term and successful experience of supplying natural gas to the Sverdlovsk Region. ITERA shall continue developing as a gas company. We shall increase the volume of gas production, enter new markets, be involved in natural gas processing. Investing in alternative power engineering does not mean winding up our gas business. Nothing precludes us from parallel development of projects. We want natural gas is treated with more care.
- Vladimir Putin, the President of the Russian Federation, believes that Russia should take a special place among bio-fuel producer-countries. In this respect, ITERA, as we may put it, is a trailblazer.
- It is true that we pay great attention to involvement in development and implementation of promising ecologically clean fuel technologies and alternative energy sources. Our plan is to implement this sort of projects in Russia and the CIS countries. In the USA the search for and production of alternative energy sources are encouraged with appropriate benefits, and we have accomplished something there.
In the summer of the last year, ITERA Ethanol of ITERA International group of companies announced its involvement in financing the projects of BioEnergy International LLC, a research and development company, specializing in technologies related to production of bio-fuels and special chemical agents from renewable energy sources' raw materials. ITERA had made its initial investments in BioEnergy International LLC in May of 2006.
An investment group, including ITERA Ethanol, and a few American and European companies, has completed the financing of the civil-engineering design of a bio-ethanol production facility in the city of Clearfield (the state of Pennsylvania) in the USA early this year. The factory shall be producing 400 thousand tons of denaturized ethanol a year, as well as husbandry forages. Completion of the construction process is planned for late 2009. Scientific achievements of BioEnergy International make the basis of this bio-ethanol production technology. Construction of a similar factory in the state of Louisiana shall be the next step in this direction.
- What are your bio-fuel commodity markets in the midterm?
- Our first project is intended for the market of the USA. I hope that the expertise of building bio-ethanol factories, the technology and scientific developments shall be applied in Russia, in the CIS countries and in Europe. When implementing any production project, it is necessary to solve many technical problems. ITERA is acquiring a unique expertise while implementing such projects in the USA.
Only three countries and about twenty individual states and provinces legislatively encourage production of bio-fuels as a motor fuel. Brazil was the first country that passed this sort of legislation. We hope that acts on the usage of bio-ethanol in Russia will be passed shortly. Then ITERA projects on production of this fuel will start working for the Russian market. The Company is presently working on bio-ethanol production projects in Kalmykia and in the Ukraine.
- According to scientists of Utah University, to replace the entire gasoline with alcohol in the USA, 75% of the planet’s agricultural land will have been used to produce an adequate quantity of ethanol. Whether this is to withhold production of bio-ethanol, is the question.
- According to the International Power Agency forecast, the share of bio-fuel will be 7 % in 2030. To produce that much bio-fuel, the farmland equal to territories of France and Spain is required. I am sure that new bio-fuel production technologies will allow to do with much smaller land areas. Let us compare technologies of oil and gas production in the early XIX century, and the ones used today. The same, or even more impressive progress is to be seen in production of bio-fuels.
However, there are funny projects there, too. Not so long ago, scientists of Scotland have declared they intended to invent a bio-fuel based on whisky. www.dni.ru/news/economy/2007/12/26/125706.html>. This project is definitely not good for Russia.
- How else is ITERA going to save natural gas? What projects are being implemented for this purpose?
- Unfortunately, these are not the Russian projects. ITERA has started construction of solar power plants in the south of Germany and in Spain. Their cumulative capacity is 23 megawatts. By the way, to convert solar energy into electricity, significant land areas are required anyway. To install solar cells to produce one megawatt of electric capacity, an area of 3 to 6 hectares is required.
Is this project intended for the future, too?
- According to specialists, the global electric power demand shall increase a few times over to reach 34 billion tons of fuel equivalent a year by 2020. Such a quick development of power engineering may cause an irreversible change of the climate. Extensive usage of alternative energy sources (ecologically much cleaner than the conventional ones) will help solve the problem. The cost of photoelectric batteries slashed by 23 % in 2007 if compared to 2000. It has been calculated that the quantity of silicon in solar batteries (and contained in one ton of sand) is sufficient to produce the quantity of electricity produced by incineration of 500 thousand tons of coal. Solar power plants will of course not replace conventional power plants, but their share will be increasing every year. I am convinced that Russia shall efficiently use solar energy technologies that are coming to its territory.
- What exactly is ITERA involved in during solar power plants' construction process?
- We are involved in every aspect of the project. We analyze the electricity supply situation in the region. We hold hook-up negotiations with proprietors of electric transmission and supply systems, and identify suitable land-leaves. We are doing the design of facilities and obtain all permissions required for construction and operation of power plants. We purchase equipment, construct power plants on a turnkey basis, and hook them up to electricity supply network. Our activities include raising project financing from local banks and the sale of the hooked up power plants to institutional investors.
- Is the state support required to implement these projects?
- Governments of some EU countries decided to increase the share of renewable sources of energy in the energy balance thanks to energy of wind, solar energy and geothermal energy. In 2020, the share of these sources will be 20 % of all energy produced. The share of renewable sources of energy in Germany is already about 11 %.
Today, renewable sources of energy cannot compete against conventional power industry from the cost viewpoint, therefore for its development the state creates favorable market conditions. Energy supply network acquires electricity produced from renewable sources at an increased tariff rate. As a result, in countries where solar power plants are extensively used, consumers spend approximately two euros a month more. It is a negligible amount for a European, but this policy allows for active development of a new area of the power industry that employs over 100 thousand people.
Top of page
