Gas market urgently needs more transport capacity

Gas market urgently needs more transport capacity

Hannover, 14 July 2009 | Press release

Eliminating bottle necks beneficial to all end users

Gasunie has experienced “overwhelming” requests by more than 60 market parties for expanding transport capacity in its supra-regional gas transport system, especially in Germany. To serve the end users with continuous gas supply and to avoid further possible increase of energy prices due to lack of gas transport capacity, market parties have to rely on the availability of a well functioning supra-regional gas transport system offering sufficient transport capacity.

More than 40 market parties have recently underpinned the need for expansion of the Gasunie Deutschland transport system, including cross border transport capacities. This is the most important outcome of the second phase of the first joint Integrated Open Season (IOS) procedure, conducted by the transmission system operators (TSO) of Gasunie in Northern Germany and the Netherlands (Gas Transport Services), to firm up market interest for transmission capacity.

Strong demand

The indigenous gas production in North Western Europe is declining, whilst demand for natural gas - the cleanest fossil fuel - is rising. This leads to a strong demand for additional and reliable supra-regional transport capacity to accommodate intensified imports from the vast supply sources outside the EU, such as Norway, Russia and various LNG supply areas and the provision of new gas storages to modulate these new supplies. For market players sufficient access to and expansion of the supra-regional gas transport system especially in Northern Germany are crucial.

The timely alignment of the IOS with Storage System Operators and international Transmission System Operators (e.g. Danish is supporting this market desire and shows a transport capacity demand nearly doubling the current transport capacity of the Gasunie Deutschland grid. This demand is getting close to the same level experienced during the first phase of the IOS, the market screening, conducted by GTS and Gasunie Deutschland in autumn 2008. As unbundled European infrastructure company Gasunie is willing to face and react on these market needs. A well functioning and independent supra-regional gas transport system with sufficient capacity also for new suppliers enhances market functioning and liquidity which are preconditions for more competition and hence lower gas prices.

New investments

In The Netherlands, Gasunie recently started a large investment program (more than 1.5 billion €) for network expansion, which is based on an earlier Open Season. These new projects in The Netherlands create more than 15,000 extra jobs.

Marcel Kramer, CEO Gasunie: “Looking at current market developments in Germany this could also lead to an investment in our German network in the range of 1 to 2 billion €. Germany is in the heartland of the European economy and of its energy market. The lack of sufficient transport routes which we are facing would in the end surely lead to higher energy prices. However, since we are the only non-integrated company without any interests in trading or production, to be able to invest we need a well defined and reliable regulatory framework, which allows a proper functioning of our current transport system and makes investments in grid-expansions possible. Especially in Germany this framework is currently changing for Gasunie Deutschland and we have to observe the development and consequences for our business very carefully before taking any final investment decisions.”

Fully unbundled gas transport company

It is the first time in Europe that a cross-border network development approach is carried out by a fully unbundled cross-border asset owner, such as Gasunie. This integrated approach will synchronize capacity development on both sides of the border, with other national as well as international networks and gas storages and will provide new business opportunities. In offering this integral concept of network development to its customers, Gasunie fully recognizes the cross-border nature that characterizes today’s natural gas marketing business to a large extent.

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