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Assessment Summary on Selected Transportation Routes Gas Regional Initiative – Region: South-South East Assessment Summary on selected Transportation Routes European Regulators’ Group for Electricity and Gas Contact: Council of European Energy Regulators ASBL 28 rue le Titien, 1000 Bruxelles Arrondissement judiciaire de Bruxelles RPM 0861.035.445 GRI-SSE Assessment Summary on selected Transportation Routes Executive summary The underlying report is the result of an analysis by regulators on impediments to transportation on selected transportation routes through the regional energy market South-South East. The report highlights a number of impediments which newcomers may encounter on these transportation routes. Against the background of underdeveloped trading activities at and between hubs of the region, this report shall be devoted to understanding the reasons that hinder it. The routes are analysed by focussing on its separate sections. Special focus is put on whether there are available capacities, whether there exists effective congestion management and how tariffs are computed and whether tariff information is published. Furthermore, transmission system operators were asked if operational balancing agreements at interconnection points have been signed between adjacent system operators. The main problems identified for each transportation route can be summarized as follows: ROUTE 1: UKRAINE-SK-CZ-GER: “The major difficulties for newcomers are missing Operational Balancing Agreements (OBAs) at border points.” ROUTE 2: UKRAINE-SK-A-SI: “Currently, it is not possible for new shippers to transport gas across the analysed route because of physical congestion at some interconnection points along the route; lack of appropriate long term congestion management on TAG system.” ROUTE 3: UKRAINE-SK-A-I: “Viability is still limited to incumbents and represents a bottleneck to the Italian market; lack of appropriate long term congestion management on TAG system” ROUTE 4: UKRAINE-SK-A-GER: “The transportation of natural gas on the whole route from Velke Kapusany to Oberkappel on a firm basis is not possible due to a lack of available capacity.” ROUTE 5: BELARUS-PL-GER: “TPA service may be provided only under permission of main shareholders, especially Gazprom-Export” ROUTE 6: ALGERIA-I-A-SK: “At present the Tunesian bottleneck and related regulation is the main problem. A lack of harmonisation with neighbouring networks may also hinder the usage for other markets.” In summary, viability of the routes assessed in this report is still difficult for newcomers. A lack of transparency separates national markets and makes transport of gas over several TSO systems burdensome. In the cases where there exists contractual congestion, UIOLI provisions are often weak and secondary market trading is not facilitated by TSOs which also hinders effective viability of gas transport. 2/27 GRI-SSE Assessment Summary on selected Transportation Routes Table of contents 1. INTRODUCTION...........................................................................................................4 2. TRANSPORTATION ROUTES.....................................................................................5 2.1 ROUTE 1 – U KRAINE - SK - CZ - GER.......................................................................5 2.2 ROUTE 2 – U KRAINE - SK - A - SI - I .........................................................................7 2.3 ROUTE 3 – U KRAINE - SK - A - I..............................................................................12 2.4 ROUTE 4 – U KRAINE - SK - A - GER .......................................................................15 2.5 ROUTE 5 – B ELARUS - PL - GER ............................................................................18 2.6 ROUTE 6 – A LGERIA - I - A - SK ..............................................................................22 3. CONCLUSIONS..........................................................................................................25 3/27 GRI-SSE Assessment Summary on selected Transportation Routes 1. Introduction Integration and the development of regional gas hubs is a source of commodity re-trading and thus provides for access to natural gas within the borders of the EU. Since trade at and between hubs is very much underdeveloped in the Regional Energy Market SSE, this report will be devoted to understanding the reasons that hinder it. In this respect, 6 transportation routes have been identified with a view to a possible lack of gas liquidity in the Region. The Action Plan for the South-South East regional gas market (Ref.No.: GRI-SE-RCC-02-04) stated practical case studies for transportation of gas through the region as one of its four priority topics. The responses received during the public consultation on the Action Plan supported the case studies in principle. Regulators concluded to carry out a detailed viability analysis of the transportation routes. Practical case studies of gas transportation on the 6 routes through the region have been performed and the results are described in this report. Preliminary results have also been discussed with the transmission system operators of the region in a workshop held on November 24, 2006 and the results of this workshop have been incorporated into this report. Each transportation route is examined by its separate national sections as these are currently run differently. Figure 1 shows a map highlighting transportation routes 1-4. Figure 1 1 4 3 2 Source: GTE 2006 4/27 GRI-SSE Assessment Summary on selected Transportation Routes 2. Transportation routes 2.1 Route 1 – Ukraine - SK - CZ - GER 2.1.1 Description of the route The route is used to transport Russian natural gas through Slovakia and the Czech Republic to Germany and further West, mainly to France. The Slovak section from Velke Kapušany to Lanzhot is run by SPP Preprava and the Czech section from Lanzhot to Waidhaus or Hora Svate Kateriny is run by RWE Transgas Net. The Route in the Czech Republic is divided into direction Lanzhot – Hora Svate Kateriny (hereinafter as “HSK”) and Lanzhot – Waidhaus (hereinafter as “W”). Table 1: Overview of information (as of November 2006) Route 1 SPP RWE Transgas Net Capacity situation Availability of firm and interruptible reduced firm capacity available at available firm capacity, for both exit capacities exit point Lanžot, interruptible points from 5 to 20 percent of technical contracts are available capacity available (capacity situation is displayed as traffic lights due to confidentiality reasons - only 2 shippers) Technical maximum capacity at 301 mcm/day 180 mcm/day section entry Available firm capacity at section 11 mcm/day 5 to 20 percent of technical capacity entry Technical maximum capacity at 134 mcm/day W 83,95 mcm/day section exit HSK 57,99 mcm/day Available firm capacity at section exit 7 mcm/day 5 to 20 percent of technical capacity Duration of contracts offered long-term, yearly and monthly long-term, yearly, monthly and daily Congestion management Congestion Management UIOLI not applied, no bulletin UIOLI – day ahead available procedures (UIOLI principle, board, secondary market trading interruptible capacity, bulletin board Secondary Market) not known to SPP available, secondary market not forbidden Description of expansion plans no expansion plans no expansion plans Description of Capacity Allocation fcfs Preference of contract with longer procedures duration. Fcfs for daily capacity Tariffs Description of the tariff methodology benchmarking prepared by SPP, benchmarking prepared by RWE applied ex ante approval of tariffs by NRA Transgas Net, ex ante approval of tariffs by NRA Availability of contractual or physical physical backhaul, tariffs published Capacity offered for both directions, backhaul flows and published tariffs same price for both directions. No demand for this service. Other issues Length of route section 470 km W – 401 km HSK – 379 km Tariff to be paid for each section of 0,187 0,170 the route (EUR/m 3/h/km/a)1 Units (flow rate) m3/h (at 20°C and 1,01325 bar) m 3/h (at 15°C and 1,01325 bar) Gas day 06:00 am to 06:00 am 06:00 am to 06:00 am OBAs concluded or schedule for OBA has been agreed, will be finally signed until the end of 2006 their implementation 1 transportation case: firm 10-year contract for 100.000 Nm 3/h, load factor = 0,913 (8.000 h per annum), fuel gas not included 5/27 GRI-SSE Assessment Summary on selected Transportation Routes 2.1.1.1 Capacity situation Along the transportation route there is neither physical nor contractual congestion. In the Czech part of the route available and booked capacity is displayed as traffic lights due to confidentiality reasons (currently there are only 2 shippers). A long-term forecast of available capacities for up to 10 years is capacity information is not published according to the Regulation 1775/2005 by SPP Preprava. RWE Transgas Net publishes this forecast stating that even more than 20 percent of available technical capacity would be available in near future. With regards to the requirement of the Regulation to publish capacities down to daily periods, SPP Preprava announced during the workshop that this will be published in due time. Currently SPP Preprava only publishes monthly figures. Capacity booking in Slovakia is based on an entry/exit system, whereas in the Czech Republic booking is based on point to point principle. Details are published also in English on the website of SPP Preprava and RWE Transgas Net. 2.1.1.2 Congestion management SPP Preprava does not provide a bulletin board and secondary market
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