Meeting of Eurogas with EU Energy Commissioner

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Meeting of Eurogas with EU Energy Commissioner
Mr. Andris Piebalgs 18.09.06, Brussels Willy
Bosmans, President of Eurogas
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• Major trends in the European gas market
• Eurogas' views on the way forward
• Eurogas "Vision Paper"

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Major trends in the European gas market
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EU25 Gas imports projections
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Development of Natural Gas Supplies in the EU25

• Billion m³

EU Production
Remark Malta and Cyprus are notsupplied with
natural gas
LNG-share (in imports)
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20
20
22
provisional data for 2005 ) of which Nigeria
3, Qatar 3 Basis for imports Contracted
volumes and prospective contract
prolongations Russia without volumes via North
European Gas Pipeline (NEGP) which are included
in advanced projects
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SUPPLY CAPACITIES FOR WESTERN EUROPE 2010- 2020
(billion m³/year)
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Challenges for the European gas market

• Growing import dependency. Market is becoming
  more global Europe competing for gas supplies
• Ensuring security of supply
• Investments in infrastructure
• upstream
• transport
• LNG
• storage (Study Clingendael need for seasonal
  storage 60 ? 120 bcm (2025))
• Commodity limited number of suppliers
• Europe must remain an attractive consuming region
• Security of demand
• Achieving further market integration

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Eurogas' views on the way forward
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How to achieve the internal gas market?

• Full and timely implementation of existing
  legislation and voluntary agreements
• Full market opening 1/7/2007
• TSO/DSO effective legal and operational
  unbundling
• Access to transmission networks (improved
  implementation of Regulation 1775/2005)
• TPA services
• capacity allocation mechanism
• transparency rules
• balancing
• Guidelines for storage system operators to be
  observed

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How to achieve the internal gas market?

• Further progress within existing framework
• Development of liquid hubs
• Market-based balancing
• Optimise use of existing capacity
• Incentivise secondary markets in capacity trading
• Effective UIOLI-mechanisms
• Automatic transfer of capacity at/to exit points
  when switching end user
• Allocation of capacity in new investments to give
  all parties equal opportunities to access
  capacities (e.g. open season), case by case
  assessment of proposed TPA exemptions
• Effective customer switching processes

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How to achieve the internal gas market?

• Focus on further market integration
• Convergence and coherence of market rules
• Pragmatic approach on cross-border issues
• Maximize use of existing capacity (e.g.
  facilitate swaps)
• Improve interoperability
• Regional markets (with regional liquid hubs) as
  pragmatic first step
• Improve regulatory process
• Regulators sufficient powers and resources
• ERGEG stronger role
• Increased supranational view
• Co-operation between TSO's to facilitate
  seamless transport of gas supplies

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Contribution of natural gas to a sustainable
energy market

• Environmental benefits of gas as cleanest fossil
  fuel should be fully acknowledged
• Energy mix let the market decide
• Encourage energy efficiency via market-based
  incentives
• Technological development
• heat pumps, CHP, micro CHP, fuel cells
• combining natural gas with
• renewables
• biomethane
• natural gas vehicles

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How to deliver security of supply?

• New market environment
• Growing dependence on resources outside Europe in
  a more global gas market
• Geopolitical aspects
• Need for diversification (sources, transport
  routes)
• Increasing role of LNG
• New infrastructures
• Internal market separation of decisions
  concerning commodity and capacity

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How to deliver security of supply?

• A more European approach
• Develop and share at European level a common
  understanding on the supply/demand balance
• Strategic Energy Review
• Energy Supply Observatory
• MS responsible for setting their national
  security of supply standards importance of
  meeting common principles (Directive 2004/67 on
  security of supply)
• EU dialogues with producer and transit countries
• MS develop a more co-operative approach
• Europe has to speak with one voice
• exporting open competitive market model, but
  balanced approach
• Sufficiently strong European companies

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How to deliver security of supply?

• Large investments to bridge the gap between
  supply and demand
• Policy framework supporting these investments
• Stable political and regulatory environment
• Confidence in the reliability of the long-term
  return
• Appropriate exemption mechanism
• Additional storage is needed
• Significant cost and long lead times
• Stable regulatory framework
• Fundamentally a commercial tool
• LT contracts will remain the backbone of supply
  portfolios
• (Commodity and capacity to bring gas to market)
• Necessity to develop hubs as a complementary
  instrument