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An Operator’s view of the GRI NW Virtual Investment Project?

An Operator’s view of the GRI NW Virtual Investment Project?. Nigel Sisman GTE+ Senior Adviser. The Stakeholders. TSOs. Consumers. R. Regulators. Shippers. “It’s all about risks ......”. The Challenge. European single market & security of supply Growing gas demand?

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An Operator’s view of the GRI NW Virtual Investment Project?

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  1. An Operator’s view of the GRI NW Virtual Investment Project? Nigel Sisman GTE+ Senior Adviser

  2. The Stakeholders TSOs Consumers R Regulators Shippers “It’s all about risks ......”

  3. The Challenge • European single market & security of supply • Growing gas demand? • Increased importation requirements • New patterns of gas flow • Emergent hubs and transfers “We may need more infrastructure?”

  4. GRI NW Initiative B “Do we need to re-think our approach to investment?”

  5. Stakeholder requirements? “We should be able to achieve sufficient alignment of interest”

  6. Risk distribution – a simple view Let’s assume we’ve fixed the risk / reward for TSOs ! Shipper commitment to required revenue stream 0% 100% All risks with consumers (Regulators) All risks with contracting shippers “but perhaps a rather one-dimensional view of the world”

  7. Risk Distribution – the reality 100% Initial Shippers’ risk • Consumers’ risk overstated? • shippers book later • lower commodity prices Risk allocation? 0% Initial shipper commitment 100% “national considerations may advocate some socialisation?”

  8. The Market Test • Concept recognises: • Investment requires a revenue stream • Socialisation needs to be considered • Shippers need to understand commitment thresholds to secure capacity • Not one size fits all ...... • The test could reflect: • national circumstances • anticipated benefits to local consumers “might a market test ensure timely, well founded investment?”

  9. The Cross-Border Dimension Territory A Territory B “Could sufficient surplus available in B enable build in A?” “We may need to think about a regional investment climate?”

  10. On reflection ...... • The Virtual Investment Test Project • provokes thinking about current investment framework • permits safe environment to explore different perspectives • may enhance national frameworks • may reveal where we need new cross-border risk framework

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