Long term security of gas supplies: point of view of a ... · 2004012GHe - United Nations 20.01.04 - 1 Long term security of gas supplies: point of view of a transmission company

2004012GHe - United Nations 20.01.04 - 1

Long term security of gas supplies:Long term security of gas supplies:point of view of a transmission companypoint of view of a transmission company

United NationsUnited NationsEconomic Commission for EuropeEconomic Commission for Europe

GrietGriet HeyvaertHeyvaert -- 20/01/200420/01/2004


Fluxys in brief Fluxys in brief -- contribution to SOScontribution to SOS

Key factors influencing SOSKey factors influencing SOS

Our mission concerning SOSOur mission concerning SOS

Conditions to be fulfilled for reinforcing SOSConditions to be fulfilled for reinforcing SOS

Recent EU measuresRecent EU measures

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Transport: Fluxys Commercial: New Distrigas

FLUXYS AN INDEPENDENT GAS TRANSMISSION COMPANYFLUXYS AN INDEPENDENT GAS TRANSMISSION COMPANY

Owner of:• Transport- & Transit grid, Storage& LNG Terminal

Service provider of:• TPA for Transport grid, Storage& LNG Terminalling

• Hub Services

• Gas Purchases & Sales includingSpot Trading (Belgium and Europe)

• LNG Trading & Shipping

• International Gas Transport & Transit Capacity Trading in Belgium

01/01/200201/01/2002


CUSTOMER AND LIQUIDITY DRIVEN SERVICESCUSTOMER AND LIQUIDITY DRIVEN SERVICES

Non regulated tariffsRegulated tariffs

Natural gas transmission services

Natural gas storage services

LNG terminalling services

Natural gas transit services

Hub services

ICT & Shipping Services forGas Operations


CONTRIBUTION TO SOS FOR BELGIANCONTRIBUTION TO SOS FOR BELGIAN& EU CUSTOMERS& EU CUSTOMERS

• Multiple links with production areas & downstream grids• Transit: well developed infrastructure & competitive conditions• Zeebrugge: 15% of EU gas consumption

Hub Zeebrugge: first in continental Europe & essential toolfor market liquidity

• Investments: EU priority projects under considerationa.o LNG terminal extension & involvement in BBL pipeline







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OUR MISSION CONCERNING SOSOUR MISSION CONCERNING SOS

•• UnderUnder sustainablesustainable conditionsconditions

•• As As efficientefficient as as possiblepossible (at minimum (at minimum costcost))

•• WhileWhile contributingcontributing toto the the developmentdevelopment of of competitioncompetitionand and marketmarket liquidityliquidity in in EuropeEurope

EnsureEnsure a a continuouscontinuous, , reliablereliable transmissiontransmission serviceservice







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KEY FACTORS INFLUENCING SOS (1)KEY FACTORS INFLUENCING SOS (1)

•• Increased demand of Natural GasIncreased demand of Natural Gas

•• Progressive depletion of gas fields nearby EU Progressive depletion of gas fields nearby EU markets (markets (egeg. UK, NL ...). UK, NL ...)

–– Increased dependence of non EU suppliesIncreased dependence of non EU supplies–– Increased distance to gas supply sourcesIncreased distance to gas supply sources–– Increased importance of LNG chainIncreased importance of LNG chain

Need for huge investments in gas chain Need for huge investments in gas chain infrastructureinfrastructure



•• Multiplication of playersMultiplication of players–– Unbundling of functionsUnbundling of functions–– Abolishment of monopolies for gas salesAbolishment of monopolies for gas sales

àndànd transmissiontransmission

•• Increased importance of spot marketsIncreased importance of spot markets–– Unknown final destination of the gasUnknown final destination of the gas–– Increased volatility in gas pricesIncreased volatility in gas prices

•• Regulatory pressure on transmission tariffs & marginsRegulatory pressure on transmission tariffs & margins

More uncertainties, more risksMore uncertainties, more risksMore difficult to estimate market needs for capacity; More difficult to estimate market needs for capacity; uncertainty for MT & LTuncertainty for MT & LT

Market liberalization =Market liberalization =



•• Stricter environmental & safety constraints; Stricter environmental & safety constraints; increased environmental awareness among EU increased environmental awareness among EU citizens ("citizens ("nimbynimby" syndrome)" syndrome)

•• Increased complexity of licensing processIncreased complexity of licensing process(Belgian: interfaces national & regional levels)(Belgian: interfaces national & regional levels)

More complicated operation of existing infrastructureMore complicated operation of existing infrastructureImportant impact on costsImportant impact on costsIncreased lead times for projectsIncreased lead times for projects(necessary authorizations)(necessary authorizations)


Ensuring security of supply is becoming more complex in the present environment

Need for reinforcing European transmission,

storage and LNG infrastructure

• Uncertainties & risksof a liberalized market

• Regulatory pressureon tariffs & margins

More complex authorization process

• Cost of environmental & safety constraints

• Longer project lead times







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CONDITIONS TO BE FULFILLED FOR CONDITIONS TO BE FULFILLED FOR REINFORCING SOS (1) REINFORCING SOS (1)

•• Long term contracts, also for capacity Long term contracts, also for capacity reservations (reservations (egeg. ZB LNG Terminal, transit . ZB LNG Terminal, transit infrastructure): importance of multi yearly infrastructure): importance of multi yearly tariffstariffs

•• Equitable margins to be adapted to market Equitable margins to be adapted to market conditions: riskconditions: risk--taking to be rewarded taking to be rewarded adequately for shareholdersadequately for shareholders

Regulatory frameworkRegulatory framework

Possibility of specific Possibility of specific regulatory conditions regulatory conditions (derogation foreseen in (derogation foreseen in 2d EU gas directive)2d EU gas directive)

•• Stable regulatory frameworkStable regulatory framework

•• Remedy interoperability constraints,Remedy interoperability constraints,sources of discrimination sources of discrimination



•• Missions of different players in gas chainMissions of different players in gas chain& standards to be identified & standards to be identified

•• In case of pipeIn case of pipe--toto--pipe competition: adequate tariff pipe competition: adequate tariff mechanisms needed for optimizing use of integrated mechanisms needed for optimizing use of integrated gridgrid

•• Authorization processes to be simplified & shortened Authorization processes to be simplified & shortened (national & international infrastructure)(national & international infrastructure)

Legal frameworkLegal framework



Importance of cooperation between Importance of cooperation between neighbouringneighbouringTSO'sTSO's

Operational aspects & coordination grid extensions Operational aspects & coordination grid extensions and reinforcementsand reinforcementsSpace for developing international partnershipsSpace for developing international partnerships

Cooperation between Cooperation between TSO'sTSO's


Reinforcing SOS how ?

Stable regulatory framework

Identify missions & standards for different

market players

Remedy interoperability

problems

Mechanism for avoiding non efficient

multiplication of transmission infrastructure

Simplify authorization processes

Adequate regulatory regime for new

infrastructure of national or EU

importance

Encourage cooperation between

TSO's







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RECENT EU MEASURESRECENT EU MEASURES

•• Directive SOS:Directive SOS: -- Role of different playersRole of different players-- StandardsStandards-- European coordination mechanisms European coordination mechanisms

respecting respecting subsidiaritysubsidiarity

•• New proposed measures for regulating access New proposed measures for regulating access to transmission networks:to transmission networks:

-- Too soonToo soon-- TSO'sTSO's excludedexcluded-- Concentration of power for Concentration of power for

CommissionCommission

-- Key role of art. 22Key role of art. 22(exemptions RTPA regimes)(exemptions RTPA regimes)

•• 2nd gas directive:2nd gas directive:

2004012GHe - United Nations 20.01.04 - 212004012GHe - United Nations 20.01.04 - 21

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Long term security of gas supplies: point of view of a ... · 2004012GHe - United Nations 20.01.04 - 1 Long term security of gas supplies: point of view of a transmission company