Challenges in Gas Transmission:
The V4+ Perspective
Andreas Rau
Member of the Board of Directors
European Economic Congress, Katowice, 17 May 2011
Facts and Figures 2010
Holding
Trade & Sales
Employees
Turnover
Transmission
100%
893
> € 800 million
Transmission volume
71 bcm
Key Business Data
Distribution
100%
 transmission contracts for 90bcm/a
 2,270 km of pipelines
Storage
E&P
56%
Storage
35%
 four compressor stations
(aggregated power >1,000 MW;
Veľké Kapušany biggest
compressor station in the EU)
2
Market Position
About 75% of today’s gas flow from Russia to
Western Europe is passing through Slovakia
St. Petersburg
Existing
Eustream
90 bcm/a
EuRoPol Gaz 33 bcm/a
Moscow
Minsk
Berlin
Warsaw
Prague
Vienna
Kiev
New
Nord Stream 2 x 27.5 bcm/a
South Stream 30-60 bcm/a
Nabucco
31 bcm/a
Bratislava
Budapest
New projects can easily double
existing pipeline capacities!
New challenges due to increasing pipe-to-pipe competition!
3
Development of Transmission Capacities in Slovakia
Capacity 2009=100%
expected impact
of Nord Stream
contracted capacities
max. technical capacities
(acc. to decommissioning plan)
How reasonable are new routes if they lead to
stranded investment elsewhere?
4
Our Vision: A Central European “Gas Turntable”
Poland
 interconnection PL/SK?
 access to LNG (Świnoujście)?
Ukraine
 gas storages and E&P?
 technical cooperation SK/UA?
 reverse flow at SK/UA border
(capacity cca. 85 mcm/d)
Czech Republic
 reverse flow (capacity
of 25 mcm/d via Lanzhot)
Austria
 development of Baumgarten Hub
 reverse flow (capacity of cca.
40 mcm/d via BOG)
Hungary
 SK/HU Interconnector
(“bridgehead” for Nabucco)
 access to LNG (Krk)?
5
Short-term / Short-haul Gas Transmission
4
20
annual capacity [bcm]
18
16
no. of contracts
3
14
12
2
10
8
6
4
1
2
0
0
2006
2007
2008
2009
2010
• increasing no. of hub related transactions in SK
(e.g. arbitrage NCG/CEGH)
• sufficient transmission capacities available in
Slovakia in the long run (no investment need)
• new products (e.g. title transfer, VTP prepared)
• positive impact expected from SK/HU
interconnector
6
TSO Cooperation : GATRAC
Cross border VP2VP products – Overview
VP
Direct connection between
respective VPs
Bundled products with one single
contract (similar “train tickets”)
Bookable with each participating
TSO on FCFS-principle
First product:
Firm daily capacity
Bookable one to more days
ahead*
No renomination
* More days ahead will be used to allow bookings over the weekend and holidays and to align capacity booking periods with trading times
on the EEX Gas Spot Market
7
7
The North-South Gas Corridor
• discussion triggered i.a. by 2009 gas crisis
• strong political support by V4+ initiative
(six countries directly involved)
• 2,300 km of pipelines (+upgrade of existing lines)
• 900,000 t of steel
• investment approx 3,800 MEUR
• financing under EU programmes: 220 MEUR
• access to two LNG terminals (Świnoujście, Krk)
Realistic concept for enhancing
market liquidity and security of
supplies or wishful thinking?
8
The Hugarian/Slovak Interconnector I
SK/HU
• 115 km of pipeline length
• 5 bcm/a of (design) capacity
• bidirectional flow
• investment app. 120 MEUR
• financing under EERP (30 MEUR)
• start of operations initially planned for 2013
9
The Hungarian/Slovak Interconnector III
6/2009 MoU signed by FGSZ and Eustream
7/2009 EEPR application
Requested capacity in direction SK-HU
Daily flow rate [mil. Nm3]
15
12/2009 end of non-binding open season
13
Total requested capacity
11
Technical capacity
9
7
5
3
1
2020
8
7
6
2021 2022
2023
Total requested capacity
5
4
3
2
31
20
27
29
20
25
20
20
21
19
17
23
20
20
20
20
20
13
20
FGSZ withdraws from project,
OVIT new partner on Hungarian side
2018 2019
Duration of the booking period
Requested capacity in direction SK-HU
14,000
Daily flow rate [mil. Nm3]
4/2011
2016 2017
1
0
10/2010 EEPR grant decision by EC
12/2010 end of binding open season II
(start of operations postponed to 2014)
Requested capacity in direction SK-HU
2014 2015
10
9
15
6/2010 end of binding open season I
Daily flow rate [mil. Nm3]
-1
2013
12,000
10,000
Total requested capacity
8,000
Technical capacity
6,000
4,000
2,000
0,000
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Duration of the booking period
10
Conclusions
• further diversification of transmission routes and supply sources (e.g. Nord Stream,
Nabucco, South Stream ) – mainly enhancing east-west capacities
• huge efforts of TSOs to increase transmission capacities and implement new
interconnections (forward and reverse flow)
• special focus on establishing a north-south corridor in Central Europe
• significant financial support of EU and political support by V4+
• TSOs introducing new products (e.g. GATRAC)
• some uncertainties as to development of commodity markets
• some routes already having spare capacities today
Start with realistic projects (e.g. HU/SK) and then follow a
step-by-step approach (always verifying market demand,
needs in terms of security of supply and cost/benefit ratio)
11
For further information: www.eustream.sk
12
Strategic Challenges
EU gas demand
stagnating?
stricter
environmental
regulations
pipe-to-pipe
competition
consolidation among
European TSOs?
new unbundling
requirements
short-term bookings
and increased speed of
shipper transactions
13
Back-up: Main Gas Corridors in Central Europe
8
9
7
11
6
1
2
3
5
4
1
2
3
4
5
6
7
8
9
10
11
12
13
-
CZ/SK reverse flow Lanžhot
AT/SK reverse flow WAG
AT/SK reverse flow TAG
SK/HU interconnector
Internal reverse flow SK
Gazelle
EuRoPol Gaz / Jamal
Nord Stream
LNG PL
LNG CRO
OPAL
HU/CRO interconnector
Nabucco / South Stream
13
12
10
14