Research will be key to ensuring energy supply

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27.10.2010 21:30
issekeshev.jpg«International Herald Tribune», Wednesday, October 27, 2010. - The KazEnergy Eurasian Forum included a talk on lessons learned from the world financial crisis and the energy sector’s role in recovery. Participants stressed that sufficient energy supply and continuous research and innovation are essential for global economic recovery and long-term growth.
During his presentation on Kazakhstan’s efforts to modernize industry and the power sector, Asset Issekeshev, deputy prime minister and minister of industry and new technologies, listed three main tasks for the power industry: to prevent energy shortages, to give guarantees for investors in energy and to create a fair and objective pricing mechanism for the electricity market.
Issekeshev reviewed the country’s program for development of industrial innovation for 2010-14, saying the world was watching to see how Kazakhstan would reach its potential and create high-value-added industry.
He specified 144 projects under way under its accelerated-development program and said that over the next five years, 320 would be launched.
Issekeshev then talked specifically about the development program for the electrical-energy sector for 2010-14, saying that the most vital task is to expand and modernize present generation units and construct new ones. He emphasized that Kazakhstan relies on support from investors and business associations to achieve these goals.
He concluded with a review of the future potential of renewable energy. Because of specific incentives in place, he said, Kazakhstan will produce 1billion kilowatt-hours of renewable energy annually by 2014.
John Howard, former prime minister of Australia, expressed pleasure at making his first trip to Kazakhstan and hailed its remarkable growth, which he said was ‘‘exemplary in this part of the world.’’
He noted that Kazakhstan and Australia are similar in having a large land mass and small population as well as a ‘‘natural resource endowment.’’
He said that the world had escaped the economic crisis relatively unscathed thanks to Asian economic growth, especially in China. He expressed the opinion that a sense of perspective should be kept when considering the downturn’s full impact, as well as another vital issue —climate change and the role that renewable and other alternate energy sources will likely play in the future.
Renewables offer promise, he noted, but are unlikely to replace fossil fuels in the near future, adding that we should recognize the increasing role nuclear power will play —which also means opportunity for Kazakhstan to continue to build its world leadership.
Other speakers reviewed the future of alternative and renewable energy and investments. Kairat Kelimbetov, chief executive of the national welfare fund Samruk-Kazyna, commented that Kazakhstan is benefiting from an ongoing active investment policy on the part of international development institutes, especially related to the oil and gas and energy sectors.
Uzakbai Karabalin—general director of the Kazakh Institute of Oil and Gas and chairman of the KazEnergy Association’s Coordination Council for the Support of Entrepreneurship and the Development of Kazakhstani Content —said that the state of science in a country is a sign of a its overall development as well as a guarantee of technical progress and the foundation of the economy.
Kazakhstan’s priority sectors are now production and processing of hydrocarbons, ore mining and smelting, and industrial agriculture, he said. He noted that world oil reserves have risen 20percentwith discoveries in technologically difficult fields and said that Kazakhstan’s research and development is now geared toward extracting problematic reserves and creating alternative energy.
Karabalin said that innovation will provide long-term competitive advantage amid dramatic market changes, adding that the Gulf of Mexico disaster shows a need for big investments into safe, ecologically friendly technology that lowers exploration and development expenses, enhances operational efficiency and increases oil-conversion rates and output.
International experience, he said, shows that leading companies as well as state companies in fast-emerging economiestend to institutionalize strong research and development processes.
He said that conventional oil and gas companies are being transformed into vertically integrated energy enterprises with al research and design consolidated under self-owned scientific institutes, which have become amain source of demand for research and thus form a major driver of innovation.
He added that governments can follow Kazakhstan’s example to support domestic science and engineering by setting up special economic zones for priority sectors and adopting tax and legal incentives to make research economically attractive.
Randall Gossen, president of the World Petroleum Council, cited the International Energy Agency’s prediction that, as energy demand increases over the next 20 years, production would be dominated by coal, oil, gas nuclear, hydro, biomass and renewables, with the latter two continuing to take a lesser role.
 He noted that cumulative investment needed to supply energy infrastructure is $26.3 trillion for 2007-30, but added the credit squeeze could delay spending —especially in the power sector.
He discussed recent innovations such as enhanced oil recovery, citing gas reinjection to boost extraction under challenging conditions and depths as an example.
He concluded by stressing the need for both companies and nations to attract and keep the best talent to stimulate innovation.
Michael Crews, lead country manager for ExxonMobil Kazakhstan, emphasized that the oil and gas industry’s mission is now threefold: to increase efficiency, mitigate emissions and expand supply. Substantia conventional recoverable resources remain he said, but geological and man-made barriers can impede the industry’s ability to access some reserves.
He said strategies to address climate change should consider the central importance of energy to world economies, and policies with the lowest overall societal cost are needed. He said governments should encourage international trade and free markets, promote diversity of supply and maintain stable regulatory and fiscal environments for the long term.
He reiterated previous comments that human factors like creativity and skill are key to long-term success. He added that diversity delivers the widest talent pool and continuous training is of the utmost importance.

JOSEPH URBANAS
«International Herald Tribune», Wednesday, October 27, 2010
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