Eurelectric Working Group Gas

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• Eurelectric Working Group Gas
• 18th October 2006
• by
• Margot A. Loudon
• Deputy Secretary General Eurogas

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VIEWS OF EUROGAS ON THE WAY FORWARDSingle
European Gas Market
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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 TSOs 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

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• AN EXTERNAL POLICY FRAMEWORK
• Dialogue with producers and transit countries
• Neighbourhood policy
• A coherent European energy policy with
  appropriate roles for EU, national authorities
  creating the right diplomatic, institutional and
  legislative framework for enterprise, allowing
  industry to operate effectively
• Diversification of supplies in terms of
  different sources and routes to Europe, with
  necessary investments in infrastructure
• Sufficient long-term commitments for upstream
  supplies

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