The July 1 opening of gas and electricity markets in Europe jumped to 12 million from 680,000 the number of French customers who can select their gas suppliers, but the Energy Regulatory Commission (CRE) foresees no massive shift to the open market.
CRE Pres. Philippe de Ladoucette said expansion will be slow because the market is concentrated in the hands of historic suppliers Gaz de France, Total SA, and Electricite de France. In addition, government regulated tariffs available to all consumers compete successfully with market prices.
France imports 98% of the gas it consumes, mainly under long-term supply contracts hitched to the price of oil products. For consumers to fully benefit from an open market, more efficient and transparent price signals are needed that reflect the medium and long-term investments required to increase production and network infrastructures.
CRE insists development of interconnections and new points of entry for gas imports are indispensable to help new entrants gain access to the French market. New tariff proposals that became effective at the start of this year are providing inducements for investment in the transport network. These tariffs are adapted to the specific features of two network operators, GDF’s subsidiary GRTgaz (Gestionnaire de Reseau de Transport) and Total’s TIGF (Total Infrastructure Gaz France) that together control 89% of gas imports into France, 83% for GDF and 6% for Total.
CRE said LNG could become a significant alternative with five methane terminals to be commissioned by 2011-12 by competitors of GDF and Total.
European cooperation
A large part of France’s gas supplies transit through European countries, so CRE has closely cooperated with the European Regulators Group for Electricity and Gas (ERGEG). Because of its geographic position, France is part of two of the three regional initiatives that would be forerunners of a single EU energy market. The Northwest initiative includes Germany, Belgium, Denmark, France, the UK, Northern Ireland, Ireland, the Netherlands, and Sweden, which have formed six working groups to deal with cooperation among regulators, quality of gas, transparency, balancing and hubs, and interconnections.
CRE and its German counterpart Bundesnetzagentur together chair the working group dealing with interconnections and primary gas transport capacities. Priority is given to Taisnieres on the France-Belgium border and Obergailbach on the France-German border.
The South regional initiative includes France, Spain, and Portugal but so far is restricted to the two first countries. New capacities are needed because of expected increased gas trade between France and Spain. But at this stage, Spain is capturing some of the gas that flows between Spain and France. A second gas line to link France with Spain’s Bilbao LNG terminal is being built by TIGF in joint venture with Spain’s Gas de Euskadi. Called Escadour, it is due on stream in the fall of 2008 and is intended to increase the capacity of Total’s Lussagnet storage facility.
TIGF, Enagas, and GRTgaz also worked out a joint and broader investment program for French and Spanish gas connections at the points where they meet.
At Larrau, from France to Spain, annual capacity is to increase from 2.9 billion cu m to 6 billion cu m in 2010-11. A 3.6 billion cu m/year capacity has already been decided to come on stream in 2009.
From Spain to France, an initial 3.6 billion cu m/year will be operational in 2010 and a potential 6 billion cu m extension in 2011 is under discussion. At Biriatou, a 400 million cu m extension to 2.2 billion cu m/year from France to Spain, and a 210 million cu m extension to 1.3 billion cu m/year from Spain to France is being proposed.
The third regional initiative covers South-Eastern Europe and includes Austria, Greece, Italy and Central European countries-Hungary, Poland, the Czech Republic, Slovakia, and Slovenia.
