DRAFT DG TREN Staff Working Paper on LNG

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DRAFT DG TREN Staff Working Paper on LNG
Madrid Forum XV Follow-upLNG workshop
Introduction by European Commission
Heinrich Hick DG TREN C 2 12-13 March 2009,
Bilbao
Heinrich Hick DG TREN C 2 XV Madrid Forum 6
November 2008
EUROPEANCOMMISSION
EUROPEANCOMMISSION
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Current EC policy context for LNG

• LNG featuring in both internal external energy
  policy dimensions
• Political - European Council of 19/20 March 09
  Follow-up 2nd SER SoS, crisis
  mechanisms, infrastructure, etc.
• - Preparation of Communication A secure and
  competitive EU Gas Policy
• - integrated view on EU gas policy
• - no separate LNG Action Plan as referred to
  in SER2
• Legal - Second Reading on 3rd IEM Package
• - gas specfic Trilogue only next week
• - target agreement within this legislature
• - Revision of Security of Gas Supply
  Directive
• Operational - MF XV homework, GGPLNG

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3rd IEM Package perspective (1)

• Package provides more solid basis depending on
  final second reading outcome ! for taking
  workshop issues further
• TPA (Art 15) new Regulation, some differences
  between EP and CP !
• CAM/CMP (Art 17) new Regulation, some
  differences between EP and CP !

• offer same services under equivalent
  contractual terms conditions
• offer services compatible with use of
  interconnected gas transportation
• system ? ref. to cooperation with TSOs
• make  relevant information  public on use
  and availablility of services
• ? meet TUs  reasoable commercial needs 

• ambitious and balanced provisions efficient
  and maximum use of capacity
• facilitate investment in new infrastructure
• LSO to offer unused capacity on primary market

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3rd IEM Package perspective (2)

• Transparency (Art 19) new Regulation, some
  differences between EP and CP !
• Trading of capacity rights (Art 22) new
  Regulation, some differences between
• 
  EP and CP !

• disclosure of information re. services
  offered, conditions applied and
• technical information
• information on contracted and available
  capacities (regular, rolling basis,
• user-friendly, )
• disclosure requirements also for exempted
  terminals
• some provisions on confidetiality
• PM role of NRAs ?

• all SOs shall ensure harmonized  contracts
  and procedures on primary
• market to facilitate secondary trade 

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LNG Policy rationale for regulatory framework

• Many terminals in EU have capacity (almost) fully
  booked in long-
• term contracts. Parties seeking long-term
  capacity booking depend on participation in
  terminal enhancement / construction project.
• BUT capacity committed in long-term
  contracts is not used all the
• time (overcapacity in
  regasification) and access to short-term
• capacity (primary and secondary) is
  becoming more important
• - substitute scarce long-term
  capacity
• - capture potential of short-term
  trading opportunities

What does EU market need ?
Fair level playing field investment friendly
conditions

• arbitrage possibilities across EU terminals (if
  price differentials allow)
• no regulatory distortion ?
• prevention of capacity hoarding !
• Transparency for services offered and tariffs
  charged !
• Certain alignment of services offered by LSO ?

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Set-up and ambition of workshop

• Discuss Action Points dynamic view (perspective
  of 3rd
• Package, business cycle, question well-known
  established
• views ..) ? selection of priorities
• IV thematic blocks of Action Points lead
  stakeholder per
• block, stakeholder presentations,
  discussion, conclusions on
• consolidated position of group
• Consolidate stakeholders views on Action Points
  to report
• back to next MF
• consider input into wider EU energy policy
  process under
• way (COM Communication on gas ?)

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Running order (1)
BLOCK I

• 1) Preliminary findings from monitoring GGPLNG
• 2) Further analysis of tariffs and revenue
  regulation applied to LNG
• terminals
• ? ERGEG to kick-start

BLOCK II
1) Application of CAM principles to past capacity
bookings 2) Need for harmonisation of
anti-hoarding notification periods and anti-
hoarding rules regarding the effect on capacity
rights 3) if the analysis above concludes that
harmonisation is needed recommendation on
what such notification period and anti-
hoarding rules should be ? Eurogas to
kick-start
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Running order (2)
BLOCK III

• 1) Identification of all technically possible and
  commercially relevant
• unbundled services
• 2) Benefits of detailed requirements for
  tradability of terminal access services,
• and possibilities and benefits of standard
  contracts offered for the same
• LSO services
• 3) Need for rules on prospective transparency
• 4) Need for detailed rules on transparency with
  regards to services offered
• ? EFET to kick-start

BLOCK IV

• Steps to improve cooperation between LSOs and
  interconnected TSOs
• Assess costs benefits of minimum gas quality
  requirements at the entrance of terminals in the
  development of standards issued to CEN
• ? GLE to kick-start