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The Status of Underground Natural Gas Storage in Europe------------
and its Impact on Energy Security
Jean-Marc LeroyPresident, GSE CEO, Storengy
UNECE “Energy Week”, Committee on Sustainable Energ yGenève, 24 th November 2010
2
GSE represents : � 33 Storage System Operators� 110 storage sites in 16 countries � ≈ 85% of Europe’s technical
storage capacity.
3
Agenda
1. The key role of natural gas storage in security o f supply
2. Gas storage development perspectives
3. Risks and incentives
4. Conclusions
4
1. The key role of natural gas storage
in security of supply
5
Security of supply : Security of supply : a a «« highhigh --visibilityvisibility »» topictopic
January 2009
January 2010
October 2010
Reduction in gas supply in %, January 2009
Regulation onSecurity of Gas
Supply
6
Natural gas storage : Natural gas storage : A key role in the A key role in the European policyEuropean policy
sustainability
security of supply
The European energy policy
� Large proven reserves (conventional + unconventional )
� Large panel of routes and suppliers
� A storable energy
� A market-oriented storage industry which proved its efficiency through crisis
7
Austria
Belgium, Portugal,Switzerland
Bulgaria
Hungary
Ireland
Italy
Netherlands
Poland
Romania
Slovakia
Spain
United-Kingdom
Danemark
Czech Republic
Estonia, Finland,Lithuania, Lux.
0%
10%
20%
30%
40%
50%
0% 20% 40% 60% 80% 100%
Imports / Demand (%)
Sto
rage
/ D
eman
d (%
)
EU-27Storage/Imports = 25% EU-27 2020e
EU-27 2030eGermany
France
Source: SG Equity Research / Eurogas / GSE 2008
Another way to look at Another way to look at storage in Europestorage in Europe
8
2. Gas storage developmentperspectives
9
1. Need for security of supply � Decline of local production
� Increase of import contracts & remoteness of sourcing
=> two major driverstwo major drivers
Sou
rce
: Ced
igaz
200
5
10
2. Need for flexibility� Decline of local production
� estimated additional seasonal swing demand ≈ 14 Bcm in 2030
� Development of trading
� Exple : traded volumes on NCG
� Increase of CCGT
� Increase of wind power generation
� estimated additional peak swing demand ≈ 10 Bcm in 2020
=> two major driverstwo major drivers
Sou
rce
: E.O
N E
nerg
y T
radi
ng
11
19,6
12,3
14
1,6
2,3
2,8
3,7
5,04,3
4,1
1,0
0,7
2,7
0,4
Spain
France
Belgium
UK
Netherlands
Germany
Poland
Latvia
Italy
Denmark
Czech R.
Slovakia
Austria
Croatia
Romania
Bulgaria
0,2
Portugal
Source: GSE 2009, CEDIGAZ 2009, IGU 2009
4,2
3,1
14,3
P
P
P
P
p
Storage volumesStorage volumesin Europein Europe
–– current situation current situation ––Hungary
0,6
Europe storage facilities : working gas volume in bcm
Total around 80 bcm
1,6
Turkey
12
19,6
12,3
14
1,6
2,8
3,7
5,0
4,3
4,1
1,0
0,7
2,7
0,4
Spain
France
Belgium
UK
Netherlands
Germany
Poland
Latvia
Italy
Denmark
Czech R.
Slovakia
Austria
Croatia
Romania
Bulgaria
0,2
Portugal
Source: GSE 2009, CEDIGAZ 2009, IGU 2009
4,2
3,1
14,3
P
P
P
P
p
2,3
Storage Storage projectsprojectsin Europein Europe
Hungary
0,6around 70 bcm
0,2
Albania
3,2
0,1
2,4
0,1
Bosnia-H.
0,5
0,8
1,8
8,7
2,3
11
1
0,5
Lithuania4,5
1,7
2,2
5,8
Serbia
5,9
20
Pro
ject
in b
cm
Cu
rren
t in
bcm
12
1,6 1,5
Turkey
13
• A worldwide oversupply situation � Economic crisis => fall of the demand (2009 : -3% / -4%)
� New GNL capacities (+50% from 2009 to 2013)
� Rise of non conventional gas
• Impact on the flexibility market � Spot prices < Long term oil indexed prices
� Squeeze of the seasonal spread
=> ……but short term uncertaintiesbut short term uncertainties
13
14
3. Development :Risks & incentives
15
� Stability of the regulation Stability of the regulation : a necessity for attracting funding
Regulatory instabilityRegulatory instability
(three directives in ten years !)
several dozen billion EUR to be invested in the next 20 years
RISK
Incentives
16
GSE believes that :
- strategic storage is definitely damaging
- choice of access regime should be market-oriented
- negotiated TPA should be the preferred choice wherever market conditions allow : ⇒ best regime to facilitate investments⇒ best regime to foster commercial creativity and provide best response to the demand
Inappropriate regulatory frameworkInappropriate regulatory frameworkRISK
Incentives
17
4. Conclusion
18
� Transparency
� Market Orientation
� Dialogue
keywords
EuropeEurope ’’s etymology : s etymology : ““ the farthe far --seeing oneseeing one ””
www.gie.eu.www.gie.eu.