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GRI NW: C3 Capacity
Other initiatives
Fluxys’ new interruptible services
Report 2008
Report – Fluxys’ new interruptible services –
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Content
1.
Executive summary ....................................................................................................... 3
2.
Introduction .................................................................................................................... 3
3.
Scope of project and timing ........................................................................................... 3
4.
Analysis ......................................................................................................................... 4
4.1.
Transit in Belgium .................................................................................................. 4
4.2.
Interruptible transit service ..................................................................................... 4
4.3.
Buy-back and overbooking of transit capacity ........................................................ 5
5.
“Lessons learnt” ............................................................................................................. 6
6.
Conclusion ..................................................................................................................... 6
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1. Executive summary

In 2006 and 2007, the Primary Capacity workstream analysed the Blaregnies /
Taisnières cross-border point. It emphasized the differences in offered capacity
products.

On 1 October 2008, Fluxys introduced an "interruptible transit" service, allowing nonnominated transit capacity to be reused by the market on an interruptible basis.

The "interruptible service" is sold on a yearly basis with a historical probability of
interruption of 5 %.

Buy-back of transit capacity is useful to the market if the TSO sells it on other transit
routes.

Overbooking occurs naturally when two pipelines are connected to one downstream
pipeline; it is acceptable if it does not hamper access to the market.

The applicability of this "interruptible transit" service to other TSOs in GRI NW is
limited as they currently do not differentiate transit from domestic transport.
2. Introduction
In 2006 and 2007, the Primary Capacity workstream of the GRI NW analysed in detail the
Blaregnies / Taisnières cross-border point on the Belgian / French border. Mismatches in
levels of capacity bookings on both sides of the border were reported and explained.
Differences of capacity products on both sides of the border were also discussed and as well
as possible solutions. Later, Fluxys and GRTgaz started a coordinated open season to
increase the physical capacity from Belgium ('s Gravenvoeren and Zeebrugge areas) to
France (Blaregnies / Taisnières cross-border point).
In 2007, Fluxys announced its intention to introduce an "interruptible transit" service,
consisting of non-nominated transit capacity on a similar way as the "interruptible entry
capacity (level 1)" offered on the domestic market. This service is in operation since 1
October 2008.
Alternatives exist for the TSO to offer more capacity to the market, among others
overbooking and buy-back measures.
This document analyses the "interruptible transit" service and its relationship with the
"interruptible entry capacity" for the domestic market in the framework of the GRI NW.
Overbooking and buy-back measures for transit are also analysed with a regional regard.
The analyses includes an assessment of the value of the service for the market.
3. Scope of project and timing
The scope of this project is the examination of Fluxys' new interruptible transit service and
existing interruptible entry capacity for domestic transport; the examination of overbooking
situation and buy-back measures for transit with, for each subject :
 a detailed description of the characteristics of the services;
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how they are rendered;
an examination of the compatibility to other capacity work areas.
The timing of the project and the deliverables is as follows :



Survey on Fluxys' new interruptible transit service and existing interruptible entry
capacity for domestic transport; examination of overbooking situation and buy-back
for transit  Q4 2008
Conclusion outline of Fluxys' new interruptible transit service; overbooking; buy back;
interruptible capacity  Q1 2009
Publication of work plan for promising options  Q2 2009
This report covers the 1st point in the previous paragraph.
4. Analysis
4.1. Transit in Belgium
Transit through Belgium represent a very significant part of the Fluxys transporation activity.
Three main pipelines transit gas from the Netherlands and Norway to France (L-gas, Segeo
and Troll), while one pipeline connects the UK to the Netherlands and Germany (VTN-RTR).
Subscribed capacity for transit in Belgium are over 80 bcm, much more than for domestic
transport. Most of the transit subscriptions are under long-term contracts to shippers
supplying downstream markets. A lot of European countries are in a similar situation as
Belgium regarding transit, among others Austria, the Czech republic, Slovakia and Poland
but currently no country in GRI NW.
Transit is usually characterised by a point-to-point capacity service without flexibility. Indeed,
given the high cost of gas transportation over long distances, transit pipelines maximise the
capacity between a production region and a consumption market; while domestic transport
values also the flexibility – both in capacity and in commodity – needed to supply the
downstream domestic markets.
The regulatory treatment of transit is different from the domestic transport, mainly because
the higher risk of stranding assets cannot be passed to the domestic market of the country
where the infrastructure lies, contrary to possibly unused domestic transport infrastructure.
Transit is normally sold on a firm basis. However, the liberalisation of the European gas
markets introduced demand for new routes and for arbitrage capacities between market
places. When firm capacity is not available, conditional and/or interruptible transit can sold.
Fluxys announced in 2007 the introduction of a new "interruptible transit" based on nonnominated capacity, on a similar way as the "interruptible entry capacity" is proposed for
domestic transport. This service is in operation since 1 October 2008.
4.2. Interruptible transit service
The "interruptible transit" service is characterised by a point-to-point capacity (like firm transit
capacity). It is subscribed in advance on a yearly basis.
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Nominations are accepted insofar there is enough non-nominated capacity on the same
transit route. Accepted nominations can be reduced if renominations on the firm capacity
routes reduces the non-nominated capacity under the level of the requests, up to 2 hours
before the gas flow (in accordiance with the EASEE-gas CBP).
In order to provide more value to the market, the amount of interruptible transit capacity
offered to the market on a yearly basis is calculated in analogy with the "interruptible entry
capacity (level 1)" in domestic transport, that is the amount of capacity with a historical
probability of interruption of 5 %.
Because the recent years show very volatile transit flows through the Belgian pipeline
infrastructure, it is likely that the amount of capacity offered on an interruptible basis will vary
quite widely from year to year. (In domestic transport, the value is much more stable.)
If the market is interested, Fluxys could possibly introduce in the future a second level of
"interrutible transit", outside the limit of the 5 % of historical probability fo interruption. Such
capacity would be interrupted first, in order to preserve the value of the service offered now.
The interruptible transit capacity offered by Fluxys helps improve the capacity usage of
existing transit infrastructure. This clearly fosters the European gas market and answers one
of the objectives of the GRI NW.
4.3. Buy-back and overbooking of transit capacity
An alternative way to offer more firm transit capacity to the market is to "buy back" existing
primary transit capacity. In this case, the TSO buys primary capacity from a shipper on a
given route in order to sell it to another shipper on the same route or to another route if it is
technically possible.
It is clear that if the bought-back capacity is sold on the same route, the secondary capacity
market is best placed to carry out this function. If the bought-back capacity is sold on another
route, the TSO provides added value to the market in converting unneeded capacity one one
transit route to capacity on another transit route.
Overbooking occurs when there is more capacity subscribed than technically available. This
situation can happen in several cases :
1. when two pipelines in a country converge to one pipeline in an adjacent country,
there is naturally a higher level of capacity bookings in the first country than in the
second because shippers usually want arbitrage opportunities between two sources
of gas;
2. when an entry point to the network is physically connected to more than one transit
routes, it can happen that shippers want to reserve two transit routes from this unique
entry point, while only one will be used at a time.
The first situation is useful for the market as it can make more use of arbitrage between gas
sources. The second situation is acceptable if it does not prevent access of that entry point to
other shippers.
Fluxys currently works on improvements of its transit capacity model, which will lead to a
more flexible use of the capacity than the current point-to-point contracts, while maintaining
the very high level of firm capacity available now to the market, which is still the main value
of transit and ensures the security of supply of the downstream markets.
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5. “Lessons learnt”
The introduction of the interruptible transit capacity service by Fluxys answers a request from
the market. Beside the secondary market for firm capacity, it allows non-nominated transit
capacity to be used by the market on an interruptible basis.
As no other TSO in the GRI NW currently applies different capacity models for transit and
domestic transportation, this service is of limited value to them. However, most TSOs in
Central Europe and in South-East Europe have a big share of transit and the interruptible
transit product could be a way to foster the gas market in their countries.
6. Conclusion
This report explains the main characteristics of the interruptible transit capacity offered by
Fluxys since 1 October 2008. This service helps improve the usage of existing infrastructure.
It clearly fosters the European gas market and answers one of the objectives of the GRI NW.
However the applicability of this service to other TSOs in GRI NW is limited as they currently
do not differentiate transit from domestic transport.
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