fluxys experience towards liberalization
DESCRIPTION
FLUXYS EXPERIENCE TOWARDS LIBERALIZATION. P. Wailliez - COO Fluxys. A strong acceleration. %. 100. 90. 2010. 2006. 2002 FL Gas. 07/2003. 80. Decree. 70. 2001 B Gas Law. 60. 50. 1999 B Gas Law. 40. 30. 20. 1998 EU GAS. 10. Directive. 0. 2000. 2001. 2002. 2003. 2004. - PowerPoint PPT PresentationTRANSCRIPT
2003204PW - GTE Paris 22.10.03 - 1
FLUXYS EXPERIENCE FLUXYS EXPERIENCE TOWARDS LIBERALIZATIONTOWARDS LIBERALIZATION
P. Wailliez - COO FluxysP. Wailliez - COO Fluxys
2003204PW - GTE Paris 22.10.03 - 2
Liberalization: Fluxys experience
00
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5050
6060
7070
8080
9090
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2000
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MARKET OPENING IN BELGIUM: MARKET OPENING IN BELGIUM: a unique example in Europea unique example in Europe
2002 FL Gas Decree
07/2
003
2001 B Gas Law
2006
1999 B Gas Law
2010
1998 EU GAS Directive
A strong acceleration
Less than 6 months between decision& implementation
2003204PW - GTE Paris 22.10.03 - 3
Liberalization: Fluxys experience
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
• RegulationRegulation
• ActorsActors
• Market and NetworkMarket and Network
• CostsCosts
2003204PW - GTE Paris 22.10.03 - 4
Liberalization: Fluxys experience
BEFOREBEFORE
• Clear Objectives Clear Objectives
• Infrastructures enablingInfrastructures enablingGas Market DevelopmentGas Market Development
• Continuity of SupplyContinuity of Supply
• SafetySafety
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
RegulationRegulation
2003204PW - GTE Paris 22.10.03 - 5
Liberalization: Fluxys experience
NOWNOW
• Same clear objectives butSame clear objectives but
• Regulators at FederalRegulators at Federal& Regional level in Belgium& Regional level in Belgium
– Risk of regulatory pancakingRisk of regulatory pancaking
• Important impact on:Important impact on:
– Value creationValue creation
– ComplexityComplexity(potential dis-optimization)(potential dis-optimization)
TOWARDS MORE COMPLEXITY / UNCERTAINTY TOWARDS MORE COMPLEXITY / UNCERTAINTY
RegulationRegulation
2003204PW - GTE Paris 22.10.03 - 6
Liberalization: Fluxys experience
THEREFORETHEREFORE
• Take initiativeTake initiative
– UnbundlingUnbundling
– Publishing Tariffs Publishing Tariffs
– Coordinate modalitiesCoordinate modalitiesof opening with Distributors.of opening with Distributors.
TOWARDS MORE COMPLEXITY / UNCERTAINTY TOWARDS MORE COMPLEXITY / UNCERTAINTY
RegulationRegulation
2003204PW - GTE Paris 22.10.03 - 7
Liberalization: Fluxys experience
BEFOREBEFORE
• IntegrationIntegration
• Non-detrimental Decisions for TransportNon-detrimental Decisions for Transport(molecule decisions taking into account network (molecule decisions taking into account network integrity)integrity)
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY ActorsActors
2003204PW - GTE Paris 22.10.03 - 8
Liberalization: Fluxys experience
NOWNOW
• Transport not underTransport not underthe umbrella of incumbentthe umbrella of incumbent(incumbent decisions not granted)(incumbent decisions not granted)
– RevenuesRevenues(tariff hypothesis <> reality)(tariff hypothesis <> reality)
– Continuity of SupplyContinuity of Supply(network integrity <> portfolio optimization)(network integrity <> portfolio optimization)
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
ActorsActors
2003204PW - GTE Paris 22.10.03 - 9
Liberalization: Fluxys experience
THEREFORETHEREFORE
• Anticipate shippers Behavior & NeedsAnticipate shippers Behavior & Needs
• Careful design of Access Rules.Careful design of Access Rules.
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
ActorsActors
2003204PW - GTE Paris 22.10.03 - 10
Liberalization: Fluxys experience
BEFOREBEFORE
• Long-term contractsLong-term contracts& Easy forecasts& Easy forecasts
• Infrastructure Developed around ContractsInfrastructure Developed around Contracts
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
Market and NetworkMarket and Network
2003204PW - GTE Paris 22.10.03 - 11
Liberalization: Fluxys experience
NOWNOW
• Shorter TermsShorter Terms& Uncertainties& Uncertainties
• Infrastructure ProjectsInfrastructure Projectsnot tied to Moleculenot tied to Molecule
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
Market and NetworkMarket and Network
2003204PW - GTE Paris 22.10.03 - 12
Liberalization: Fluxys experience
THEREFORETHEREFORE
DevelopDevelop
• Performant Forecasting ToolsPerformant Forecasting Tools
• Probabilistic above Deterministic Approach.Probabilistic above Deterministic Approach.
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
Market and NetworkMarket and Network
2003204PW - GTE Paris 22.10.03 - 13
Liberalization: Fluxys experience
BEFOREBEFORE
• Transport costs includedTransport costs includedin Commercial Marginsin Commercial Margins
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
CostsCosts
2003204PW - GTE Paris 22.10.03 - 14
Liberalization: Fluxys experience
NOWNOW
• Revenues models not always favouring an Revenues models not always favouring an Entrepreneurial BehaviourEntrepreneurial Behaviour
• Deregulation <> OptimisationDeregulation <> Optimisation
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
CostsCosts
2003204PW - GTE Paris 22.10.03 - 15
Liberalization: Fluxys experience
THEREFORETHEREFORE
Further developFurther develop
• Cost ConsciousnessCost Consciousness
• Customer-mind and InnovationsCustomer-mind and Innovations
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTY
CostsCosts
2003204PW - GTE Paris 22.10.03 - 16
Liberalization: Fluxys experience
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTYRegulationRegulation
Be Proactive & Innovative!
- Actors- Actors - Market and Network - Market and Network - Costs- Costs
One Example: Hub in Zeebrugge
(and this happened before Liberalization)
2003204PW - GTE Paris 22.10.03 - 17
Liberalization: Fluxys experience
SPAINSPAIN SWITZERLANDSWITZERLANDITALYITALY
SWITZERLANDSWITZERLANDITALYITALY
EASTERNEASTERNCOUNTRIESCOUNTRIES
Zebra
NETHERLANDSNETHERLANDS
GTS
SotegSoteg
LUXEMBURGLUXEMBURG
Ruhrgas
GERMANYGERMANY
Wingas
UNITEDUNITEDKINGDOMKINGDOM
Transco
Gaz de France
FRANCEFRANCE
OVERSEASOVERSEASLNG sourcesLNG sources
NORWEGIANNORWEGIANGAS FIELDSGAS FIELDS
HUB
Fluxys launched in 98-99the Zeebrugge Hub
2003204PW - GTE Paris 22.10.03 - 18
Liberalization: Fluxys experience
0
1000
2000
3000
4000
5000
6000
99 00 01 02 03
Physical Volumes Net Traded Volumes Trend
20002000 2001200119991999 20022002TJ/day
20032003
ZEEBRUGGE HUB: ZEEBRUGGE HUB: LIQUIDITY LIQUIDITY
Gross Traded Volumes (*) up to 15 106 m³(n) / h
(*) estimated(*) estimated
= 3 9Net Churning
OUTIN
5 Customers
55 Customers
[6 x Transport Capacity between UK & Continental Europe]
[3 x Belgian Peak Consumption]
Market Evolution (// UK)
2003204PW - GTE Paris 22.10.03 - 19
Liberalization: Fluxys experience
HUB CONTRIBUTION TO AN EFFICIENT GAS HUB CONTRIBUTION TO AN EFFICIENT GAS MARKETMARKET
• Opportunities for optimizing Gas Supply Opportunities for optimizing Gas Supply Portfolio through Arbitrage Portfolio through Arbitrage
– Location Location (Zeebrugge (Zeebrugge Bacton) Bacton)
– Spot / Long Term Spot / Long Term
– Spark Spark (Gas (Gas Electricity) Electricity)
– LNG / Pipeline GasLNG / Pipeline Gas
Spread TradingSpread Trading
2003204PW - GTE Paris 22.10.03 - 20
Liberalization: Fluxys experience
0
1
2
3
4
5
6
7
8
9
01/9
703
/9705
/9707
/9709
/9711
/9701
/9803
/9805
/9807
/9809
/9811
/9801
/9903
/9905
/9907
/9909
/9911
/9901
/0003
/0005
/0007
/0009
/0011
/0001
/0103
/0105
/0107
/0109
/0111
/0101
/0203
/0205
/0207
/0209
/0211
/0201
/0303
/0305
/0307
/0309
/03
Continental Beach Bacton Day-ahead - Midpoint Zeebrugge Hub Day-ahead - Midpoint
EUR/GJ
No
v ‘
98
Sta
rt I
nte
rco
nn
ec
tor
No
v ‘
98
Sta
rt I
nte
rco
nn
ec
tor
ZEEBRUGGE HUB: ARBITRAGE OPPORTUNITIESZEEBRUGGE HUB: ARBITRAGE OPPORTUNITIES
Source: The Heren Report (ESGM) & Distrigas
2003204PW - GTE Paris 22.10.03 - 21
Liberalization: Fluxys experience
-25000
-20000
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
30000
01-01
03-01
05-01
07-01
09-01
11-01
01-02
03-02
05-02
07-02
09-02
11-02
01-03
From UK To UK
TJ/monthTJ/month
ININ
OUTOUT
ZEEBRUGGE HUB: THE ZEEBRUGGE HUB: THE UK BEHAVIOURUK BEHAVIOUR
Net SellerNet Seller SummerSurplus
WinterShortage
2003204PW - GTE Paris 22.10.03 - 22
Liberalization: Fluxys experience
-10000
-8000
-6000
-4000
-2000
0
2000
4000
6000
01-01
03-01
05-01
07-01
09-01
11-01
01-02
03-02
05-02
07-02
09-02
11-02
01-03
From To
ININ
OUTOUT
ZEEBRUGGE HUB: ZEEBRUGGE HUB: ANOTHER BEHAVIOURANOTHER BEHAVIOUR
TJ/monthTJ/month
Net BuyerNet Buyer
Sellingin the Winter
Buyingin the Summer
2003204PW - GTE Paris 22.10.03 - 23
Liberalization: Fluxys experience
One Example: Hub in Zeebrugge
(and this happened before Liberalization)
TOWARDS MORE COMPLEXITY / UNCERTAINTYTOWARDS MORE COMPLEXITY / UNCERTAINTYRegulationRegulation
Be Proactive & Innovative!
- Actors- Actors - Market and Network - Market and Network - Costs- Costs
One Example: Hub in Zeebrugge
(and this happened before Liberalization)
(would have this happened after Liberalization ?)
2003204PW - GTE Paris 22.10.03 - 24
Liberalization: Fluxys experience
A new Challenge :
Criteria:
HUB IN EUROPE : WHAT’S NEXT?HUB IN EUROPE : WHAT’S NEXT?
• Interconnected Grid• Access to Sources• Flexible & Willing Operator• Market Driven Generation
??
Harmonization of Business Practices for [multi-] Hubs Trading (EU Standard)& avoid Temptation of sub-Regional Behaviours
CommunicationCommunicationFlowsFlows
Liberalization: Fluxys experience
2003204PW - GTE Paris 22.10.03 - 25
Liberalization: Fluxys experience
2003204PW - GTE Paris 22.10.03 - 25