In an increasingly integrating market, we take on the challenge of maintaining, and where possible strengthening, our leading position as a cross-border gas infrastructure player.
Cooperation at European level
The transport of natural gas takes place in a market with internationally operating parties. The customers of GTS and Gasunie Deutschland also operate partly across borders. This calls for an international approach. Connecting gas markets will create a bigger market, with more suppliers. This generates more competition, which has a positive effect on prices. All gas consumers in the region will benefit from this.
Auctioning via PRISMA
On 1 April 2013, GTS and Gasunie Deutschland started to offer day-ahead capacity (including bundled capacity where possible) at a number of border points. This capacity is auctioned on the PRISMA platform, which was co-founded by GTS and Gasunie Deutschland. PRISMA is a new European booking platform for shippers, developed by 19 European network operators. The platform offers an opportunity for auctions at border points, allowing capacity on both sides of the border to be bundled. In addition, shippers can book capacity at domestic exit points. The platform also facilitates a secondary market, which allows customers to offer for sale capacity they have already booked. For shippers, PRISMA is a uniform point of entry for buying and selling capacity products in various European countries. As of 2014, GTS and Gasunie Deutschland will start auctioning the capacity that is already available at all of their border points via PRISMA.
Implementation of network codes
In order to stimulate the development of a competitive European gas market, the TSOs are cooperating in, for instance, ENTSOG. Within ENTSOG, stakeholders can, amongst other things, coordinate their plans in the field of European network codes, the ten-year network development plan, and the promotion of transparency. In 2013, several developments took place in the context of European legislation and regulations, guidelines and network codes.
The EU strives to deal more efficiently with the capacity available at interconnection points. The European Commission has therefore commissioned the development of the network codes CAM and CMP. In 2013, GTS and Gasunie Deutschland worked hard on preparing the implementation of these two codes. The introduction of CAM and CMP makes it possible to fully exploit the connections between the network of Gasunie and the networks that surround us. This has positive effects on the development of the TTF gas trading point. PRISMA also already complies with these codes.
Growing gas trading points
Gasunie wants to expand the current leading position of the TTF gas trading point, the most liquid and prominent hub of continental Europe. Trading on the TTF should therefore be made as attractive as possible. A well-developed gas exchange such as ICE Endex can play an important role in this, particularly if the same trend develops on the European continent as in the United Kingdom, where a shift is taking place from bilateral trade to gas trade via an exchange.
TTF is the Dutch virtual trading point where gas can be traded. Over the past five years, TTF has grown into one of the most prominent liquid gas hubs in Europe, alongside the English NBP. Despite the declining demand for gas in north-west Europe, TTF managed to maintain its high level in 2013. A well-functioning gas trading point attracts traders who each bring along their own gas. This is good for security of supply, and also ensures that supply and demand can function properly. A high level of liquidity raises the confidence of market parties and has a positive effect on pricing.
In 2013, a total of 8,287 billion kWh of gas was traded via TTF (compared to 7,569 kWh in 2012) – both via bilateral trade (OTC) and via exchanges. The physical volume flowing through TTF (the net TTF volume) increased in 2013 from 417 billion kWh in 2012 to 447 billion kWh. This means that, just as in 2012, the physical TTF volume is larger than the domestic gas consumption in the Netherlands. In other words, both the Netherlands and other countries use TTF to meet their demand for gas. In 2013, the number of active TTF traders was 113, well above that of 2012 (104).
On 1 March 2013, the energy exchange APX Endex was split into an electricity part (spot trade and clearing) and a derivatives and spot-gas part. The derivatives and spot-gas part continued as ICE Endex, with ICE as its major shareholder. Gasunie has a share of 20.88% in ICE Endex.
We also see growth at the North-German virtual gas trading point GASPOOL, which is significantly smaller than TTF. In 2013, the traded volumes and liquidity of GASPOOL both increased. The traded volume was 1,251 billion kWh and the net volume 444 billion kWh (compared to 981 billion kWh 2013 and 389 billion kWh respectively in 2012). At the end of 2013, 355 traders were active on GASPOOL, considerably more than in 2012 (314 traders). This growth is expected to continue in the coming years.
Developments in cross-border infrastructure
Expansion towards the north
Due to various developments, there is a growing need for extra transport capacity through Germany, towards the north. For instance, domestic gas production in Denmark is in decline, and there is more demand for natural gas in Schleswig-Holstein and the Hamburg region as a consequence of the German Energiewende. We have therefore initiated an expansion project called ExEll. This will be carried out in two phases. In Phase 1, a new compressor station will be built at Embsen. This is expected to become operational on 1 October 2014. In Phase 2, a new compressor station will be built at Quarnstedt, a 65-kilometre pipeline will be laid between Fockbek and Ellund, and a new metering and regulating station will be built at Ellund. The pipeline is expected to be completed by the beginning of 2015, and both stations are expected to be completed in late 2015 or early 2016. The entire ExEll project is part of the German NEP.
The connection with the United Kingdom
For the United Kingdom, the BBL gas pipeline between Balgzand and Bacton forms an important connection with the gas market on the European mainland. Due to the prolonged cold winter of 2012/2013, large differences arose between gas prices on the Continent and those on the British gas market. As a result, in March 2013, BBLʼs capacity was temporarily completely sold out.
Connection to the Russian gas supply
After becoming partially operational at the end of 2012, NEL became fully operational on 1 November 2013. NEL is the connecting pipeline between Nord Stream’s landfall point in Greifswald (North Germany) and our own German network. As a consequence of the licensing process for NEL, we decided to use an alternative route over a distance of 40 kilometres, which resulted in the project being delayed.
When NEL became fully operational, Nord Stream was also able to offer its full capacity of 537 billion kWh (55 billion m3) per year to the market. As a result, north-west Europe is now well connected with Russian gas supplies, increasing security of supply.
In 2014, Nord Stream shareholders (including Gasunie) are expected to receive dividend from Nord Stream for the first time.
NEL is managed by GOAL. GOAL acts on behalf of Gasunie as a joint-venture partner in NEL, together with NEL Gastransport GmbH, E.ON Global Commodities SE and Fluxys Deutschland GmbH. In September 2012, GOAL exercised its right to take over 5.13% of the share of E.ON Global Commodities SE in NEL (10%). This transaction took place on 1 November 2013, when NEL became fully operational. This increased GOALʼs share in NEL to 25.13%.