Vienna, 24 november 2006 1
GRI SSE: work done so far
1. Assessment summary on selected transportation routes ongoing
2. Preliminary paper on hubs as regional balancing points ongoing
3. Preliminary paper on requierements to introduce a regional ongoing
OSS and E/E tariff system
4. Paper on “Long term planning on a regional level” missing
EFET welcomes the work done by regulators so far but now is time
for actual improvement on the ground
Vienna, 24 november 2006 2
GRI SSE: one–stop-shop provider and regional entry-exit zones
One of the opportunities for better situation on the market (EFET wants
effective unbundling as soon as possible, no matter how)
Simplification of the work for traders and shippers (one counterpart)
Better overview about transit flows and investments (SSE region is facing
insufficient access to the network and in-transparent enhancement)
Ensure clear mechanism for capacity increase
EFET calls for:enhanced inter-TSO co-operation in SSE region
---> enlargement of the E/E zones, in line with European progress
harmonization of regulatory arrangements (all systems to open at same pace,
operational procedures, market-based balancing regime on regional level) and
establishment of OBAs (supporting development of liquid hubs) ---> firm deadline
for the implementation
Vienna, 24 november 2006 3
GRI SSE: hub used as balancing point
Market based balancing more effective and positive for liberalisation than
fixed penalties
Help to increase the liquidity at the hubs in SSE and contribute to security
of supply due to more choice and offers
Allow for pooling of imbalance positions throughout bigger areas
Baumgarten and PSV (potentially) ideal mechanism for providing market
forces with a tool for network balancing
EFET seeks for developing of hubs in SSE as soon as possible Establishment of ad hoc CEGH development group (setting of timeline for
further steps and common requirements on any given hub
Vienna, 24 november 2006 4
Boost liquidity on CEGH through:
Efficient and stable regulatory framework with respect to system access
functioning operational framework
Firmness
Balancing services
Transparency on available capacities
Transparency on prices
Availability of gas and choice of source
Tightness of bid-offer spread
Standardisation (Gas contracts EFET; others Hub)
How to have a well functioning CEGH?
Vienna, 24 november 2006 5
Timeline – CEGH Development
Feb 07 Oct 2008Oct 07
► For Bulletin Board the decision on Market Maker (volume? spread? period? rights and responsibilities?)
► Back-up/-down services► Customer focus
OBAsphysical nomination < 1 day
lead time (now 5 days)Web based nomination
► Workshop CEGH with EFET on products
Mar 07 May 2007
► systematic offering of structured products (week ahead, month ahead) anonymous
► standardised agreements (EFETs)
► (Super-) firm market place
► CEGH takes counterpart risk and makes clearing
► International balancing via CEGH
► online intraday balancing market
► derivative trading with physical hedge/forwards
► gas exchange
► Meeting CEGH with EFET CEGH Working Group (Ressl)
Jan 2009
► Derivative trading► Regional
balancing market
Mar/Apr 07 Jan 2008
► Meeting CEGH with EFET CEGH Working Group (after 20.03)
► day ahead products► intraday products► physical nomination
< 1 day possible► web based
nomination possible
Jul 07
► Operational Market Maker
► Back up/down service
► completion of contractual specifications
Vienna, 24 november 2006 6
… EFET view – Europe currently
V N G
E n e r g i n e t
S v e n s k aK r a f t n ä t
G T S
F l u x y s
E O N - R . T .
G R T g a ze a s t
E n a g a s
B E B
G R T g a zs o u t h
S o t e g
G a l p D E P A
E e s t i G a a s
G e o p l i n
W i n g a s
3 H - g a s z o n e sE O N -
R . T .
V N G
E n e r g i n e t
S v e n s k aK r a f t n ä t
G T S
F l u x y s
E O N - R . T .
G R T g a ze a s t
E n a g a s
B E B
G R T g a zs o u t h
S o t e g
G a l p D E P A
E e s t i G a a s
G e o p l i n
W i n g a s
3 H - g a s z o n e sE O N -
R . T .
Virtual hub (in-grid balancing point)
NBP
TTF
Huberator @Zeebrugge
Physical hub ( e.g border point)
CEGH @Baumgarten
Less liquid gas tradinglocations
Vienna, 24 november 2006 7
European Gas market grid 2010 –allows for enhanced SoS grid
xy
The zones in detail: Zonal Spot price indicator (Hub and Gas Exchange)
0
12
4
see
3
5
Atlantic bassin LNG Spot price
LNG
LNG
LNG
Discussion: Is this possible?Zonal price differentials reflectcross-zonal interconnectivity betweenregions
Border price
Border price
Border price
Border price
Vienna, 24 november 2006 8
Conclusion
GRI necessary intermediate step - but European market goal
Therefore need to include parts of Germany, at least the adjacent
systems to SSE, in the assessment
The introduction of legal requirements should be facts and not
discussed again in a time consuming manner
(Regional) balancing markets are key for a transparent evaluation of
the value of gas and flexibility services and boost Hub liquidity
SSE region lacks availability of gas and physical choice of supply –
authorities urged to accelerate the realisation of all projects leading to
higher choice of supply and thus security of supply, competition and
trade
Vienna, 24 november 2006 9
Backup, not for send out
Vienna, 24 november 2006 10
… transparent information available
Vienna, 24 november 2006 11
… gross vs. net balancing energy
Vienna, 24 november 2006 12
… Balancing markets cheaper than firm storage contract for TSO