Download - The Integrated European Gas Market
The Integrated European Gas Market
Present status and Future Challenges
Adela Comanita System Development Adviser, ENTSOG
Pipeline Technology Conference – 28-30 March 2012 Hannover
How to define system integration
Integrated European Gas Market is understood as enhanced cooperation and functioning of the system as a whole, including: > Interconnections between systems;
> Liberalization of the single European Market achieved by harmonized access conditions to the transmission networks and the application of the principles of nondiscrimination, transparency and objectivity for the organization of the Gas Market as a whole
The process has shown that this cannot be achieved without close cooperation between TSOs and other operators, NRAs, MSs, European Commission
> To achieve harmonization and cooperation and the application of the 3 principles, the legislative framework had to be amended/extended multiple times
Directive 2003/55/EC; Regulation (EC) 1775/2005; Directive 2009/73/EC; Regulation (EC) 715/2009 (amended in November 2010); Regulation (EC) 713/2009
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Liberalization started by changing the supply environment
Supply Demand Balance has long been ensured by imports (on top of NP)
which had lead to a well-interconnected gas transmission
system in Europe before the liberalisation started
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1992 1998 2000 2010
EU-27*
NP NP Exports Russia Norway Algeria Others
*Based on Eurostat (1992, 1998, 2000) and BP Statistical Review (2010) data
Interconnection between systems had primarily been determined by supply contracts and destination markets;
Liberalization has not changed this underlying logic but made it more
complex (and dynamic) while making new developments more difficult.
Pave the way for a new picture
The European integrated market will be a reality providing that common practices can be found and applied all across Europe, in particular on the following issues : >Capacity Allocation Mechanism (CAM)
>Congestion management
>Balancing
>Tariffs
>Data exchange
Implementation of such common and binding practices will be the main challenges for all stakeholders( shippers, NRAs, MSs … not only for TSOs)
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Situation is improving, even if new obstacles and challenges remain. The 3rd energy package introduces the framework of the Network Codes and Common Network Operation Tools
Political Goals
Role of infrastructure and hence investments are influenced by
political goals
Future gas flows at cross-border points will require higher infrastructure flexibility.
Appropriate incentives are necessary to attract required investments.
Single European gas market
> EU: 2014 > Development of Target Model > Development of European
market rules Capacity allocation
mechanisms Congestion management
procedures Balancing
Security of supply
> EU: no energy islands after 2015
> SoS Regulation: high level of security of supply, reverse flow across borders
> Energy infrastructure package: priority corridors
… by fulfilling its tasks under the 3rd package and offering a platform for a truly European TSO cooperation, ENTSOG shall:
> enable easy grid access
> facilitate cross-border gas flows
> be a fair partner to all stakeholders
> provide regular short and long term assessment of the resilience of the European gas system under various scenarios and therefore
promote the integration of the European energy market
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ENTSOG’s Mission & Vision
ENTSOG’s achievements
> Delivery of the Ten Years Network Development Plans
• 1st pilot edition published in December 2009
• 2nd edition(first formal) published on 17th February 2011
• 3rd edition of the TYNDP is a process under develop, starting on September 2011 (slated to be published in Q3 2013)
> Delivery of Summer/Winter Outlooks
> Delivery of the NC for CAM (published on the 6th March 2012)
> Started work on balancing NC; interoperability and tariffs will follow soon
> Consultation and engagement of stakeholders
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Annual Supply Demand Balance
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Overall supply potential
ENTSOG (EU-27) demand
The supply potential for Europe seems robust enough to meet all
presented demand outlooks while allowing also for additional flexibility > Geo-political developments as well as demand growth in producing countries to be
continuously analysed to confirm this outlook
(in TWh/y)
Submitted projects per category
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Pipes FID Non-FID
Projects 62 97
10^6 € 13 711 58 556
UGS FID Non-FID
Projects 26 22
10^6 € 4 260* 2 593*
LNG FID Non-FID
Projects 11 20
10^6 € 3 570 6 614*
(*): some project sponsors have not submitted costs
Network Resilience -- Key Findings
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Norway
North Africa
Russia
Caspian
LNG
Low UGS
Norway
Algeria
Qatari LNG
By transit
UA Transit
Security of Supply
Market Integration
Overall security will only improve with non-FID projects
with few exceptions
With only FID, storage deliverability
in winter remains a key requirement
Overall market integration is increasing due to FID &
non-FID projects but spread width
will still differ
Reference Case
Focus on Security of Supply
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Impact of indigenous production decline > Shall be compensated:
On a yearly basis by additional imports
On short severe climatic conditions by additional imports and/or new UGS
> In any case alternative and longer gas flows should be anticipated
European network is still not perfectly prepared to all disruptions > Modelled Norwegian, Algerian and LNG disruption scenarios should not decrease the
ability to face the whole demand with low impact on remaining flexibility
> Ukraine transit disruption impact should decrease with North Stream, OPAL and Gazelle (FID) and should be completely mitigated with Nabucco and South Stream
> Belarus transit disruption impact should decrease in Poland with LNG terminal (FID); the Baltic region will nevertheless still be negatively impacted even with the planned non-FID projects due to limited integration with the other regions
The use of UGS will depend on new project development > FID projects are only sufficient to address the additional demand under severe climatic
conditions
2011
Evolution of remaining flexibility (1-in-20 day)
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FID
Non-FID
2015
2020
New investment decisions are crucial in order not only to maintain but also to
increase European security of supply (FID projects will not be sufficient)
Focus on Market Integration
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TYNDP 2011-20 is a first attempt to picture market integration > No clear direction neither from REG-715 nor TYNDP WS on 17 October 2010 but EC
informal position on supply diversification per country:
At least 3 different sources
Access to one LNG terminal (LNG implicit diversification to be considered)
> High level of supply diversification across Europe is seen as a main underlying of price convergence across Europe
> Contractual congestion cannot be considered on a 10-year range especially when considering CAM/CMP measures to be implemented
> Criteria: maximum even spread of supply source / Targeted level 5% (second step 20%)
Heterogeneous situations > From an end-consumer perspective, the ability to access different sources will increase
but will still widely differ in 2020
> From a supply source perspective, gas reach will vary from regional extent (North Africa & Caspian region) to pan-European extent (Russia, LNG & Norway)
Source Accessibility for End-Consumers
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# countries having potential access (5% share) to at least 3 sources: 38% 55% 55% 62% 86%
Number of alternative potential sources
On the way toward a more integrated network
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Further network integration will support both SoS and market integration > Overall security will only improve with non-FID projects with few exceptions
> With only FID, storage deliverability in winter remains a key requirement
> Overall market integration is increasing due to FID & non-FID projects but spread width will still differ.
Conclusions
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Challenges for market integration are multiple > Enhanced cooperation between all stakeholders
> Commitment by all to look for balanced and sustainable solutions implementing the 3rd energy package provisions and the European vision
> The role of gas in Europe in the future
> Determination of infrastructure needs and the ‘who-pays’ principle
> Long-term sustainability of the construction and operation of gas infrastructure
Thank You for Your Attention
Adela Comanita ENTSOG -- European Network of Transmission System Operators for Gas Avenue de Cortenbergh 100, 1000 Brussels EML: [email protected] WWW: www.entsog.eu