Sofia, Bulgaria, 30th January 2009

Sofia, Bulgaria, 30th January 2009

5th SG Meeting

2 Sofia, Bulgaria, 30th January 2009

Agenda 5th SG meeting

Agenda TopicsRapporteur

10:30

Arrival and registration Reception with coffee and sandwiches

11:30 Welcome and opening address by SEWRC and the co-chairs SEWRC/Co-chairs

11:45

1. Opening - Approval of the agenda of the 5th SG meeting - Approval of minutes of the 5th IG meeting - Review of action points from the 5th IG meeting

Co-chairs

12:00

2. Cooperation and coordination - Update of SG/IG Mailing list - 1st Strategic Advisory Panel Meeting - Involvement of Gazprom

Co-chairs

12:30 3. Work Programme 2009 Co-chairs


Agenda of 5th SG meeting

Agenda TopicsRapporteur

13:154. The Bulgarian Natural Gas Market - The view of the NRA - The view of the TSO

SEWRCBulgartransgaz

13:455. Cooperation of TSOs - Memorandum of Understanding - Integration of MOL, Bulgartransgaz and Transgaz

TSOs

14:00 6. Capacity, trading and transparency related issues - Conclusion of IPAs/OBAs in Baumgarten

E-Control

14:30 7. Gas CrisisCo-Chairs

15:00 8. South Stream Gazprom

15:30 9. Closure Co-chairs


Review of Action Points

Action Description Who Status

AP1 Integration of Gazprom on certain issues as observer

RCC AP2

Circulation of proposal for modified structure of Route Assessment

AEEG ongoing

AP3 Conclusion of OBAs/IPAs BG TSOs ?

AP4 Circulation of TSO MoU TSOs ongoing

AP5 Coordination and organisation of 1st Strategic Advisory Panel Meeting

Co-chairs AP6 Update of Mailinglist Co-chairs AP7

Circulation of the PwC study- lessons learnt document to IG group

Co-chairs


Update of Mailinglist

If you are missing on the GRI SSE Mailing list or think that somebody is missing, please write an E-Mail to

[email protected]

We are working to implement a “track keeping” tool in our webpage.


1st Strategic Advisory Panel Meeting

• 1st Panel Meeting on 29 Jan 2009 in Sofia

• Fruitful discussion

• Meetings planned twice a year

• Outcome will be presented later under agenda topic work programme 2009


2. Cooperation and coordination

Involvement of Gazprom in GRI SEE as an observer

e.g. on South Stream


3. GRI SSE Draft Work Programm 2009- 1

# Issue

Deliverable Timetable

Description

Co-

operation

Priority

Status

Conclusion

GRI SSE -1

Market Integration

Security of Supply (due to recent developments):Market Integration (elements to increase SoS; R_ISO)

EF

ET A

Jan 09

June 09

GRI SSE -2

Regional coordination

Security of Supply (due to recent developments):Regional Coordination (Infrastructure Planning)

A

Jan 09

June 09

GRISSE -3

Hidden bottlenecks

Security of Supply (due to recent developments):List of hidden bottlenecks

GT

E a

nd E

RG

EG

input

A

Jan 09

April 09

GRI SSE -4

Secondary Market

Congestion Management:Secondary Market: UIOLI, nomination procedures

TS

Os A

Jan 09

June 09

GRI SSE-5

Route Assessment

Congestion Management:Route Assessment: Include alternative routes

RC

C E

FE

T A

Jan 09

April 09

GRI SSE-6

Access to storage

Access to Storage:Easy and transparent access to storage (following ERGEG work)

B

Dez 09

Jun 10


3. GRI SSE Draft Work Programme 2009 - 2

# Issue

Deliverable Timetable

Description

Cooperation

Priority

Status

Conclusion.

GRI SSE -7

TransparencyImproved Transparency by TSOs:Motivate TSOs to join TSO network (GTE)

all B

Jan 09

June 09

GRI SSE-8

TSOcooperation

Improved TSO cooperation:Implementation of IPAs in Baumgarten and further work

Ba

um

ga

rten

TS

Os A

Jan 09

Aug

09

GRI SSE-9

TSOcooperation

Improved TSO cooperation:Updating Implementation of IPAs for other IPs

RC

C A

Jan 09

April 09

GRI SSE-10

TSOcooperation

Improved TSO cooperation:Information exchange

Eu

rog

as

A

Jan 09

June 09

GRISSE-11

Market Entrybarriers

Route map how to enter natural gas markets in the GRI SSE

RC

C A

Oct 0

8

April 09

GRI SSE-12

Pricetransparency

Price transparency at hubs

EF

ET

; tra

de

rs

C

Jan 09

June 09


4. The Bulgarian Gas Market

• View of SEWRC

• View of Bulgartransgaz Net


5. Cooperation of TSOs

• Memorandum of Understanding

• Involvement of FSGZ, Bulgartransgaz, Transgaz


6. Capacity, trading & transparency related issues

• Conclusion of IPAs/OBAs in Baumgarten

• Meeting of relevant TSOs this morning in Sofia

Dr. Stephan ResslEFET Gas Committee VC

GRI SSE30 January 2009Sofia

European Federation of Energy Traders

13Sofia, 2009

Liquidity

and

Gas Supply Security

SR – Sofia 2009 14

What happened

The recent supply disruption of a major gas source formally due to

unclear and intransparent national (outside EU) transportation issues

(like tariff regime and actual flow data) without internationally integrated

oversight has lead to a major turmoil with economic and political

consequences.

It has been shown again (after early 2006) that national structures are

not perfectly capable of overcoming the challenges of a more complex

and international energy market.

We would like to invite the EC, ERGEG and the relevant authorities to

consider the following elements:

SR – Sofia 2009 15

Some details of what happened

It has been shown (particularly in SSE) that more liberalized markets tend to

cope better with this supply disruption, e.g. in Austria the balancing market

proved to provide sufficient balancing energy to keep the system stable.

However, price response was rather opaque and not as expected in a fully

liberalized market. The fact that the only nucleus of a market place in that area

(CEGH) was shut down left many market participants with commercial and

physical challenges to fulfill their obligations. Price level response was nearly

inexistent in SSE, no transparent information on short term prices was easily

available.

Entry/Exit systems have proven to be more resilient and virtual embedded Hubs

to be firm, other systems seem to be outdated considering modern challenges

with multi market participants.

SR – Sofia 2009 16

Multi TSO integration is necessary

It has been shown that international TSO coordination is insufficient, also it has

been shown that the current TSOs did not prepare for stronger multi system

integration (e.g. also for physical west-east flows after 2006) despite being paid

for back flow transport and to increase security of supply as requested amongst

other occasions from EFET and GEODE during the 14th Madrid Forum, as can

be seen on the relevant slide.

We do attach the then issued joint letter of EFET and GEODE on the respective

matter including a concrete time table and a phased and timed approach. This

letter was also supported by other associations during the Madrid Forum.

SR – Sofia 2009 17

Transparent liberalised market increase SoS

Transparent markets automatically help security of supply as higher short term

prices in a given area automatically attract different gas providers to that area

as well as it frees up existing flexibilities within contracts, like voluntary

customer shut down under predefined commercial conditions. The European

market offers sufficient flexibilities from other sources including LNG to at least

reduce significantly the supply risk exposure.

This is possible to the extent of physical connection and interoperability. SSE

markets are mostly small markets, so volumes are not so large compared to the

rest of European market.

SR – Sofia 2009 18

Improving liquidity and gas supply security.In NW Europe, hub prices are well correlated

Source: Eon Energy Trading

SR – Sofia 2009 19

Improving liquidity and gas supply security. Gas trading may well retain a regional element

Large (virtual or physical) trading hubs are needed for sufficient liquidity.

Gas takes far longer to travel than electricity

High economic cost of full interconnection across whole of EU.

EU gas market will be a series of ‘pools’ rather than a ‘copper plate’

LNG links some pools, as well as pipelines

E.g. IEA view of possible gas market development

SR – Sofia 2009 20

Actions to do

We would like to invite the EC, ERGEG and relevant authorities to take concrete

actions to strengthen international system resilience, system integration and

establishing transparent markets if this is possible on a European level and

particularly in GRI SSE as a quick start.

A first step could be done via the commissioning of a study taking findings of the

current situation, the request by market participants as expressed in Madrid

also via the joint letters into account and delivering a proposal for clear

measures as a result for short term (like reverse flow capabilities – measuring

devices, sometimes compressor design, market rule compabilities, enhanced

market transparency including prices, entry/exit systems…), mid term (small

trunks of infrastructure connecting different systems were not sufficiently

existent) and longer term actions (new supply possibilities and regionally

operated systems with regional tariffication and regulation) to be executed by

the relevant parties and member states for SSE (and potentially the energy

community area outside the EU).

SR – Sofia 2009 21

Actions to do (2), please do it really this time!!

We

SR – Sofia 2009 22

Improving liquidity and gas supply security. Different EU gas prices within regional grids?

SR – Sofia 2009 23

SR – Sofia 2009 24


Presentation by GDF Suez


7. Effects of import cuts on the SSE region

>=25%

26%-49%

50%-75%

75%-100%

None

South South-East region most

affected by cuts in gas transit through

Ukraine


7. Impact of gas crisis on EU MS & EC MS

Decreases

in Import (09/01/2009)EU MS Measures

Energy Community

Members

Worst affected

countries

(Emergency)

BG, SK, PL, HU

Reduction of gas consumption (eg. Industry)

Regular energy crisis council meetings

Diversification of transport routes and

sources of natural gas (if possible)

Increase of domestic production

Full exploitation of storage capacity

Switching to alternative fuels (coal & oil)

Solidarity measures among industry players

(AT – Sl, HU – SCB, SRB - BiH)

SRB, BiH, CRO,

MD

Strongly affectedRO, GR, AT, SI, CZ

TR, MK

Affected DE, FR, IT, NL Diversification of transport routes and

sources of natural gas

Increase of domestic production

Full exploitation of storage capacityHardly affected

BE, UK, ES, PT, MT, CY, DK, SE, FI, IE, LT, LV, EE, FI,

LX

Kosovo, ME,

AL, CH, NO, BY


7. Gas crisis – lessons learnt – 1

In general:

Liberalized markets tend to cope better with supply disruptions

• If the markets are allowed to function, even in emergency situations, the systems are capable to adapt more quickly

• Transparent markets automatically increase security of supply as higher short term prices in a given area automatically attract different gas providers to that area

Improving interconnections between markets

• North-South connections

• Interconnectors need to allow bidirectional gas flows

• Southern corridor

• Western Balkans connection


Coordination between TSOs

• Better coordinated Gas Dispatching between TSOs would enable faster reaction to disruptions

• Regional, coordinated infrastructure planning and better regional market integration would make the system much more resilient

• Regional planning of infrastructure and modeling of “emergency” situations and their effects on the grid would help to identify high priority investment projects

Developing storage capacities in line with market requirements

• Access to storage must be provided through transparent and non-discriminatory capacity allocation mechanisms and congestion management procedures

7. Gas crisis – lessons learnt – 2


7. Improving interconnections between markets

North-South connections

• Poland – Slovakia / Czech Republic

• Slovakia – Hungary

• Romania – Hungary

• Germany – Italy, Slovenia (Tauern Gas Pipeline)

Physical reverse flows

• Romania, Bulgaria, to Greece and Turkey (LNG)

The Southern corridor

• Nabucco

• South Stream

Western Balkans connection

• Hungary and Croatia

• Bulgaria and Serbia

• Gasification and connections to Macedonia, Albania, Montenegro, BiH


Any other Business

● Florence School of Regulation

● Work shop:secure gas supply for Europe and solidarity issues

● 3 April 2009, Vienna


Next Meetings

• Proposal: second half of April

second half of June

• Venue


Contact

Konstantin HeillerGas Department

[email protected]

+43 1 24 7 24 810

+43 664 966 7239

www.e-control.at

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