Transcript 600-Natural Gas

Unbundling & Liberalisation
Creating new challenges and opportunities
The ‘Belgian case’
Rudy Van Beurden
GIE Conference – 3 November 2005 - 1
FLUXYS: PROACTIVE UNBUNDLING 11-2001
Former Distrigas
GAS TRANSPORT
Existing company with a new name:
Fluxys
GAS SALES & SUPPLY
New company with an existing name:
Distrigas
Why proactive unbundling :
• Draft proposal 2nd EU directive included legal unbundling
• Market perception: legal unbundling most effective to ensure level
playing field
• Strategic move: organise rather than undergo changes
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SHAREHOLDERS
SUEZ
100%
SUEZ-TRACTEBEL
PUBLIGAS
• Board and Executive Committee:
two federal government
representatives in an advisory
capacity
31.25%
• Right to oppose to decisions
about and transfers of strategic
assets if considered prejudicial to
federal energy policy
57.25%
FLUXYS
11.50%
(+ 5.21% shares owned
by Suez-Tractebel)
FIRST MARKET OF
EURONEXT BRUSSELS
1 share
BELGIAN STATE
GOLDEN SHARE
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Unbundling: the challenges
• Strategical: establish new objectives
• Contractual: need for formal agreements between an
increasing number of players
• Commercial: setting up new relationships and obtain
information from the market
• Changing/unstable regulatory environment
• Operational: Gas flow management & grid balancing
• Investment planning: obtaining market information and
commitments in due time
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FLUXYS’ CHALLENGES IN THE LIBERALISED GAS
MARKET
End-consumers
interconnection
connection
Fluxys
Adjacent operator
• Put into practice framework to install
level playing field for suppliers: Code
of conduct
• Arrive at regulated tariffs providing
sufficient return to justify investment
Open access to system
• Cope with highly complex interfaces in
a multi-shipper environment
Supplier
Supplier
Supplier
Free choice of supplier
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Exploring the Current Legal Environment
Transportation agreements: new relationships
Gas supply licence
Transport Services
Agreement
+ (with connection procedure)
Shipper/
Trader
Allocation
Agreement (at Supply Point)
Transporter
Transport licence
Connection
Agreement
End-consumer
Eligible
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Regulatory environment
• The ‘Belgian case’
– 1 federal regulator
– 3 regional regulators
– Different levels of market opening in each region
– Public distribution zones sometimes covering more
than 1 region
• Continuous changes asked by different authorities
 challenge of coping with system changes
• Low profitability on transport and storage activities
 reduces entrepreneurship
• Annual  multi-year tariffs as from 2007
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Belgium: proactive acceleration of market opening
A strong acceleration
100%
100
92%
100% opening
90in Flemish
80 region
07.07
07.04
65%
70
58%
60
50 47%
40
83%
08.00
07.03
01.03
07.01
30
20
10
1998 EU Gas
Directive
0
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Gas Flow Management & Grid Balancing
• Exponential growth of data to be interchanged in a multi-shipper
environment
– Hourly flow nominations by shippers enabling Fluxys to set grid
configuration
– Hourly matching information with adjacent operators to facilitate
cross-border transactions
– Hourly flow allocations + metering data services by Fluxys
enabling shippers to stay within balance and thus avoid balancing
charges
• Residual balancing by Fluxys far more complicated:
– Gas price is main flow driver for shippers
– Shippers can arbitrage between balancing charges in different
systems
– System integrity factors (stable inflow and gas quality) considered
pure TSO concern
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Investment planning: a complex issue in an
unbundled and regulated environment
• Shippers uncertain as to their market share in the
future  fear for ‘open positions’:
– larger part of supply portfolios is short-term
– hence: more shorter term transportation contracts
• Fluxys uncertain about regulatory environment and
profitability  financing more complex
• Belgian gas demand 2000-2014 to rise by 46%
➔ huge investments needed
• Shippers’ behaviour increasingly unpredictable +
unpredictable regulatory environment ➔ lack of
adequate investment signals
➔ increasing risk of stranded investments
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BUT ALSO…..
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New opportunities
•
Zeebrugge Hub: created proactively in 1999
– Hub services  Huberator
– Cleared spotmarket  APX Gas Zeebrugge B.V.
•
Shipper & ICT services  GMSL
 Becomes a catalyst for further infrastructure investments
– LNG terminal expansion by Fluxys LNG
– BBL pipeline  BBL Company B.V.
– Futher investments in transit capacity (open season
launched)
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