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TSOs and Long-term Security of Gas Supply in Europe

TSOs and Long-term Security of Gas Supply in Europe. Peter A. Hodal Vice President of Gas Transmission and System Operations, Energinet.dk. Framework: Natural gas will continue to be an important part of the energy-mix in Europe!. Increasing demand for Energy in EU

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TSOs and Long-term Security of Gas Supply in Europe

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  1. TSOs and Long-term Security of Gas Supply in Europe Peter A. Hodal Vice President of Gas Transmission and System Operations, Energinet.dk TSOs and Long-term Security of Gas Supply in Europe

  2. Framework: Natural gas will continue to be an important part of the energy-mix in Europe! Increasing demand for Energy in EU • Today natural gas constitutes 24% of Europe’s energy-mix • Expected to be at least 28% i 2030 (IEA) • IEA (WEO 2007) estimates that EU demand for natural gas will increase by 1,4%/year from 2005-2030 (550 bill. m3 to 771 bill. m3) • The fastest growing primary energy source in the developed world • Gas to power generation a main driver The Climate issue • Fossil fuels will continue to be an important part of the energy-mix - cannot be ruled out ’overnight’ – unless dramatic fall in overall energy demand! • Natural gas has the lowest CO2-emission of the fossil fuels – almost 1:2 compared to Coal! TSOs and Long-term Security of Gas Supply in Europe

  3. Framework: Natural gas will continue to be an important part of the energy supply in Europe! Characteristics/advantages of natural gas • Main producers are close –Worlds largest reserves in the neighbouring countries/regions - Russia, Norway, Africa, Middle East • It can be traded globally – Increasing relevance of LNG • It can be stored TSOs and Long-term Security of Gas Supply in Europe

  4. But also… • EU indigenous production decreasing: Increasing import dependency • Increased global competition on fossil fuels – coal, oil, gas • Secure and ’cheap’ supplies can no longer be taken for granted! • Gas will have to be transported over longer and longer distances to come to Europe TSOs and Long-term Security of Gas Supply in Europe

  5. What can be done? • Need for massive investment in infrastructure in EU, particularly cross-border. IEA estimates 400 bill. $ towards 2030 (of these 160 bill. $ on transmission & distribution) • Better integration of the European network, physically and in terms of network codes/rules, procedures, IT-platforms • Diversification of suppliers/supply routes TSOs and Long-term Security of Gas Supply in Europe

  6. What can be done? • Necessity of longer-term contracts (but not for the full capacity!) • Increased need for storage! (consequence of the longer transports) • Need for European, not national, security of supply strategies due to falling domestic production, • EU/TEN funding of strategic projects (such as the Nabucco feasibility study) • Strategic storages – Denmark already has such a setup TSOs and Long-term Security of Gas Supply in Europe

  7. Market and security of supply – brothers in arms! • Suppliers (Shell): ”An open and competitive, liquid and interconnected single European market is crucial” • Will make gas move around quickly • Harmonisation of rules on a European level: The importance of an effective coming ENTSOG, composed by independent TSOs • But also focus on regional strengthening to secure faster development of markets! • What will help diversification of supplies? Big buyers with negotiating powers - or a liquid, competitive market with many players?! TSOs and Long-term Security of Gas Supply in Europe

  8. The role of TSOs in gas supply security • Security of supply lies within the ’task-portfolio’ of TSOs • TSOs has the know-how, expertise and overview • TSOs must show the necessary will and courage to invest – the need is there! • Necessity of improved demand-supply information andforecast by unbundled/neutral TSOs • Improved options for collaboration between TSOs and SSOs • Open season procedures conducted by the TSOs (in pairs for border points) • Neutrality/Objectivity: Independent and unbundled TSOs are the best to play this role! TSOs and Long-term Security of Gas Supply in Europe

  9. What is Energinet.dk doing today? • Denmark is currently exporter of natural gas • But North Sea gas production will go ’off plateau’ within 5 yrs. • Led to GISA - Gas Infrastructure Analysis project, where Energinet.dk assesses all options • Diversification of supply routes TSOs and Long-term Security of Gas Supply in Europe

  10. Does the 3’d package provide the tools? Points in the right direction as regards security of supply: • Ten years statement/forecasts on a national and European level • Effective ENTSOG for faster code and rule development (but ownership or ISO unbundling crucial for strong and credible ENTSOG development) • ACER and the Commission are granted important roles to assist and ensure ENTSOG progress. • Improved options for cross-border investments: Regulators and ACER to secure investment decisions are made TSOs and Long-term Security of Gas Supply in Europe

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