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GIE Annual Conference Bratislava, September 28-29, 2006. TRANSIT IN CENTRAL EUROPE. Author: Milan Sedlacek , SPP-preprava, a.s. Content. Infrastructure and volumes 2. Gas transit outlook till 2020 3. Operational aspects 4. Regulatory issues. Central European transit systems.
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GIE Annual Conference Bratislava, September 28-29, 2006 TRANSIT IN CENTRAL EUROPE Author: Milan Sedlacek, SPP-preprava, a.s.
Content • Infrastructure and volumes • 2. Gas transit outlook till 2020 • 3. Operational aspects • 4. Regulatory issues
Central European transit systems • Traditional corridor Ukraine, Slovakia, Czech republic, Austria • New Yamal corridor through Belarus and Poland • NEGP and Nabucco close to construction phase
Transit Capacity of SPP-Preprava 2006 year: - capacity of the transmission system isabout 90 bcm/a
Transit Capacity – competition effect Effect of Yamal = drop of volumes Questions – - how does this competition fit into the image of monopolies sitting on transit lines? - who pays for the investment? Cost based regulation=decreasing volumes means increasing tariffs. Are these stable rules for shippers? - Where is the incentive to invest into new infrastructure? - Is this a risk free business for which only low rate of return is justified? - 18 bcm/a 5 years
Assessing the perspective What will be the CE transit future?
Assessing the perspective What will be the CE transit future? Source Wood MacKenzie
Assessing the future Russian gas reserves – the biggest source for Europe Source Gazexport
Assessing the future - parameters Main parameters: - indigenous production in Europe - consumption - trade pattern Gas consumption: Steady growth over the period to 2020, influenced by: - Economic growth - Usage of gas in power generation - Gas prices - Increased SoS concerns
Assessing the future – trade pattern In all principal markets large pipeline projects are competing with LNG. Share of Russian gas is increasing. • Assumptions: • SPP-preprava, 1 line Yamal, 1 line NEGP • growth rate from 1.5 to 2.5 percent • filtered short-time turbulences Source Gazexport, BP
Outcome – optimistic scenario Result: Lack of capacities after 2020, some even in 2010. SPP-P is able and willing to invest to meet these requirements under the condition that commitment of shippers is in place.
Outcome – pessimistic scenario Result: Rising import dependency of Europe could lead to growth of volumes of Russian gas to be imported to Europe.
Operational issues • m3 • 20 degrees C • 8-8 business day • long-term contracts • customised balancing and allocation rules • „right of first refusal“ • OBAs • kWh • 6-6 business day • electronic data interchange • daily contracts • standardised balancing and allocation rules • non discriminatory access • UIOLI Domáci EU Non EU
What is being offered as an answer Producers TSOs/DSOs/SSOs Consumers - Tendency to over-regulate the infrastructure part - Risk of underinvestment while main problem is rather a limited number of competition on producers side.
Conclusions • Growing import dependence • Growing importance of Russian gas • Some free capacities in SPP-P transmission system, ability and willingness to invest • Future of transit volumes depends on development of consumption • Introverted Europe, stable • regulatory framework is necessary • plus the need of positive • investment climate