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The role of natural gas storage The role of natural gas storage in the changing gas market landscapein the changing gas market landscape
Jean-Marc LeroyGSE President, CEO of Storengy
24th World Gas ConferenceBuenos Aires, 5th-9th October 2009
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Our sites and current developments Our sites and current developments
www.storengy.com
3
Gas Storage Europe Gas Storage Europe
GSE represents the interests of :33 Storage System Operators,
with 110 storage sites in 16 countries in Europe,
representing approximately 86% of Europe’s technical storage capacity.
4
Valuable tools on our website Valuable tools on our website ––www.www.giegie..eueu.com.com
Aggregated European Gas Storage Inventory
European Storage Investment Database and GSE Storage map
GSE Position papers on strategic storage, on third energy Package, on capacity allocation mechanisms & congestion management methods, key messages on the flexibility market
5
Agenda Agenda
1.1. European gas storage market European gas storage market –– OverviewOverview
2.2. Gas Storage development and opportunitiesGas Storage development and opportunities
3.3. European legislative frameworkEuropean legislative framework
4.4. European gas storage market: main issuesEuropean gas storage market: main issues
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1.1. European gas storage market European gas storage market --OverviewOverview
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European GasEuropean Gas SupplySupplyTransmission systemTransmission system
8
2011,9
14
1,6
2,3
2,3 2,6
3,7
54
2,7
0,8
0,6
2,3
0,6 0,6
Spain
France
Belgium
Great Britain
Netherlands
Germany
Poland
Latvia
Italy
Denmark
Czech R.Slovakia
AustriaHungary
Romania
Bulgaria
Croatia
4
0,2
Portugal
The overall working gas volume in EU-27 is around 82 bcm
Source: GSE 2008, CEDIGAZ 2007
Europe storage facilities : working gas volume in bcm
Storage volumes in EUStorage volumes in EU--2727––current situationcurrent situation
9Source: SG Equity Research / Eurogas / GSE 2008
Austria
Belgium, Portugal,Switzerland
Bulgaria
Hungary
Ireland
Italy
Netherlands
Poland
Romania
Slovakia
SpainUnited-Kingdom
Danemark
Czech Republic
Estonia, Finland,Lithuania, Lux.
0%
10%
20%
30%
40%
50%
0% 20% 40% 60% 80% 100%
Imports / Demand (%)
Stor
age
/ Dem
and
(%)
FranceGermany
EU-27Storage/Imports = 25%
EU-27 2020eEU-27 2030e
… and to assess the … and to assess the need for new storageneed for new storage
EU storage volumes need to be expanded by 50 bcm until 2025!
Another way to look at Another way to look at storage in Europe…storage in Europe…
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Security of supply issues (1/2)Security of supply issues (1/2)
European commercial storage facilities have played and play a key role in ensuring security of supply.
The real issue is a lack of diversification in supply sources and supply routes for some countries.
Security of supply
Diversification inthe energy mix
Diversification in the energy sources
Diversification insupply routes
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Security of supply issues (2/2)Security of supply issues (2/2)
The good functioning of the commercial storage facilities has been proven during several crisis.
The development of commercial storage in a more interconnected market must be fostered in order to reinforce security of supply in Europe.
Strategic stocks should not be deemed as a solution for the security of supply problem.
There should not be a confusion between strategic storage facilities and stock obligations in commercial storage facilities (Strategic stock management) in order to ensure security of supply for the customers.
More transparency in stocks information from system operators is paramount.
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2. Gas Storage development and 2. Gas Storage development and opportunitiesopportunities
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Gas Supply Gas Supply for Europefor Europe
Source : Cedigaz 2005
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Europe : Europe : Supply Capacities Supply Capacities in in 2006 & 20152006 & 2015
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New uncertainties facing the New uncertainties facing the European gas marketEuropean gas market
COMMERCIAL
DEMANDSUPPLY
• LNG is flexible• Transit and by-pass• The Fourth Corridor• Unconventional gas in
Europe• What price for investment
economics?• Where will costs settle?• Availability of debt
• Impact of recession• Role of 20/20 targets
… leading to … leading to opportunities in gas opportunities in gas storage developmentstorage development
Source: Cambridge Energy Research Associates, 2009
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European gas market Gas Demand Growth European gas market Gas Demand Growth —— Dependent on the Success ofDependent on the Success ofRenewablesRenewables and Efficiency Policiesand Efficiency Policies
Xxx
0
200
400
600
800
2000 2005 2010 2015 2020 2025 2030
Bcm
Power Range:160 Bcm
Demand Range:280 Bcm
Majority of uncertaintyfrom power sector
Power Generation
Total Demand
Low power demand growthHigh renewables, Post 2020: nuclear, CC&S
A stagnation can be observed in the last 3-4 years
Note: Europe = EU27, Switzerland, Norway, Balkan countries and TurkeySource: Cambridge Energy Research Associates, 2009
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Why are gas storage needs increasing in Europe?Why are gas storage needs increasing in Europe?
Longer transportation routes
Decreasing EU gas production
Increase of gas imports
Increase of interruptible renewable power generation installed capacity
Increase of gas-fired power generation installed capacity
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Investment : Commercial Storage Investment : Commercial Storage Operators are responding to Operators are responding to market needsmarket needs
• Database of EU storage investments updated regularly (launched in July 2007) : – Projects divided into 3 categories: planned, committed and under
construction
• Main results:– From an initial 30 bcm WG capacity increase to 2015 (July 2007) to
around 63 bcm (February 2009)
– Grand total of around 110 projects : new players are increasing their role : 25% of projects / 30% of planned new capacity (~19 bcm)
http://www.gie.eu.com/maps_data/database/index.html
19
0
2500
5000
7500
10000
12500
15000
17500
20000
22500
AUSTRIA
BELGIU
MBULG
ARIA
CZECH REPUBLIC
DENMARKFRANCE
GERMANYHUNGARY
ITALY
LATVIA
LITHUANIA
NETHERLANDS
POLAND
PORTUGALROMANIA
SERBIA
SPAIN UK
mcm
Jul-07
Jan-08
Jun-08
Feb-09
http://www.gie.eu.com/maps_data/database/index.html
The last update of the GSE Investment Database showed that over 63 bcm of
additional storage capacity can be expected in Europe by 2015
Investment : Commercial Storage Investment : Commercial Storage Operators are responding to Operators are responding to market needsmarket needs
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3. European legislative framework3. European legislative framework
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3. European legislative framework3. European legislative framework
• European legal framework:– Security of supply (2004) – Internal market liberalisation (2003)
• Ensures Third Party Access (TPA) to storage • Gives alternatives for Member states: Regulated / Negotiated
• European voluntary guidelines: Guidelines for Good Practices for Storage System Operators (GGPSSO)
– Compliance with GGPSSO shows a transparent and non-discriminatory access to storage
• 3rd Energy Package including a 3rd gas directive
2 directives for 2 objectives
3rd directive
GSE believes that - the choice of access regime should be market oriented- negotiated TPA should be the preferred choice wherever market conditions allow as this regime best facilitates investments andfurther development of the market
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4. European gas storage 4. European gas storage market : main issuesmarket : main issues
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European gas storage market : European gas storage market : main issuesmain issues
European gas storage development : we will have to develop as much capacity over the next 20 years as we have developed over the last 60 years.
Competition with other flexibility tools : indigenous gas production swing, imported pipeline gas contract flexibility, peak shaving, spot markets, imported LNG, new transmission lines, interruptible gas, …
Attracting funding : we have to invest up to 50 billion euros over the next 20 years to face this development in the context of the current economic crisis.
A stable European Regulatory framework that encourages new storage developments as well as the optimal use of existing storage facilities is essential.
Europe’s etymology : Europe’s etymology : “the far“the far--seeing one” seeing one”
Thank you for your attention!Thank you for your attention!
www.gie.eu.comwww.gie.eu.com