Liddell: Old guard hampering European gas markets

Helen Liddell, the UK minister for energy and competitiveness, hit out at the old guard of vertically integrated energy companies in Europe that continues to undermine liberalization of the continent's gas and electricity markets by hanging onto monopoly positions in their home patch while exploiting markets in other countries with more open competition policies.


Darius Snieckus
OGJ Online

STAVANGER�Helen Liddell, the UK minister for energy and competitiveness, hit out at the old guard of "vertically integrated" energy companies in Europe that continues to undermine liberalization of the continent's gas and electricity markets by hanging onto monopoly positions in their home patch while exploiting markets in other countries with more open competition policies.

Liddell, attending the Offshore Northern Seas (ONS) 2000 conference in Stavanger, Norway, said the long-standing disparity between the "pace of liberalization" in the UK and France has led to a "situation where a French company can enter freely into the UK market, but it is not as easy for a UK company to enter into France." UK objections, she added, had been raised with both the French government and the European Union.

The minister also expressed her "anxiety" at the recent trend in mergers and acquisitions, which she said is giving enlarged companies an anticompetitive advantage based on their "considerable financial resources" to advance commercial interest.

She added that cases of larger companies merging to create "oligopolies" are a concern, as it is unclear whether "such moves help or hinder competition." If the goal is a "true single market in energy," she suggested, national and community competition authorities should take a "careful look at present and future corporate structures" to ensure they are consistent with this aim.

EU gas trade
Opening up the European gas market, following on from the recent EU gas directive, would call for "large-scale structural changes," said Liddell, to counter a scene at present "dominated by powerful monopoly buyers and monopoly sellers, [and] in many cases heavily influenced by governments."

To establish what she termed "real gas-to-gas competition" in Europe and uncouple the long-standing link to oil prices, Liddell said three prerequisites would have to be met: transport activities of large gas utilities that are "truly independent of supply," terms and conditions for access to pipelines that are "transparent and non-discriminatory," and the lifting of contractual restrictions imposed on purchasers preventing them from selling gas to new entrants.

She pointed to Norway as a country that could take the lead in advancing the cause of gas market liberalization, as Europe is the country's chief gas importer.

"Norway stands to reap huge benefits as the European gas market opens up," offered Liddell. "A little more flexibility, for instance in the arrangements for gas sales, would have a positive and not negative impact on your gas sector. I look forward to the day when we can work together on that.

"The task ahead is huge," she added. "But the prize is well worth it."

Norway's Minister of Petroleum and Energy Olav Akselsen made it clear his country, while aiming to "remain a long-term supplier of natural gas to the European market," would need 5 years to write the EU gas directive into national legislation, so as to ensure "optimal allocation of committed but as yet unallocated gas sales" and make adjustments to Norway's resource management.

Dealing with the UK gas market, Liddell put forward Shell Expro's Shearwater field as a prime example of a development that�via the North Sea-to-Europe Interconnector pipeline�would "help secure [the UK's] own gas supply and facilitate trade with Europe."

Future outlay in new gas development on the UK Continental Shelf and "reactivating marginal fields," in addition to investment in the infrastructure to receive and transport gas at "competitive prices" she concluded, would be "key to ensuring sustainable gas supplies."

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