Unbundling liberalisation
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Unbundling & Liberalisation. Creating new challenges and opportunities The ‘Belgian case’. Rudy Van Beurden. GAS TRANSPORT Existing company with a new name: Fluxys. GAS SALES & SUPPLY New company with an existing name: Distrigas. FLUXYS: PROACTIVE UNBUNDLING 11-2001. Former Distrigas.

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Unbundling & Liberalisation

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Unbundling liberalisation

Unbundling & Liberalisation

Creating new challenges and opportunities

The ‘Belgian case’

Rudy Van Beurden


Fluxys proactive unbundling 11 2001

GAS TRANSPORT

Existing company with a new name:Fluxys

GAS SALES & SUPPLY

New company with an existing name:Distrigas

FLUXYS: PROACTIVE UNBUNDLING 11-2001

Former Distrigas

Why proactive unbundling :

  • Draft proposal 2nd EU directive included legal unbundling

  • Market perception: legal unbundling most effective to ensure level playing field

  • Strategic move: organise rather than undergo changes


Shareholders

SHAREHOLDERS

SUEZ

100%

SUEZ-TRACTEBEL

PUBLIGAS

  • Board and Executive Committee:two federal government representatives in an advisory capacity

  • Right to oppose to decisions about and transfers of strategic assets if considered prejudicial to federal energy policy

57.25%

31.25%

FLUXYS

11.50%

(+ 5.21% shares owned by Suez-Tractebel)

1 share

FIRST MARKET OFEURONEXT BRUSSELS

BELGIAN STATE

GOLDEN SHARE


Unbundling the challenges

Unbundling: the challenges

  • Strategical: establish new objectives

  • Contractual: need for formal agreements between an increasing number of players

  • Commercial: setting up new relationships and obtain information from the market

  • Changing/unstable regulatory environment

  • Operational: Gas flow management & grid balancing

  • Investment planning: obtaining market information and commitments in due time


Fluxys challenges in the liberalised gas market

FLUXYS’ CHALLENGES IN THE LIBERALISED GAS MARKET

interconnection

connection

End-consumers

Fluxys

Adjacent operator

  • Put into practice framework to install level playing field for suppliers: Code of conduct

  • Arrive at regulated tariffs providing sufficient return to justify investment

  • Cope with highly complex interfaces in a multi-shipper environment

Open access to system

Supplier

Supplier

Supplier

Free choice of supplier


Transportation agreements new relationships

ConnectionAgreement

Exploring the Current Legal Environment

Transportation agreements: new relationships

Gas supply licence

Shipper/

Trader

Transport ServicesAgreement

+ (with connection procedure)

AllocationAgreement (at Supply Point)

End-consumer

Transporter

Transport licence

Eligible


Regulatory environment

Regulatory environment

  • The ‘Belgian case’

    • 1 federal regulator

    • 3 regional regulators

    • Different levels of market opening in each region

    • Public distribution zones sometimes covering more than 1 region

  • Continuous changes asked by different authorities  challenge of coping with system changes

  • Low profitability on transport and storage activities  reduces entrepreneurship

  • Annual  multi-year tariffs as from 2007


Belgium proactive acceleration of market opening

A strong acceleration

100%

100

92%

90

83%

07.07

80

07.04

70

65%

58%

60

07.03

01.03

47%

50

08.00

07.01

40

30

20

1998 EU Gas

10

Directive

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Belgium: proactive acceleration of market opening

100% opening in Flemish region


Gas flow management grid balancing

Gas Flow Management & Grid Balancing

  • Exponential growth of data to be interchanged in a multi-shipper environment

    • Hourly flow nominations by shippers enabling Fluxys to set grid configuration

    • Hourly matching information with adjacent operators to facilitate cross-border transactions

    • Hourly flow allocations + metering data services by Fluxys enabling shippers to stay within balance and thus avoid balancing charges

  • Residual balancing by Fluxys far more complicated:

    • Gas price is main flow driver for shippers

    • Shippers can arbitrage between balancing charges in different systems

    • System integrity factors (stable inflow and gas quality) considered pure TSO concern


Investment planning a complex issue in an unbundled and regulated environment

Investment planning: a complex issue in an unbundled and regulated environment

  • Shippers uncertain as to their market share in the future  fear for ‘open positions’:

    • larger part of supply portfolios is short-term

    • hence: more shorter term transportation contracts

  • Fluxys uncertain about regulatory environment and profitability  financing more complex

  • Belgian gas demand 2000-2014 to rise by 46% ➔huge investments needed

  • Shippers’ behaviour increasingly unpredictable + unpredictable regulatory environment ➔lack of adequate investment signals➔increasing risk of stranded investments


But also

BUT ALSO…..


New opportunities

New opportunities

  • Zeebrugge Hub: created proactively in 1999

    • Hub services  Huberator

    • Cleared spotmarket  APX Gas Zeebrugge B.V.

  • Shipper & ICT services  GMSL

  • Becomes a catalyst for further infrastructure investments

    • LNG terminal expansion by Fluxys LNG

    • BBL pipeline  BBL Company B.V.

    • Futher investments in transit capacity (open season launched)


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