WATCHING THE WORLD MIXED UP EC GAS MARKET

On Jan. 1 Germany, France, Netherlands, U.K., Belgium, Spain, Portugal, Greece, Italy, Luxembourg, Denmark, and Ireland became a single market, under the European Community (EC). Britain's failure to win approval for third party access to Europe's gas market came partly because, while the market may be officially single, it is not uniform (OGJ, Dec. 21, p. 27).
Jan. 5, 1993
3 min read

On Jan. 1 Germany, France, Netherlands, U.K., Belgium, Spain, Portugal, Greece, Italy, Luxembourg, Denmark, and Ireland became a single market, under the European Community (EC).

Britain's failure to win approval for third party access to Europe's gas market came partly because, while the market may be officially single, it is not uniform (OGJ, Dec. 21, p. 27).

At its Nov. 30 meeting, the Council of Ministers said, "The wide differences between and within member states' existing energy systems should be recognized. Member states should continue to choose the structure and instruments best suited to their own circumstances. Any new community legislation should be capable of being implemented, taking account of the specific situations in member states, with a minimum of regulation."

MIXTURE

A spokesman for Norway's Den norske stats oljeselskap AS said the U.K.'s formalized approach to third party access would not have been easily transferable to other EC countries. Statoil sees the future EC gas market as a mixture of state and commercial supply.

"The bottom line is that the old days of complete control will not be preserved," said a spokesman. "The market will take care of that, not legislators. The changes are already happening in Germany, where companies are constructing competing pipelines."

The council also said, "Arrangements for the internal market in gas need to ensure the maximum economic development over time and under fair conditions of the gas resources in the community and sufficient supply from third countries.

"A significant part of the community's gas demand is supplied from outside the community in conditions where suppliers are few, thereby increasing the need to safeguard security of supply."

As a major gas supplier to the EC, Statoil takes the view that, as the market changes, it will adapt. But the fragmentation of the market, which is beginning to take place, may conflict with long term security of supply.

COMMITMENT

Norwegian gas producers are committed to supply as much as 1.7 tcf/Year to European customers but expect to expand deliveries to 2.1 tcf/year by 2005. After signing Troll field gas sales contracts in 1986, Norway began spending heavily for infrastructure to produce and deliver the gas.

But Statoil is wary of the growing dualism in the EC gas market. The need for long term commitment, said the spokesman, with its corresponding capital investment, conflicts with the ideology of an open European market.

"If there had been a fragmented market in 1986, there would have been great problems finding a group of investors willing to sink 100 billion kroner ($15 billion) in bringing Norwegian gas to Europe."

Copyright 1993 Oil & Gas Journal. All Rights Reserved.

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