2015 2024 TEN-YEAR NETWORK DEVELOPMENT PLAN - GRTgaz
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th
1ed0ition
2015 - 2024
TEN-YEAR NETWORK
DEVELOPMENT PLAN
Construisons le transport de demain
contents Profile.......................................................................................................................................................................................................... 1 Framework of the GRTgaz ten-year network development plan............................................................. 2 Foreword by the managing director................................................................................................................................. 4 Summary.................................................................................................................................................................................................. 5 1. evolution and prospects for the gas market in europe 1.1 A new drop in European consumption in 2014................................................................................... 11 1.2 World prices again contrasted in 2014....................................................................................................... 13 1.3 Stabilisation of supplies............................................................................................................................................ 16 1.4 Uncertainty over long-term demand............................................................................................................. 18 1.5 The European energy policy and its objectives..................................................................................... 20 1.6 Development of gas infrastructures in Europe...................................................................................... 22 1.7 Major European infrastructure projects...................................................................................................... 24 2. evolution and prospects for the gas market in france 2.1 Diversified supply sources....................................................................................................................................... 27 2.2 Decreasing consumptions in 2014.................................................................................................................. 28 2.3 The role of gas in the energy transition...................................................................................................... 30 2.4 Gas demand forecast................................................................................................................................................. 31 2.5 Public service obligations in the event of exceptionally cold spells...................................... 34 2.6 The alternative scenarios for the period up to 2030........................................................................ 36 2.7 The transmission offer of GRTgaz.................................................................................................................... 43 2.8 Demand for transmission capacity on the GRTgaz network..................................................... 45 3. development of the grtgaz transmission network 3.1 Developing the transmission network: process and timelines................................................. 55 3.2 Project portfolio changes........................................................................................................................................ 56 3.3 A single marketplace in France in 2018..................................................................................................... 57 3.4 Developments in the North Zone..................................................................................................................... 59 3.5 Developments in the South Zone..................................................................................................................... 63 3.6 Other development projects................................................................................................................................. 66 3.7 Infrastructure to be commissioned over the next three years (2015-2017)................. 67 3.8 Infrastructure commissioned after 2017.................................................................................................... 67 3.9 Forecast capacity development for 2015-2024.................................................................................... 69 3.10 Meeting of demand for gas in France in 2024..................................................................................... 70 annexes annexe 1 Interconnection points: subscription and utilisation rates.......................................... 72 annexe 2 Determination of the network’s commercial capacity.................................................... 74 annexe 3 Execution of major projects.................................................................................................................. 76 Glossary ................................................................................................................................................................................................ 78 Flap 1 Map of the GRTgaz network in 2015 Flap 2 Map of the GRTgaz network in 2024
map of the grtgaz
network in 2015
570
H 640
B 230
Dunkirk
Taisnières 620
Obergailbach
North PEG
Montoir-de-Bretagne Oltingue
223
37
370
Jura
Trading Region
South
TIGF
Fos Tonkin Fos Cavaou
225
165
410
key figures for
2014
32,153 km
of high-pressure pipelines
583 TWh transported
energy i.e. 51 billion cubic
National network metres of which:
Regional network
• 392 TWh consumed
Balancing zone
3 LNG terminals • 78 TWh stored
1 LNG terminal under construction • 113 TWh transiting
Network interconnection points
14 underground storage facilities
27 compression stations
1 compression station
640 TWh
under construction traded at the PEGs
Direction of flow of natural gas
Firm capacity in GWh/d 129 shippers
802 connected customers
including:
• 17 distribution system operators
• 12 power generation plants
• 773 industrial consumers
Staff of 2,965
Investments of €663 M
Turnover of
€2.05 billion
_ 1
PROFILE
GRTgaz
working for a secure and competitive energy supply
and forward-looking energy solution
GRTgaz is the operator of the high-pressure natu- all over the world, it provides access to diversified
ral gas transmission network over most of France. sources and facilitates gas trading across Europe.
It helps to ensure efficient operation of the natural
GRTgaz thus contributes to enhancing energy se-
gas system bringing gas to consumers:
curity for France and the rest of Europe, and to
• the industrial facilities directly connected to
the completion of an integrated, efficient and
the transmission network, including gas-fired
competitive natural gas market.
power plants;
• the households, communities and enter- France and Europe have undertaken an energy
prises connected to the public distribution net- transition that will have to combine security of
works that in turn are supplied by the transmis- supply, competitiveness and sustainability. The gas
sion network. infrastructures, and in particular the transmission
networks, have a key role to play in meeting these
The GRTgaz network is a major network at the
challenges and dealing with the development of
heart of Europe. Connected to the Norwegian, Bel-
sustainable energy systems.
gian, and German networks, the Italian network via
Switzerland and the Spanish network via TIGF, as The aim of GRTgaz is to place its network, its of-
well as LNG terminals on the Atlantic and Mediter- fers and its skills at the service of energy solutions
ranean coasts that can be supplied with gas from of the future in France, in Europe and worldwide.
2 _
FRAMEWORK FOR THE GRTgaz’S TEN
YEAR NETWORK DEVELOPMENT PLAN
framework for the
grtgaz’s ten year network
development plan
The Energy Code transposes into French law the European directive setting out the access con-
ditions to the gas infrastructures and the common rules applicable to the national natural gas
market. Within this framework, each year GRTgaz draws up a ten-year development plan for
its gas transmission network in France (1) and submits it to the Energy Regulation Commission
(CRE) for examination.
The ten-year GRTgaz plan lies within the frame- The analysis and the projects set out in this
work of the European and French energy policies. document concern mainly the national net-
It integrates the obligations placed on transmis- work. The transmission network is indeed
sion operators regarding security of supply. It divided up into two units:
takes into account the expectations and projects • the national network links the intercon-
of stakeholders at national, regional and Europe- nection points with the adjacent transmission
an levels. It is based on existing gas supply and networks, natural gas terminals and storage
demand as well as reasonable forecasts as to facilities. It consists of pipes with diameters of
medium-term development of gas infrastructures, 600 mm to 1,200 mm, and it features a meshed
consumption and international trading. part in which the gas can flow in both directions:
• It identifies the main gas transmission infrastruc- the core network. The investments made on the
tures to be built or enhanced over the next ten core network provide potential benefits for all
years. the entry and exit points in the balancing zone
• It lists the investments confirmed or to be made concerned (2);
over the next three years. • the regional network carries gas from the na-
• It sets out a provisional planning for all the in- tional network to the distribution networks and
vestments mentioned, making a distinction be- the major industrial consumers, and also to gas-
tween projects that have been confirmed and fired power plants. It consists of pipes whose di-
those that have not. ameter is generally less than 600 mm, and other
than in specific cases, the gas can only flow in
one direction.
1. European directive No. 2009/73/CE and order No. 2011-504 dated 9 May 2011 transposing the directive into French law.
2. In France, a shipper can request transmission of his gas from any entry point to any exit point in a given market zone, within the limits of the
capacity subscribed at the various points. His only obligation is that of balancing incoming and outgoing quantities over the gas supply day. In 2014,
GRTgaz had two balancing zones: the North zone and the South zone.
_ 3
FRAMEWORK FOR THE GRTgaz’S TEN
YEAR NETWORK DEVELOPMENT PLAN
Identification of new projects or new re- its obligations as an independent transmission
quirements relies on an extensive consulta- network operator (ITO).
tion process: the “Gas Consultation” in France,
The 2015-2024 development plan takes into
the North-West and South regional gas initiatives
account the results of the public consultation
(GRI (3)) at a regional level, the work executed un-
made by the CRE in November 2014 and the CRE
der the aegis of the ENTSOG (4) to draw up the re-
deliberation dated 17 December 2014 (6). It has
gional investment plans (GRIPs) and the Ten Year
been examined jointly in coordination with TIGF.
Network Development Plan (TYNDP) covering the
European gas network, of which the fourth edi- It integrates the elements included in ENTSOG
tion was published in March 2015, together with TYNDP together with the elements contributed
bilateral discussions with adjacent system opera- by the adjacent operators.
tors or project promoters. In this respect, it is useful to point out that a con-
The CRE collects market opinions, checks that siderable proportion of the structures to be built
the investment needs are actually covered, and or enhanced is conditioned by the projects of oth-
makes sure of the coherence of the national plan er operators whose investment decisions have not
with the European ten-year network develop- yet been taken. For projects awaiting a decision as
ment plan (TYNDP). It checks execution of the to execution, the financial elements presented are
investments covering the first three years, which based on estimations and are provided for infor-
are binding. mation purposes only.
Within GRTgaz, the compliance manager (5) checks Taking into account uncertainty related to mar-
the correct implementation of the plan. Subject to ket and project development in an ever evolving
the competencies assigned specifically to the CRE, energy context, this document is not binding on
his mission, set out by the Energy Code, consists GRTgaz beyond its legal obligations regarding
of ensuring that the GRTgaz practices comply with execution of the developments envisaged.
3. The Gas Regional Initiative, implemented in 2006 as an intermediate step in the transition from national electricity and gas markets to a single
internal energy market. France participates in two of the three regions defined for gas.
4. The European Network of Transmission System Operators for Gas, the association of European gas TSOs.
5. Bertrand Lombard: bertrand.lombard@grtgaz.com.
6. Deliberation of the Energy Regulation Commission dated 17 December 2014 covering examination of the ten-year network development plan
and approving the GRTgaz investment programme for 2015.4 _
FOREWORD
In many ways, the 2014 econo- little investment and that are useful and sustainable
mic and gas situation in France re- over the long term, such as the creation of entry
flected that of 2013: consumption capacity at Oltingue, currently have the support of
fell slightly and low LNG supply market players.
required large North-South flows
However, the biggest development over the past
towards the country’s South Zone
few months in France is, undoubtedly, the Law on
as well as the Iberian Peninsula.
energy transition for green growth (LTECV), which
Meanwhile, GRTgaz has pursued is the outcome of broad consultations with the
its efforts, through greater coope- various stakeholders. This law, which is consistent
ration with adjacent gas infra- with European guidelines revised a few months ear-
THIERRY TROUVÉ, structure operators, to optimise lier, aims to drastically reduce the volume of fossil
MANAGING DIRECTOR the use of its network. Consequently, fuels and greenhouse gas emissions; it defines
at the beginning of 2015, a single Title goals unfavourable to natural gas. Nevertheless,
Transfer Point in the south of France common to certain provisions mean that natural gas, a stora-
the GRTgaz and TIGF Balancing Zones was com- ble source of energy that is also the least polluting
missioned. This contractual streamlining, which fossil fuel, could play a positive role in the area of
aims to make the market in the south more flexi- mobility, the production of electricity due to the in-
ble, was based on the concept of a Trading Region, termittent nature of renewables and caps on elec-
a first in Europe. Furthermore, access to the GRT- tricity production from nuclear sources. The emer-
gaz South Zone, which had already been improved gence of renewable gas enhances the appeal of
thanks to cooperation with Storengy (JTS), was gas in the light of this outlook. More generally, gas
further enhanced by a mechanism that uses Elengy’s infrastructure and, in particular, the gas transmis-
LNG terminals’ storage capacity (‘circulating gas’) sion network constitute a powerful asset that could
and by new commercial capacity offered at the entry benefit the energy transition process. Nevertheless,
point of the South Zone from Switzerland. the place of gas in the energy mix still remains rela-
Following cost-benefit analysis widely shared with tively uncertain. So that the gas industry can fully
market players, GRTgaz also launched projects to contribute to the development of French energy
strengthen the network between the north and the mix, some orientations that are favourable to gas
south of France, involving the extensive participa- will have to be confirmed and reflected in all future
tion of all public authorities. In 2018, France will laws and regulations, particularly the Multi-annual
thereby benefit from a robust gas transmission net- energy programme and new Thermal regulations,
work that is able to offer French consumers a more which are currently being drafted.
secure and competitive supply. Transmission networks have confirmed their central
After 2020, potential development of GRTgaz role with regards to facilitating the energy transition
network primarily aim to further incorporate process (solidarity of regions, synergies between energy
south-western markets into central European mar- sources) and to strengthening market integration
kets and to offer the latter a better access to LNG (access to the most competitive and secure energy).
from the Atlantic and Mediterranean basin. Most The development of the networks, which are very
of these projects require a substantial increase in capital intensive, can only be considered in response to
transmission capacity within France and, therefore, a sustained requirement shared by all market players
major investments in the GRTgaz network. The de- and within a stable regulatory framework.
cision on whether or not to develop this new infra-
This tenth GRTgaz Ten-year network development
structure will have to be based on the sustainability
plan aims to contribute to discussion by providing
of demand and alternative terrestrial or maritime
an insight into the transmission infrastructure pro-
supply solutions. In the light of these factors, most
jects that may be envisaged over the next ten years
of the adjacent gas infrastructure project promoters
and the challenges to which they respond.
have postponed their projects in comparison of last
year’s plan. Only capacity developments requiring I hope you enjoy reading it._ 5
SUMMARY
summary
With over 2 billion euros invested over the 2013-2015 period,
GRTgaz has continued to execute its development programme to
increase its interconnection capacities with the adjacent networks,
facilitate access to the gas market, and ensure its efficient operation.
The forthcoming implementation of the core network
reinforcement in the north of France and the link with Belgium
will enable gas importation via the fourth French liquefied natural
gas terminal in Dunkirk, in late 2015 or early 2016.
The existing network has also shown its robustness regarding gas
transmission, even during very cold spells, while freeing up the
capacities necessary to enable shippers to take advantage of the
most competitive sources.
Because of its geographical situation, France occupies a key
strategic position in Europe, and these investments make efficient
contributions to security of supply and integration of the European
gas markets.
The GRTgaz investment programme ties in well with these
prospects. By 2018, the simplification of the market organisation
in France will lead to creation of an open, competitive single
wholesale market.6 _
SUMMARY
gas: a credible solution for energy consumption
with a small carbon footprint
Since 2010, natural gas consumption has for electricity generation, instead of oil- or coal-
slackened off in Europe as a whole, and also fired plants, which emit higher levels of pollution.
in France, under the combined effects of the Development of natural gas in the fields of
economic slowdown, competition from coal for transport or heating could also help reduce peak
generation of electricity, and the progress made demand of electricity requirements and set up
in energy efficiency. In 2014, consumption was an energy mix with a small carbon footprint.
especially affected by the exceptionally mild Lastly, local production of renewable gas, such
climate, with a fall of 16% in France and 11% in as biomethane via methanisation or synthetic
Europe as a whole. methane via Power to Gas, will enable cuts in
importation requirements, and hence reduce
In Europe, the Energy Union launched in 2015 is
French energy dependence, while setting up an
aimed at establishing a sustainable energy sys-
intelligent bridge between electricity and gas.
tem that is able to reconcile security of supply
These evolutions give the transmission network a
and prevention of global warming with economic
key role in the French energy system to facilitate
competitiveness by giving priority to research and
solidarity between territories.
innovation.
Whatever the choices made, gas and its
The European Union has set itself the objective of
infrastructures have a major role to play in the
reducing its greenhouse gas emissions by 40% in
future energy mix. The forecasts as to evolution in
2030 as compared with 1990. France, for its part,
demand for gas vary widely over the period covered
has entered into similar undertakings by aiming
by the plan, depending on the hypotheses adopted
at a 30% reduction in is fossil fuel consumption
concerning the various development factors.
as compared with the 2012 reference level, with
The graphs below show the different scenarios
adoption of the Law governing Energy Transition
explored by GRTgaz: the reference scenario,
for Green Growth (LTECV) in July 2015.
which entails falls of about 0.7% per year, and
In this context, natural gas has the advantage of two contrasting alternative scenarios, “Less 30”
being among the energy sources that emit the and “Diversified Uses”. These scenarios illustrate
lowest levels of CO2. Abundant, competitive and the uncertainties surrounding the long-term levels
easy to store, it is in a strong position as regards of gas demand, even though gas remains an
energy transitions. Development of renewable essential part of the energy mix in all cases. The
energy sources (wind power and photovoltaic Pluriannual Energy Programming system is likely
systems) can be enhanced by careful management to shed fresh light on the question. To make its
of their intermittency; the share of nuclear power contribution to the ongoing discussions, GRTgaz
could be reduced from 75% to 50% by 2025. has gone over the hypotheses underpinning these
These two factors could encourage use of gas different scenarios in great detail._ 7
SUMMARY
TOTAL CONSUMPTION (TWh)
700
TWh
600
500
400
300
200
100
0
10
12
14
16
18
20
22
24
26
28
30
20
20
20
20
20
20
20
20
20
20
20
Less 30 scenario (LTE) Diversified Uses scenario AMS2 - DGEC scenario GRTgaz-2015 scenario (reference)
GRTgaz-2015 scenario (with development of gas mobility)
new transmission infrastructures in europe
In spite of the potential erosion in gas consump- of gas-fired electricity production could entail an
tion in Europe, the falls in production in the North even more flexible, reactive network to meet the
Sea are likely to entail increased importation re- peak generation requirements.
quirements by 2035. As things stand, only Rus-
Over the longer term, development of the infra-
sia and the world LNG market would seem big
structures underpins the European energy policy
enough to meet these new requirements. It will
priorities: reaching full integration of the Euro-
be necessary to open up new importation chan-
pean market, security of supplies, competitive-
nels - doubling the Nord Stream is a solution that
ness and sustainability. The latest edition of the
is being examined this year, for example - and
Network Development Plan (TYNDP 2015-2035)
adapt the core European network to absorb the
drawn up by the ENTSOG shows that apart from
new flow configurations that the fall in produc-
the most outlying regions (Baltic, south-east and
tion will entail.
Iberian peninsula), the market integration has
The role of gas in the energy transition constitutes already seen considerable progress. The trend is
another potential factor of change in uses of gas confirmed by the convergence of market prices
networks. The flows will have to adapt to diffuse in north-west Europe. The future developments
local production of biomethane, while providing will be aimed at reducing isolation and reaching
solidarity among the territories. Depending on the a high level of flexibility within the European net-
constraints and ambitions involved, development work to ensure enhanced market integration. The8 _
SUMMARY
European Union is encouraging their implemen- of Common Interest that can claim European ba-
tation by setting aside 5 billion euros for devel- cking. The GRTgaz projects, several of which are
opment of energy infrastructures between 2014 on that list, contribute to reinforcing the North-
and 2020, and drawing up a list of the Projects South corridor in the west of Europe.
the grtgaz development projects
2015 is seeing completion of the facilities neces- completed in 2018 with commissioning of the fa-
sary to link up the new natural gas terminal in cilities forming part of the Val de Saône and Gas-
Dunkirk. The terminal is to be put into service in cogne-Midi programmes. These facilities will avoid
late 2015 or early 2016, and it will provide an congestion on the North-South link, thus enabling
annual capacity of 13 bcm for the French and creation of a single market area for France.
Belgian markets. The work to connect the termi-
New interconnections with Spain and Germany are
nal involved major reinforcement of the network
envisaged for 2021/2022, to further strengthen the
towards the east, with doubling of the Hauts de
North-South corridor for the west of Europe. The
France pipeline over 174 km, extended by the Arc
projects to increase the regasification capacities at
de Dierrey, a new gas pipeline 308 km in length
Fos and Montoir, together with development of
between Cuvilly and Dierrey, the last part of which
the underground storage facilities at Manosque,
is to be put into service in 2016.
could also entail network reinforcements.
A new exit capacity is also to be created in late
Lastly, towards the end of the period covered by
2015 at Alveringem, with commissioning of the
the plan, GRTgaz is preparing to adapt its net-
Flanders pipeline, which will carry up to 8 bcm of
work in order to ensure transmission continuity
non-odorised gas per year to Belgium.
for customers currently supplied with “L-gas” (a
A new entry capacity will then be created from low calorific value gas) from the Groningen field
Switzerland and Italy to Oltingue in 2018 to con- in the Netherlands, which is nearing the end of its
nect the French and Italian markets and reinforce commercial service life.
the flows from south to north.
As things stand, a joint analysis with TIGF ena-
The market organisation in France is being simpli- bles us to ensure that the peak requirements can
fied at the same time. An initial stage was reached be met up to the end of the period covered by
in April 2015 by setting up the TRS, a common the plan under all the demand scenarios, taking
market area in southern France, made up of the into account the forecast entry capacities for the
TIGF and GRTgaz South areas. The process will be French transmission network._ 9
SUMMARY
DEVELOPMENT OF FIRM ENTRY AND EXIT CAPACITY
Entry capacity
GWh per day 2015 (1) Confirmed Envisaged (2) 2024 (3)
Norway (Gasco) 570 - - 570
Germany 620 - - 620
Belgium (H gas ) (4)
640 640
- -
Belgium (B gas (5)) 230 230
Spain (via the TIGF network) 225 - 230 225 - 455
Switzerland / Italy 0 100 - 100
LNG terminals in the North zone 370 520 450 620 - 1,340
LNG terminals in the South zone 410 - 327 410 - 737
Total 3,065 350 1,007 3,415 - 4,692
Exit capacity
GWh per day 2015 Confirmed Envisaged 2023
Belgium - 270 - 270
Germany - - 100 100
Switzerland / Italy 260 - - 260
Spain (via the TIGF network) 165 - 80 165 - 245
Total 425 270 180 695 - 875
1. Creation of a TIGF-GRTgaz Sud trading region on 1/4/2015
2. Subject to network reinforcement.
3. The merger of the zones in 2018 could entail further evaluation of capacity.
4. H gas: Gas with a High Calorific Value, usually containing over 90% of methane.
5. L gas: Gas with a Low Calorific Value, from the Netherlands, and distributed in the north of France. This gas can be distinguished by its higher
nitrogen content.10 _
1
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
The mild weather in 2014 amplified the In a context in which reduction of green-
decrease of European gas consumption. house gas emissions constitutes a priority,
It had already slackened since 2011, due to evolution of gas demand remain uncertain
the economic slowdown and strong competi- over the medium term. Nevertheless, Europe
tion from coal and renewable energy sources will certainly have to increase its importats to
for electricity generation. make up for the declining production in the
Industrial competitiveness is also affected by North Sea and the Netherlands. New infra-
gas prices in Europe, which are three times structures will be necessary to secure the im-
higher than in the USA. The dynamic Asian portation routes, diversify the supply sources
markets have continued to attract world- and distribute the new flows in Europe.
wide LNG supply in 2014: LNG deliveries in The launch of the Energy Union should
Europe have been halved since 2011. meet these challenges, articulating its action
However, the fall in oil prices since August around five themes: security of supply, inte-
2014 could well change things. LNG prices gration of the internal energy market, energy
have fallen in Asia, following notably the efficiency, reduction of CO2 emissions, and
restart of nuclear power plants in Japan research and innovation. In particular, the
and the commissioning of new liquefaction European Union is to set aside 5.3 billion
facilities. Thus LNG is arriving in Europe euros for the construction of energy infra-
again, leading to lower prices in the South structures between 2014 and 2020. A new list
of France and the Iberian Peninsula, a region of Projects of Common Interest will thus be
characterised by its reliance on LNG. drawn up by the end of 2015.
1.1 1.3 1.5 1.7
new drop in European
A Stabilisation The European energy Major European
consumption in 2014 of supplies policy and its objectives infrastructure projects
1.2 1.4 1.6
World prices again Uncertainty over Development of gas
contrasted in 2014 long-term demand infrastructures in Europe_ 11
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
1.1 a new drop in european consumption in 2014
The European Union represents about 12% of tion from coal and renewable energy sources for
worldwide energy consumption. It also accounts electricity generation.
for 12% of worldwide natural gas consumption,
contributing to a quarter of its primary energy GAS CONSUMPTION IN 2014*
use. In 2014, the consumption of the 28 countries
in the European Union fell by 11% to 409 bcm,
In bcm 2013 2014 Evolution
(not corrected for the climate, source Euro gas),
due to the effects of exceptionally mild weather. Germany 87.2 76.2 -13%
2014 was indeed the warmest year on record in United Kingdom 78.7 71.5 -9%
France, in Europe and worldwide. Consumption Italy 68.7 60.7 -12%
had already fallen by 10% in 2011, another year
France 46.1 38.6 -16%
showing record warmth. The drop was especially
marked in France, where gas is mainly used for Netherlands 39.9 34.8 -13%
heating. Spain 30.9 27.9 -10%
Consumption of natural gas also fell due to the Total EU 28 460.7 409.1 -11%
effects of the economic slowdown on industrial
demand, gains in energy efficiency and competi- * Before climatic correction Eurogas 2015.
ENERGY MIX IN EUROPE
European Union (28 countries)
France
United Kingdom
Austria
Italy
Spain
Germany
Netherlands
Poland
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Coal Oil Gas Nuclear Renewable energy sources
Source Eurostat 201312 _
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
GLOBAL GAS CONSUMPTION (BCM)
bcm
1,000
900
800
700
600
500
400
300
200
100
0
North America South and Central America EU 28 Europe other Middle East Asia Pacific Africa
2010 2011 2012 2014 2013
BP Statistical review 2015
Elsewhere in the world, gas demand remains dy- oil has been halved since August 2014, falling
namic, but it shows signs of slackening. In the from $110 to $60 per barrel, and staying below
USA, it is buoyed up by development of shale gas, the symbolic level of $100 on average for 2014.
which is replacing coal. In Asia, growth in demand
is slowing down, with an increase of just 2% in The prices of the other energy sources followed
2014 as compared with 2013, after several years those of crude oil, also showing falls. The drop
with annual growth of over 5%. in oil prices was reflected, with an offset of a few
The crude oil market is showing the same signs months, in the prices of natural gas and LNG,
of slowing down, whereas the production offer which are still often indexed on sliding averages
remains abundant. The price per barrel of crude of oil product prices.
CHANGE IN ENERGY PRICES ON A BASIS OF 100 (JANUARY 2010)
250
200
150
100
50
0
10
0
0
Jan 10
1
1
Oc 11
Jan 11
2
2
Oc 12
Jan 2
3
3
Oc 13
Jan 13
4
4
Oc 14
Jan 4
5
5
Oc 15
5
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
20
0
0
0
0
0
0
0
0
r. 2
y2
t. 2
.2
r. 2
y2
t. 2
.2
r. 2
y2
t. 2
.2
r. 2
y2
t. 2
.2
r. 2
y2
t. 2
.2
r. 2
y2
t. 2
.
Jan
Jul
Jul
Jul
Jul
Jul
Jul
Ap
Ap
Ap
Ap
Ap
Ap
Oc
Brent Average price of imported coal in Europe NBP gas
GRTgaz based on electronic stock exchanges_ 13
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
1.2 world prices again contrasted in 2014
In recent years, the growth in production of shale in 2014, three times lower than in Europe. LNG
gas in the USA, the biggest gas producer in the prices in Asia in 2014 stayed at $16/MMBtu, thus
world in 2014 (7), the drop in consumption in Eu- attracting most of the worldwide LNG production.
rope and the strong demand for gas in Asia have However, the first half of 2015 points to fresh
led to major price differences between continents. changes. The drop in crude oil prices triggered a
The situation remained unchanged in 2014. The slump in Asian LNG prices in December 2014, to
spot prices in the USA remained below $4/MMBtu between $6 and $8/MMbtu. The fall in Asian de-
CHANGE IN WHOLESALE GAS PRICES ON THE WORLD'S MAIN MARKETS
18
USD/MBtu
16
14
12
10
8
6
4
2
0
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
LNG Japan cif Average German import price UK Heren NBP US Henry Hub
BP Statistical review 2015
CHANGE IN LONG-TERM CONTRACT AND SPOT PRICES IN EUROPE
45
€/MWh
40
35
30
25
20
15
10
Fe 13
13
Ap 13
Ma 13
Jun 13
Jul 13
Au 13
13
Oc 13
No 13
De 13
Jan 13
Fe 14
14
Ap 14
Ma 14
Jun 14
4
Au 14
14
Oc 14
No 14
De 14
Jan 14
Fe 15
15
Ap 15
Ma 15
Jun 15
5
01
01
0
20
20
0
0
0
0
20
20
0
20
20
0
20
20
0
0
0
20
20
0
20
20
0
20
20
0
0
.2
r. 2
y2
e2
y2
t. 2
.2
r. 2
y2
e2
y2
t. 2
.2
r. 2
y2
e2
b.
g.
pt.
v.
c.
b.
g.
pt.
v.
c.
b.
rch
rch
rch
Jan
Jul
Se
Se
Ma
Ma
Ma
PEG North DA PEG South/TRS DA TTF DA ZTP DA NCG DA PSV DA PMI German
GRTgaz based on electronic stock exchanges and BAFA (average price of importations in Germany, representative of long-term contracts)
7. BP Statistical review of world energy 2014.14 _
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
mand (restarting of the nuclear power plants in
Japan, slowing growth rates in China) and new PEG SOUTH (TRS) / PEG NORTH PRICE DIFFERENTIAL
gas liquefaction capacities in Australia are other
14
factors keeping prices low. €/MWh
12
In Europe, the spread between spot market prices 10
and long-term contract prices is decreasing.
8
Northwestern marketplaces are tending towards
6
homogeneity, apart from the markets in south-
4
west Europe, PSV in Italy and PEG Sud/TRS.
2
PEG Sud (or Trading Region South since 1 April
0
2015) saw high overall prices from 2012 to
-2
2014. Due to the fall of LNG deliveries in Europe,
Ap 011
Jul 011
Oc 011
Jan 011
Ap 012
Jul 012
Oc 012
Jan 012
Ap 013
Jul 013
Oc 013
Jan 013
Ap 014
Jul 014
Oc 014
Jan 014
Ap 015
5
01
in particular at Fos and in Spain, the pipeline-
.2
r. 2
y2
t. 2
.2
r. 2
y2
t. 2
.2
r. 2
y2
t. 2
.2
r. 2
y2
t. 2
.2
r. 2
Jan
transmitted gas flows towards the South of France
showed sharp increases, saturating the North-
South link in France. The price spreads between zero in 2011, rose to €1.6/MWh on average in
GRTgaz’s North and South zones, which stood at 2012, and €3.5€/MWh in 2014.
the trading region south
The TRS (Trading Region South), the market subscribe capacities at the interconnections
area common to TIGF and GRTgaz in the between the two networks. They no longer
South of France, was launched on 1 April have to declare, each day, the quantities that
2015. The TRS was set up with the aim of they want to transmit via these capacities.
enhancing the attractiveness of the French
The two French transmission network opera-
market, by increasing the liquidity and depth
tors (GRTs) cooperated closely to develop
of the southern market. Designed within the
the operating modalities for the joint trad-
framework of the European target outlines,
ing point:
this model of market area integration is a
• GRTgaz deals with transactions for the
first for Europe.
whole of the new market area and eval-
In this single market, the gas flows from uates the physical flows transmitted be-
customers enter and leave via any physical tween the GRTgaz and TIGF networks;
point of the GRTgaz and TIGF networks. Any • TIGF is in charge of calculating the shipper
imbalance between shippers in the Trading imbalances in the mesh of the two GRTs’
Region South are spread between the two balancing zones.
GRTgaz Sud and TIGF balancing zones,
The principles of the TRS model were vali-
which continue to exist in the same way as
dated by the CRE deliberation dated 22 May
before implementation of the TRS.
2014 “covering the operating rules for the
With the TRS, shippers thus benefit from market area common to the GRTgaz Sud
a simplified system that avoids having to and TIGF zones as from 1 April 2015”._ 15
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
The fall in LNG prices noted in Asia at the end
TOTAL TRADED VOLUMES ON CONTINENTAL
of 2014 led to price drops in the Trading Region HUBS VERSUS NBP
South, and to enhanced levels of availability for
2 000
the North-South link.
Bcm
Nonetheless, GRTgaz remains committed to main- 1 500
taining the steps taken to optimise the capacity
made available for shippers, where necessary, and 1 000
improve gas offer in the South whenever possible.
500
In 2014, the TTF market moved to first place in
the classification of European markets in terms 0
of volumes traded, with the British NBP market
05
06
07
08
09
10
11
12
13
14
96
97
98
99
00
01
02
03
04
20
20
20
20
20
20
20
20
20
20
19
19
19
19
20
20
20
20
20
remaining the biggest physical market. According
Netherlands (TTF) Netherlands (TTF)
to an ACER study published early in 2015, only (Est. netted volumes prior nomination)
Germany (NCG and GASPOOL)
Belgium (Zeebrugge and ZTP)
the British hub reaches the objectives of the Gas Italy (PSV)
France (PEG)
Target Model, with the TTF as the other market Austria (CEGH)
United Kingdom (NBP)
Continental (estimated)
coming closest to them.
IHS Energy, national sources
THE MAIN GAS TRADING POINTS IN EUROPE
TTF
Gaspool
NBP ZEE
ZTP
NCG
PEG North
CEGH
PSV
TRS
MS-ATR16 _
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
1.3 stabilisation of supplies
Russia, the biggest supplier for Europe main supplier. The fall in LNG prices in Asia late in
in 2014 2014 led to a renewed surge of LNG deliveries to
Production in the European Union fell by 10% in Europe, with a 21% increase in deliveries during
2014, mainly due to the limitation in the produc- the first half of 2015 as compared with the first
tion capacity of the Groningen field in the Nether- half of 2014.
lands. The European Union’s production none-
theless remains the main source of natural gas in GAS SUPPLIES FOR EUROPE
2014, providing 34% of its supply.
In bcm 2013 2014
The mild weather has quite logically led to major
reductions in the volumes imported, in particular EU production 147 132
from Russia. However, Russia is still the biggest Russia 136 121
supplier of gas to the European Union, providing
Norway 105 103
31% of supply, followed by Norway (26%) and
Algeria (8%). Algeria 35 30
Qatar 23 23
LNG deliveries to Europe remained stable in 2014
as compared with 2013, after two consecutive Nigeria 7 4
years of decline. They were halved between Others 13 11
2011 and 2013, falling from 85 to 45 bcm, with
Total 469 424
40 bcm rerouted to Asia. LNG now accounts for
just 11% of European supply, with Qatar as the BP Statistical review 2015
GAS SUPPLIES FOR EUROPE IN 2014 (IN BCM)
LNG terminals
LNG terminals under construction
Supplies via gas pipelines
LNG supplies Norway
101
Qatar 23
Russia
Algeria 11 121
EU production
132
Nigeria 4
Other (Trinidad
and Tobago, Peru,
Norway) 7
Algeria
20
Libya
6
BP Statistical review 2015_ 17
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
Full storage facilities
Stored natural gas plays an essential part in ensu-
ring the security and flexibility of the European
REPLENISHMENT LEVELS OF EUROPEAN
network, in particular to deal with peak consump- STORAGE FACILITIES (EU 28)
tion in the winter. However, the reduced price
spreads between summer and winter on the spot
90
markets in recent years have had a negative effect 80
bcm
on the storage levels. On the contrary, the fears 70
caused by the Ukraine crisis, together with the ex- 60
ceptionally mild weather, led to the replenishment 50
of storage facilities in 2014. The fall in crude oil 40
prices late in 2014 led to reductions in gas storage 30
levels during the 2014/2015 winter to fill them 20
up with cheaper gas during the summer of 2015. 10
0
In the light of the decreasing European production,
0
10
10
0
0
0
0
10
0
0
0
0
01
01
01
01
01
01
01
01
01
20
20
changes in weather patterns and geopolitical ten- 20
.2
r. 2
y2
e2
y2
t. 2
t. 2
v. 2
c. 2
.
g.
rch
Fev
Jan
Ma
Jul
Ap
Jun
Sep
Oc
No
De
Au
Ma
sions such as those between Russia and Ukraine,
suitable use of the storage capacity is one of the
crucial questions discussed when drawing up the 2011 2012 2013 2014 2015
European Strategy for the Security of Energy Supply.
GSE 2015
STORAGE AND REGASIFICATION CAPACITIES IN EUROPE IN 2014 (IN BCM)
ESTONIA
LNG terminals
LNG terminals under construction
Annual regasification SWEDEN
LATVIA
capacity in bcm/country
Annual storage capacity
in bcm/country DENMARK
LITHUANIA
EU 28 total 4
195 108
IRELAND
13
UNITED KINGDOM
POLAND
5 NETHERLANDS
12
GERMANY
52 BELGIUM
9 25 UKRAINE
CZECH REPUBLIC
LUX.
3 SLOVAKIA 32
3
12 AUSTRIA
HUNGARY
8
6
ROMANIA
SLOVENIA
22
BULGARIA
ITALY
17
SPAIN
15
4 GREECE
PORTUGAL TURKEY
62 12
Gie 201518 _
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
1.4 uncertainty over long-term demand
In its World Energy Outlook 2014, the IEA con- However, European consumption could rise as
firmed its forecasts concerning a relatively small from 2020 under the effects of stricter regulations
increase in demand for natural gas in Europe, covering emissions of CO2 and other pollutants,
while revising it further downwards as compared which are likely to hamper use of coal for electri-
with its own forecasts in 2013. Gas consumption city generation and encourage use of gas as a fuel
has slumped since 2010 due to slower economic for public transport systems.
growth and competition from coal and renew-
According to Eurogas, gas could account for
able energy sources for electricity generation. It
24% to 30% of European primary energy con-
is unlikely to return to its historic levels before
sumption in 2035, with the share of natural gas
2030-2035.
in electricity generation representing the main
factor of uncertainty.
EU GAS CONSUMPTION FORECASTS IN BCM
650
bcm/year
600
550
500
450
400
2010 2012 2020 2025 2030
AIE 2012 AIE 2013 AIE 2014 - new policies
AIE - World Energy Outlook 2012, 2013, 2014_ 19
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
Over the medium and long term: Moreover, according to the Norwegian autho-
an acceleration in the importation rities, exports of Norwegian gas to Europe are
requirements? likely to fall as from 2020, and be reduced from
According to the IEA, the fall in conventional gas 115 bcm/year to 50 bcm/year by about 2030, un-
production in Europe, and in particular in the Uni- less fresh fields are found and exploited, mainly in
ted Kingdom and the Netherlands, will lead to a the Arctic region.
rise in imports, which could reach about 100 bcm This means that Europe, and the north-west in
by 2030, i.e. more than twice the consumption in particular, will have to rely on new gas imports,
France. Imports, which represented 69% of Euro- with Russian gas and LNG the most likely sources.
pean supply in 2014, could reach 80% in 2035.
The first signs of a return of LNG in Europe were
These new importation requirements could see noted in 2015. The trend could well be confirmed
acceleration. In the Netherlands, following earth- with commissioning of new liquefaction capaci-
quakes in the Groningen region, the Dutch govern- ties in Australia and on the eastern coast of the
ment announced on 23 June 2015 that production USA (160 bcm of annual capacity between 2015
from the field, the largest natural gas deposit in and 2018), whereas worldwide demand for LNG
Western Europe, would be limited to 33 bcm for is unlikely to exceed +3% per year, due to the
the gas year 2015/2016, as against a maximum slowdown in growth in Asia, the restart of nuclear
production of 425 bcm over the 2006-2015 pe- power plants in Japan and the disappearance of
riod. Further decisions are expected late in 2015. LNG demand in the USA.
EVOLUTION OF THE CONVENTIONAL GAS PRODUCTION IN EUROPE
160
bcm/year
140
120
100
80
60
40
20
0
15
16
17
8
19
20
21
22
3
24
25
26
27
8
29
30
31
32
33
34
35
1
2
2
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
NL UK DE IT Others
TYNDP 201520 _
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
1.5 the european energy policy and its objectives
Energy is one of the priorities set by the new Euro-
pean Commission appointed following the Euro-
pean parliament elections in May 2014.
objectives for 2030
Its new president set out to create a collegial or-
ganisation. Energy is thus the prerogative of two 27%: share of renewable energy sources
members of the Commission:
• the Vice-president for Energy Union; 27%: energy savings
• the Commissioner for Climate Action and Energy. 40%: reduction in greenhouse gas
Indeed, the European Union is faced with a double emissions as compared to 1990
challenge: reaching the objectives that it set itself
regarding reductions in CO2 emissions on the one
hand, and maintaining the security of supplies
in spite of the unrest in Ukraine and the Middle
East on the other hand. This has to be done in a for Europe as a whole. Amongst other things,
difficult economic context in which the European this reflection is to lead to revision of regulation
industrial concerns are losing competitiveness as 994/2010 governing security of supply.
compared with their American counterparts, who
These two priorities, lowering CO2 emissions and
are able to make the most of competitive energy
security of supply, form the basis of the wor-
costs as a result of the shale gas revolution.
king programme adopted by the Commission for
The Member States have adopted a framework of energy. The programme could be summed up
action regarding energy and the climate over the by the communication published on 25 February
2020-2030 period, in which they have set strict 2015 COM(2015)80 entitled “A Framework Stra-
objectives at the scale of the European Union: re- tegy for a Resilient Energy Union with a forward-
ducing greenhouse gas emissions by 40% as com- Looking Climate Change Policy”. It sets out the
pared with 1990 before 2030, and increasing to European strategy along five avenues:
27% the share of renewable energy sources in the
final energy consumption (8). • Energy security, solidarity and trust
The Commission is determined to enhance diver-
This is the ambition that the European Union will
sification of natural gas supply (sources, suppliers
present at the 21st Conference of parties at the
and routes), relying mainly on central Asia and the
2015 United Nations Framework Convention on
Mediterranean (e.g. Algeria). The future European
Climate Change in Paris (COP21).
fund for strategic investments could thus well be
Furthermore, the uncertainties raised by the Rus- called on.
sia-Ukraine crisis led the Commission to propose
The Commission will also rely on the future stra-
on 28 May 2014 a new European Strategy for
tegy for LNG and storage, which was the object of
the Security of Energy supply (ESSES). Indeed, five
a public consultation during the summer of 2015.
EU countries (Finland, Slovakia, Bulgaria, Estonia
and Lithuania) are 100% dependent on Russia Lastly, the revision regulation 994/2010 on se-
for their gas imports, and the level stands at 39% curity of supply is likely to highlight cooperation
8. 2030 climate and energy framework, European Commission, January 2014._ 21
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
between Member States. The Commission’s Stress • “Decarbonisation” of the economy
Tests indeed showed that this is a necessary condi- The Commission continues to make the ETS (Emis-
tion for efficient crisis management by the market sion Trading System) the cornerstone of its strategy
and the institutions alike. to cut CO2 emissions. Europe also sets out to be-
come the leader in development of renewable en-
• A fully-integrated internal energy ergy sources from a technological standpoint, and
market also in terms of integration with the market rules.
This is based on physical integration of the infra-
structures, and also on implementation of a cer- • Research, innovation
tain number of rules governing use. and competitiveness
Regulation 347/2013 on Projects of Common In- The four main lines of research identified by the
terest and the corresponding funds participate in European Commission are: development of a new
development of the infrastructures enabling each generation of renewable energy sources, intelli-
European consumer to benefit from secure sup- gent networks, energy efficiency and transport.
plies at competitive prices. Enhanced coordination between Member States
Implementation of the network codes is likely to and the Commission is also expected for deve-
enable efficient, transparent, non-discriminato- lopment of the CCSR (carbon dioxide capture,
ry use of the infrastructures. In this respect, the storage and recovery) activities and safety in the
ENTSOG has made major contributions to har- nuclear power field.
monisation of practices by drawing up all the The working programme is currently being dis-
network codes currently planned. The network cussed and further details will be forthcoming. For
code on harmonisation of transmission tariffs is natural gas, the next steps are as follows:
the last one that remains to be approved, after
• the first forum on infrastructures in Copenha-
being submitted to the ACER for the second time
gen on 9 and 10 November;
on 31 July 2015.
• proposal by the Commission in the first quarter
of 2016 of a “gas package” including a proposal
• Energy efficiency helping to moderate
to revise regulation 994/2010 on security of
demand
supply and the European strategy for LNG and
The main efforts will be centred on the transport
storage.
and building sectors, where potential savings
are seen as being considerable. In particular, the As things stand, it is not certain that these actions
Commission will put forward a strategy dedicated will provide enhanced visibility as to the long-term
to heating networks. Concerning transport, the role for gas. The future remains uncertain for the
efforts must be centred on development of alter- actors in the gas industry, and this weighs on
natives to road transport (i.e. rail, waterway and the investment decisions, for which visibility over
maritime solutions) and to crude oil for road trans- periods of 30 to 50 years is fundamental. None-
port. Within this framework, the Commission pro- theless, the transmission infrastructures are more
poses further measures to the Member States in vital than ever for the energy security of Europe,
the “Alternative Fuels Infrastructure” Directive. as set out below.22 _
EVOLUTION AND PROSPECTS
FOR THE GAS MARKET IN EUROPE
1.6 development of gas infrastructures in europe
Development of gas infrastructures is aimed at se- then simulated up to 2035, using several sets of
curing access to resources, putting an end to the hypotheses as to annual and peak demand, sup-
dependency of certain Member States on a single ply and prices per source, and partial or complete
source, widening the range of choices, and facilita- execution of the infrastructure development.
ting trading between the most competitive sources
The results are provided in the form of a dozen or
for the benefit of the end customers. The aim is
so indicators showing various perspectives of the
also to enhance the flexibility of the gas system to
European energy policy pillars.
meet the requirements of modulated use of gas.
The latest edition, ENTSOG TYNDP 2015-2035,
In March 2013, the European Parliament adop-
was published in March 2015. It sets out a sum-
ted a regulation “concerning guidelines for trans-
mary of the gas infrastructure projects at the Eu-
European energy infrastructures”. In the field of
ropean level, including the GRTgaz 2014-2023
gas, four main strategic corridors for Europe are
Network Development Plan.
identified, including one that concerns France di-
rectly: the North-South corridor for Western The extension of the TYNDP time frame from ten
Europe, which is aimed at better interconnecting to twenty-one years has shed light on structural
the Iberian peninsula and Italy with the north- trends. Although the priority for 2025 is to com-
west European markets. The regulation also de- plete integration of the European market, and
fined “Projects of common interest” (PCIs) that its infrastructure component in particular, main-
benefit from accelerated authorisation procedures taining diversification of supplies can be seen as a
and incentive measures, and are eligible for Euro- long-term challenge, due to the fast reductions in
pean Union financial backing. production of conventional gas in Europe.
The ENTSOG Network Development Finalising integration of the European
Plan (TYNDP) infrastructures
Within the framework of the implementation The modelling of the European gas system shows
of the third energy package, the ENTSOG publi- that apart from the most outlying regions (Baltic,
shes a Ten Year Network Development Plan (TYN- south-east and Iberian Peninsula), the level of in-
DP) every two years. This information document tegration is already high. This result is confirmed
takes into account the development plans of each by the convergence of market prices along a wide
Member State. It is aimed at assessing the ade- diagonal from the NBP to the PSV. Implementation
quacy of the scenarios covering supply, demand of the network codes should enable the coun-
and infrastructure development in the light of the tries of Central Europe to benefit in full from the
three pillars of the European energy policy (com- existing infrastructures.
petitiveness, security of supply and sustainability).
Although the Iberian Peninsula, and to a lesser
Now that regulation 347/2013 on the trans-
extent the south of France, remain heavily de-
European energy infrastructures has come into
pendent on the LNG market, that exposure is not
force, the TYNDP also constitutes the initial stage
problematic in terms of security of supply, due to
for the selection of PCI projects.
the diversification of this type of import. On the
For this purpose, the European network model other hand, the heavy dependence of the coun-
takes into account the balancing zones, the in- tries in the Baltic region and south-east Europe on
terconnections between zones, the importation Russian gas remains a source of concern for deve-
capacity (including LNG) and storage facilities. lopment of these markets and their integration in
The adequacy between supply and demand is the rest of Europe.You can also read
