The Energy Community

Chrissa Argyriou – European Commission – DG Transport and Energy

Electricity and Gase-mail: chrysoula.argyriou@cec.eu.int

The Energy Community Treaty was signed on October 25

Key issues included in the Treaty: acquis on electricity and gas, renewable, environment, competition

EU Diversity of Supply Management?(could this be a 2020 aspiration?)

10-20%

10%

Russia

Caspian/Middle East

EU

Nth. African

LNG

Norway/Netherlands

4th Supply Corridor from 80 to 100 bcmarequires about 4 - 20 bcma lines (incl. LNG),

10-15%

Existing infrastructure 4th Corridor requirement LNG requirement

LNGto 100-150 bcma

27.5%

Blue Stream 16 bcma

Russia West 1&2 15 bcma

Ukraine 5 linesTotal 140 bcma

EuroPol 20 bcma

CAC 80 bcma- 5 lines

Norway lines 93 bcma plus50 Bcma Netherlands supply

10-15%

2 lines total 31 bcma expansion +10 bcma

27.5%

Table below summarised infrastructure required as Europe gas market growth from 520 bcma in 2003 to 830 bcma in 2025Given supply diversity indicated

EU market 2025 Bcma Existing pipe Add capacity Total CostSources capture % capacity Bcma required Bcma USD bn

Russia 27.5% 228 190 38 4

North Sea 27.5% 228 93 Nor+50 Neth 85 52 case 2x20 bcma+use UK lines 2.5

4th Corridor 10% 83 0 15

Algeria 15% 125 30+10 expansion 85 2.6

LNG 10% 83 35 48 2Total 90% 747 256 31.1

Add Capacity Required

8-off 6 bcma regas terminals

2x20 bcma lines, 2000 km

4x20 bcma lines

1 case 4x20 bcma from Norway

4x20 bcma lines, 650 km

Gas Realities in South East Europe

• Market in region too small• SECI Gas Study: develop market as

ancillary market to supplying EU market• World Bank ECN Study: Delivered gas

prices in SEE competitive• So, TPA reservation for provision of EU

market and contestable local market using TPA on exiting and new local infrastructure

Mechanism for Operation of Network Energy Markets

• Outputs for 2005

Protocol on Gas Transmission and Investments

Guidelines for Gas Infrastructure Investment Regulation (GIIR) in Energy Community

Protocol on Gas Transmission and Investments

• Protocol to Athens Memorandum 2003• Title III Measure when Treaty comes into force• Principles:

– Harmonisation between Regulators and TSOs of Guidelines for Gas Infrastructure Investment Regulation (GIIR) in Energy Community

– Limited possibility for revision and not subject to regulatory policy change

– Concerted Application of Art 22 exemptions– Favour new sources of supply

Regulated Asset Base

• Minimum harmonised principles

• Risk-Return Relationship

• Risk on investors not on local market

Guidelines for Gas Infrastructure Investment Regulation (GIIR) in Energy Community

• Stability and single regulatory process• Discrimination between existing and new?• Respect of the position of small shippers and

new entrants• Unbundled regime• Use it or lose it• TPA on existing bulk transition lines –

relationship with dominant flows• Level playing fields for new investments

Activation of Gas Regulatory Group

• Agreed at last Ministerial

• Meet at early stage under aegis of Commission

• First Draft of Guidelines for Gas Infrastructure Investment Regulation (GIIR) in Energy Community

Chairman: Michael Caramanis, RAE

Next steps (1)• Updated Gas Transition Strategy

• WB launch of Gas economics study and APL gas fund, based on country action plans and transit potential

• Gas Forum in 2006

Next steps (2)

• Adoption of the gas transition strategy paper by PHLG in 2006

• Consensus on Guidelines for Gas Infrastructure Investment Regulation (GIIR) in Energy Community at Forum and then PHLG