3-4 November 2005

GIE Annual Conference 2005, Athens 1

The increasing importance of storage

Klaus-Dieter Barbknecht

GSE President

GIE Annual Conference 2005, Athens 3-4 November 2005

3-4 November 2005

GIE Annual Conference 2005, Athens 2

StorageNew Economy

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GIE Annual Conference 2005, Athens 4

2. Why storage?

Balancing seasonal variations

in consumption

Securing gas supply in case of

interferences in production, transport or

supply

Covering demand peaks

Enhancing cost effectiveness of gas

transport

Traditional roles of storages as important guarantor of security of

supply

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GIE Annual Conference 2005, Athens 5

Storage volumes

Overall working gas volume in Western Europe:57 bcm

Storage volumes in Europe need to expand by 3 bcm per year until 2025!

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Shrinking EU gas production

0

20

40

60

80

100

120

1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2015 2020 2025 2030

bc

m

Niederlande

Frankreich

Deutschland

Italien

UK

Source: Global Insight, 2004.

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GIE Annual Conference 2005, Athens 8

Growing gas demand in EU-25

0

100

200

300

400

500

600

700

1990 1995 2000 2005 2010 2015 2020 2025 2030

Mto

e

Source: European Commission, 2004.

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GIE Annual Conference 2005, Athens 9

Longer transportation routesBarents

SeaYamal

850 km

4800 km

1300

km

North Sea

NorwegianSea

> 5000 km

Turkmenistan> 4000 km

Iran

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Future role for storage

Seasonal modulation and security of

supply (technical availability)

seconded by products to support the

new market

Storage is and will be part of the

flexibility market

Security of Supply remains the most

important target

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Increasing demand for storage in order to:- Balance declining production swing (e.g. need for

strategic storage in UK)

- Meet growing demand of natural gas (e.g. in East and Southern Europe)

- Make use of market flexibilities (e.g. price arbitrage)

- Overcome delivery bottlenecks through long distance transports (e.g. producers entry to European market like Gazprom)

Need for allowing storage activities to be in line with market expectations

Need for regulative stability and positive investment signals

Conclusions

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Epilogue: Outcome Madrid X

Progress of Storage System Operators recognized

Overall compliance in the field of transparency and secondary market edentified as “construction sites”:

- Publication of Operational Datas vs. Confidentiality Requirements

- Bulletin boards not yet established with all SSOs

- Limited secondary trade of unbundled services – solutions in sight

GSE Workshop on this issues : Nov. 16. Brussels