Thomas Kleefuß (NET4GAS CEO): Security of Natural Gas Supply and Regional Infrastructure

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Thomas Kleefuß (NET4GAS CEO): Security of Natural Gas Supply and Regional Infrastructure - The role of NET4GAS securing gas supplies for CEE, 6th annual energy conference on "The Common EU Energy Policy and the Energy Security of Slovakia", Bratislava, 26th November 2012

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  • [Our vision is...]- Management strategy focuses on 4 main pillars – Asset development to build new pipelines to adjust the physical infrastructure to changing gas flow patterns- Innovative solutions – to extend offering of both capacity and non-capacity products- Market Design – playing an active role in the European gas community and form an integral part of a larger CEE gas trading region- Future gas flows - Utilise strategic positioning within region and exploit upside potential from future transit gas flows
  • - EEPR projects receiving EU subsidies (reverse flow, Stork interconnector) delivered on time and below budget - Connection to UGS Tyrdonice planned to be commissioned in November 2012- Stork: Třanovice – Cieszyn – Skoczów section with c.10km in the Czech Republic and annual capacity of c. 0.5bcm- Reverse flow: At 6 points of the NET4GAS system by 15 mcm/day in the NW-E direction
  • - Gazelle is a new pipeline which will transport Russian gas coming via Nord Stream from next year onwards- The pipeline is TPA-exempted and thus not subject to public transit tariffs- The pipeline was built for the purpose of one transit contract counterparty to reroute capacity from existing contracts- Gazelle constitutes a part of the wider Nord Stream I+II project which will transport Russian gas to Europe via the Baltic Sea with planned operation from January 1, 2013-The pipeline with a 1,400mm diameter will connect the two Czech / German boarder points of Brandov and Waidhaus serving as an interconnector of the OPAL pipeline from the North and the MEGAL transit system, which transports gas to Southern Germany and on to France-The pipeline with a total length of 158km and with operating capacity of c.30 bcm/a is designed by ILF Consulting Engineers
  • - Presenting, how the N4G investments follows the market requests (supported by the next slide) and the vision and the methods for market integration.- The EIP would be here a perfect „accidential point“ in order to get additional support for this approach (cost-benefit analysis and cross-border cost allocation)- All our major investments follows of course markets requests and market integration (because we believe that with shared between EC, regulators and TSO the investments get a more stable environment also over a longer period)(Connection to Oberkappel will support an EU-North-South corridor and serve as a backbone for a trading region CZ-A-SK-HU and increase NET4GAS’ flexibility)
  • - The Moravian Loop is a new piece of infrastructure expected to be commissioned in 2017- It will increase capacity in the direction to North Moravia and provides the optionality to be prolonged to the Polish border- The project is thus crucial for the development of the North-South corridor, which will help to increase market integration and diversification of supplies- Project financially supported by the EU as part of Trans-European Energy networks (TEN-E) in the total amount of €2.3mm currently used for the preparation of studies for evaluation of the north-south capacity demand
  • Presentation of the Trading Region AT-CR-SK, especially the impact on exiting transit and future „traffic“ Showing, how VP2VP products effects the N4G business positively (connetcing markets tightly together)N4G is located at the centre of European gas flows and is connected all but one neighbouring TSOs- A Central European trading region would facilitate the use of one VTP and gas exchange- Benefits would include - Hub-to-hub products - Diversification of supply - Increased liquidity - Optimal utilisation of existing infrastructure- Starting point is Gas Target model which N4G strongly contributed in order to initiate market region CEE. We want develop a market model on eye level with SK, A and later HU and PL and not been take over by NWE market design mainly Germany and BNetzA- Infrastructures in the future will be needed and N4G infrastructure shall be socialized in CEE market region in order to protect value- First mover advantage is allows to be able to set the rules as opposed to be dictated, e.g. 3rd energy package- Projects with Econtrol and CEGH are under way. Possibilities to become shareholders of CEGH may support our strategy
  • Thomas Kleefuß (NET4GAS CEO): Security of Natural Gas Supply and Regional Infrastructure

    1. 1. Security of Natural Gas Supply and Regional InfrastructureThe role of NET4GAS securing gas supplies for CEEThomas KleefußManaging Director and CEO6th annual energy conference on"The Common EU Energy Policy and the Energy Security of Slovakia„ 26th November 2012
    2. 2. NET4GAS turns a consistent strategy into sustainable results NET4GAS Connecting Markets1 2 3 Asset Development Innovative Solutions Market Design Future gas flows  Building of new Gazelle  Capacity products  Integrate NET4GAS into  Utilise strategic pipeline  Cooperation with a Central European positioning within  Optimisation of neighbouring TSOs trading region region compressor station with vision of  Potential for new  Explore and exploit fleet and headcount creating a regional product upside potential from  Develop North-South wholesale gas development, increase future transit gas flows Corridor, e.g. with market area liquidity and Moravian Loop and  Non-capacity products diversification of gas connection to  Provision of services supply Operkappel internally and to 3rd  Optimal utilisation of parties existing pipeline infrastructure within region Operational and commercial excellence for a safe, reliable and environmentally friendly gas transport2
    3. 3. Six additional investments complete the turn table of gas for Central Europe with capacities of 39 mcm/d to Slovakia from January 2013 Olbernhau Sayda  Entry: 27.0 mcm/day Hora Sv.Kateřiny 6 Brandov  Entry: 9.7 mcm/day  Entry:82.0 mcm/day  Exit: 31.1 mcm/day  Exit: 31.0 mcm/day 1 3 CS Kouřim Ciezyn¹  Entry: 0/0 mcm/day Waidhaus  Exit: 0.4/2.65 mcm/da  Entry: 19.3 mcm/day 4 2  Exit: 103.0 mcm/day 5 CS Kralice CS Veselí CS Hostim CS Břeclav Lanžhot BTS Mokrý Háj  Entry: 157.0 mcm/day  Exit: 39 mcm/day Note: Map depicts current status, excluding planned Moravia Loop pipeline with final investment decision in 20133 ¹ From May to October / from September to April
    4. 4. Security of supply was increased through successful delivery of three projects – 50% funded by the EU with in total €7mm Reverse flow Stork interconnector Connection to UGS Tvrdonice Commissioned in June 2011  Commissioned in September 2011  Planned commissioning in November 2012 Total EU subsidy of €2.3mm  Total EU subsidy of €2.6mm  Total EU subsidy projected at covering c.40% of overall costs covering c.50% of overall costs¹ Strengthens transmission capacity  High-pressure interconnector €2.3mm covering c.34% of and infrastructure for the reverse between Poland and the Czech budgeted costs flow of gas Republic  2.7km of DN1000 pipeline Diversification of gas supplies to  Increased integration of the regional connecting UGS Tvrdonice to the Slovakia, Austria, Hungary, and gas market NET4GAS grid South Germany  Strengthens reverse flow capability and increases security of supplies Reverse flow 1 2 Stork interconnector 3 4 5 5 6 Project sub-actions UGS Tvrdonice4
    5. 5. The Gazelle Project will improve the SoS for CEE significantly Nord Stream Gazelle Project  Capacity 30 bcm/y EuRoPoL  Length 166km, size DN NETRA 1400, pressure PN 84 Poland  Budget €377mm (CZK 9,378mm)Germany  Prime example to deliver projects on Gazelle time and within budget: MEGAL  1,035 easement contracts Slovakia negotiated and signed WAG Austria  Transfer station in Brandov started-up in October 2011 Nabucco  First 20km were completed and Ownership are operated since November 1st NET4GAS CASCADE 2012 OGE + GRTgazD OPAL NEL Transport SPP Multiple owners  Start-up date January 2013
    6. 6. NET4GAS’ investments are demand driven and support market integration incl. security of supply Oberkappel connection Commentary 1  NET4GAS North-South-corridor to Poland (Moravian Loop) is already reflected in the European Investment plans 2 2  NET4GAS currently attempts to also establish another North-South-Corridor by building the Oberkappel connection to be implemented in the regional and European 1 investment plansOberkappel eustreamconnection Baumgarten Interconnection point Compressor station Transit pipeline6 Intrastate (Transport) pipeline
    7. 7. The Moravian Loop strengthens the existing network in CZ and provides the basis for further cross-border integration Commentary  Moravia Loop planned between the section Tvrdonice – Libhošť with an overall length of 157km and planned commissioning in 2017  The purpose of the new interconnection is to increase capacity in the direction to Hať North Moravia and secure this over the long-term Třanovice Libhošť  Moravia Loop has the optionality to be prolonged to the border of Poland and Czech Republic (PL-CZ) Moravia Loop  The total investment budget estimated at €215mm Tvrdonice  Security of supply for the Czech Republic  Approx. 2.5bcm gas storage capacity in Gas Storages Moravia ¹ The diameter is to be specified after finalization of studies and Open Season process for evaluation of capacity requirements in 201377
    8. 8. The pilot project of “Trading Region Austria-Czech Republic-Slovakia” is a first step towards implementation of the Gas Target Model Trading Region in Central Europe Commentary Gaspool PL-Hub  A Central European trading region would facilitate the creation of one common virtual trading point and the establishment of a single gas exchange, the benefits of which are:  Establishing a functioning gas market NCG with hub-to-hub capacity products to (CEGH+) all neighbouring markets and HUN-Hub potentially beyond  Cross-regional arbitrage opportunities PSV and diversification of gas suppliers  Increasing liquidity and pricing competition  Shift of idle transit capacities to required intra-market capacities  Reduction of pipe-to-pipe competition and optimal application of existing pipeline infrastructure within regionTrading Hubs
    9. 9. “GATRAC” Bundled Hub-to-Hub products with a single contract cross border gas transports can be met rather quickly by expansion of the GATRAC Benefits: TTF No need to amend legal framework if national legal rules are not mandatory for cross border capacities Similar procedures and contracts for all routes Compatible with TRAC X VTP NCG VP PEG CEGH current scope of cooperation possible future routes 9F-BD
    10. 10. Connecting Markets Thank you for your attention! Bratislava, November 26th 2012

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