Current Issues in the Internal European Gas Market

Current Issues in the Internal European Gas Market

ClEP Gas Day, 3 September 2013

Presentation by

Simon Blakey, Special Envoy, Eurogas

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Members • 32 companies • 17 associations

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Two messages for EU and national energy policies

• The internal market for gas has made considerable progress

– New rules/policies should not put this at risk

– Customers will benefit best if there is plenty of gas supply to Europe

– Good network rules are needed, but alone do not guarantee competitive prices

• Gas is still the best, quickest, and most cost-effective route to a low carbon economy

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PROGRESS MADE

Energy transition in Europe:

An industry perspective

Energy transition in Europe:

An industry perspective

Current issues in the internal European gas market

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European gas today

• The vast majority of customers in Europe are in an integrated and effective market

• Still need for implementation of Third Package rules in some regions

– detracts from market progress elsewhere

• New network codes are making progress– but need to be finalized and implemented

– Coherence among codes needed

– More European outlook from national regulators

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The geographic core of the single European gas market

2010

Our peak market – 525 bcm

Our customers – 115 million

407 bcm

87 million

customers

In this core region

– 80% of volume

– 75% of customers

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A pan-European business • Most Eurogas corporate members buy, sell

and trade gas in more than one country:

– Over one-third do so in five or more countries

– Smaller markets still mostly national in character

• Pan-European purchasing by customers began in late 1990s:

– Pulp and paper, chemicals, steel took the lead

– Power companies looked for business synergies

• Entry-exit regimes and virtual trading are more recent— now make a big difference1

1 KEMA-COWI study Entry-Exit Regimes in Gas, July 2013

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Traded gas is no longer just a British/Dutch story …

NBP

25%

TTF

18%

ZEE

6%

NCG

20%

GASPOOL

11%PSV

10%

PEG

5%

CEGH

5%

ZTP

0.4%

NBP64%

TTF12%

ZEE3%

NCG9%

GASPOOL4%

PSV3%

PEG3%

CEGH2%

ZTP0.1%

Traded volumes Delivered volumes

4th Quarter 2012

Source: IHS

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… and Italy’s hub is no longer isolated

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Jan-2010 Jul-2010 Jan-2011 Jul-2011 Jan-2012 Jul-2012 Jan-2013

€/MWh

PSV - CEGH Spread

Transport cost

Dec 2011

New balancing

regime

March 2012

Daily capacity

auctions on TAG

pipeline

April 2013:

TAG capacity on

PRISMA

Source: IHS

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PROGRESS NEEDED

Energy transition in Europe:

An industry perspective

Energy transition in Europe:

An industry perspective

Current issues in the internal European gas market

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Looking forward – an industry perspective • Continue to progress the network codes

– Focus on coherence among among the codes

– Recognize market-led innovation (e.g. on bundled products, single booking)

• Limit risk of ‘de-Europeanization’

– Worrying consequences of national climate and energy measures … need to make ETS work

– Capacity mechanisms … need to coordinate

• Investment/new supply—need to make EU gas market more interesting in global context

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In a nutshell … • Speedy and coherent implementation of

internal energy market rules

• Stable and predictable climate and energy policies offering a level playing field for all low-carbon solutions

• Encouraging new supply for the benefit of customers

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Contact details Av. de Cortenbergh 172 1000 Brussels BELGIUM Phone: +32 2 894 48 48

[email protected] www.eurogas.org