The French Natural Gas Market in the European Unionwp.meritet.net/uploaded/1319298288.pdf · The...
Transcript of The French Natural Gas Market in the European Unionwp.meritet.net/uploaded/1319298288.pdf · The...
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Sophie MERITETPh D in EconomicsAssistant Professor
CGEMP
Dauphine Universitywww.dauphine.fr/cgemp/
The French Natural Gas Market
in the European Union
UFRJ – NOV 2006
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INTRODUCTION & AGENDA
Organization: Structures Conducts Performances
Goal
Presentation of the French natural gas market with its characteristics
taking into account the European Union context.
=> Situation and perspectives of the French natural gas market
Part 1 – European natural gas marketS
Part 2 – French natural gas market
Part 3 – GDF, the French company
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Natural gas is quite different from other energies and especially electricity:
Natural gas is a substitutable energy => it is in competition with other energies
Contrary to oil, there are several regional natural gas markets and not only one worldwide one.
EU Gas supply is very concentrated (Algeria + Russia + Norway : 95% of European imports in 2006)
EU Natural gas supply is more and more from outside the EU with high transportation costs (vs electricity where you can have generation units close to consumption areas)
Gas suppliers are constrained by physical limits of infrastructures (number of tankers, length of gas pipelines, technologies, high transportation costs).
SPECIFICITIES
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PART 1- EUROPEAN NATURAL GAS MARKETS
1- Supply and Demand in the EU
2- LNG development
3- New constraints
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GLOBAL GAS RESERVES
Source: Cedigaz (2005)
Global Gas Reserves by Region (tcm) in 2004Natural gas reserves in the world are very concentratedRussia (25%), Iran (15%), Qatar (14%).
40% of proved reserves
concentrated in 25 fields all
over the world.
2 in Europe ( Groningue in
the Netherlands and Troll en
the North Sea Norway).
1 field (North Field/South
Pars) represents around
25% of the total gas
reserves
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Key figures (2006)
Deregulation of energy markets in the EU is for 1rst July 2007
Fossils represents 80% of the total energy consumption in the EU (2 / 3 are already imported => 70% in 2020-2030 ?)
Natural gas represents 24% of energy consumed in the EU. The EU represents 19% of the total gas consumed in the world
40% of gas consumed was from Russia (and 90% of gas exported from Russia goes to the EU)
95 % of the gas consumed in the EU in imported from 3 main suppliers:Algeria (Sonatrach, monopoly), Russia (Gazprom, monopoly) Norway (several companies)
103 million customers (450 million of inhabitants in the EU 25)
1 850 000 kms of wires
Patchwork of national markets but progressing toward one market
THE EU GAS SITUATION
Source: EIA (2006)
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PRIMARY ENERGY DEMAND IN THE EU 25
Source : World Energy Outlook 2004 - in Mtoe
The share of natural gas should reach 32 % in 2020 with an annual growth
rate between 1.5 % and 3 %
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
1970 2000 2010 2020
Coal Oil Natural Gas Nuclear Hydraulic Others renewables
Past evolution and prospects of primary energy demand in Europe
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Gas in the primary energy balance
in the EU 25
5 countries represent
70% of the total
demand
PRIMARY ENERGY BALANCE
Source: Cedigaz 2006
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Demand increase : 425 to 450 109 m3 /y in 2020 (343 109 m3 in 2004)
% vary among EU countries
DEMAND FORECASTS IN 2020
In Northern Europe, there is still a potential increase (Electricity generation in the UK : 12 new plants - 12000Mwe - to replace old plants)
In Central Europe, the growth is moderate
Source: Cedigaz 2006
A more significant growth in Southern Europe : + 2.8% per year
270 to 280 109 m3 in 2020 (182 109 m3 in 2004)
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0
200
400
600
800
1980 1990 2002 2010 2020 2030
bcm
Production Net imports
Source: World Energy Outlook 2004
GAS SUPPLY BALANCE IN THE EU 25
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SUPPLY - DEMAND 2020
Deficit
LNG
Gazoducs
Production
Source: Cedigaz 2006
HighLow
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LNG in Europe
supply diversification,
security of supply
Growth : + 7.9 %/year
15 to 18 % of European supply in 2020 (7.8 % in 2004)
Significant increase of British imports (national production is declining)
82 109 m3 /year (60 Mt/year) of LNG bought for 2010,with 25 109 m3 /year by Spain
LIQUIFED NATURAL GAS (LNG)
Source: Cedigaz 2006
L LHighHigh
+ 7.9 %/year
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LNG CAPACITIES
Capacity
Existing: 46Mt year
Imports (2004): 30 Mt Existing capacity (Mt year)
Capacity in construction or projected (Mt year)
Source: Cedigaz 2006
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EUROPEAN GAS NETWORK 2005
A mature system :• Developed from
the 1960’s on a national basis
• Interconnected through cooperation frameworks between national gas companies
Source: Cedigaz 2006
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EUROPEAN HUBS
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M. Boiteux ‘s parabole (Chevalier, 2004)
The planet is represented by a spaceship where everything is rareand essential...Mutual aid and solidarity are necessary...
This is the situation of the earth !
It would be a scandal …
What would happen if only 1 of the 5 occupants absorbed 80% of the resources and made itself responsible for ¾ of pollution?
... and at the same time, 1 would have nothing to eat and 2 hardly enough to survive ?
� REALITY
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In this « mosaic » of markets in Europe, problems arising from the opening to competition are still being debated:
Main strategies at the EU level : climate change management -diversification – energy efficiency
Main national and European preoccupation : Security of supply Separate gas markets that should become one thanks to EU integration
process and LNG development Can new strategies make it possible to limit the competitive game?
The need for regulation ?
The multiplication of the actors complicates the management of the system. Security of the system ? Security of supply ?
Are the public services compatible with competition?
New environmental constraints
TRANSFORMATION OF GAS INDUSTRIES
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The market challenge
A single European free market in gas and electricity
Or ...
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Including ...EU-25….
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PART 2 – FRENCH GAS MARKET
1- Key figures
2- Industry organization in France
3- Regulation of the industry
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FRENCH GAS MARKET
Key figures (2005)
Consumption :529,6 TWh (+2%)Consumption : 47% industrial, 36% residential, 17% commercial
Small amount of gas for power generation (+8%)
Imports : 537,9 TWh (+4%) Supply : Norway 31 %, Russia 25 %, Algeria 26 %, Netherlands 12 %, United Kingdom 5 %Exports : 11,8 TWhDomestic production : -25.3%In France, we do not produce (or not a lot) of gas (vs electricity)Stocks :+7,1 TWh 9,000 localities connected (more than 75% of the French population)
Source : DGEMP (2006)
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Eligible Consumers : 676 000 sites for around 377 TWh
Openness of the market : 70% => 100% 01/07/07
+ 10 million gas customers 01/07/07
30 suppliers already authorized (GDF, GSO, Total, Statoil ,ENI, Gaselys , Rhodia, local distributors, …)
5th market open to competition in the EU (in volume)
FRENCH GAS MARKET
Key figures (2006)
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OPENING UP PROCESS
Launched by the European Commission in the early 90’s
Objective : To develop the competition in the gas supply in order to improve
the economic conditions for access to gas Means :
Third Party Access : to ensure an access to the networks on a transparent and non discriminatory basis.
Unbundling of regulated functions and trading An independent regulator
These 2 directives adopted in 2003 represent a major step towardsthe completion of the internal market for electricity and gas in the EU.
3 European Directives :Unbundling : accounting => managerial => legal,Independent authority for regulation,Competition on generation and supply,Market opening : 2004 for professionals and 2007 for all consumers.
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Source : CEER (2004)
EU DIRECTIVES
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25
Customers>25 Mm3
August 2000 « opening » by
GDF
(January 2000)
Customers> 237 GWh/y
cogeneration
Customers> 83 GWh/ y
All customers (530 000 sites) except
households
January 2003 1st directive
=> France (August 2003)
August 2003
2nd level of the 1st directive
Application of the 2nd directive
1 st July 2004
2nd directive
=> France (August 2004)
2007Total
opening
OPENING PROCESS IN FRANCE
5% of the market (25 TWh) opened 04/03
37% of the market (170 TWh) opened 10/03
70% of the market (350 TWh) opened 07/04
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A single regulator for both gas and electricity, the « Commission de Régulation de l’Énergie » which:
is a independent authority
approves the rules for the unbundling of accounts
proposes tariffs for transmission, distribution and access to LNG terminals
is a dispute settlement authority
can impose sanctions
REGULATOR
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FRANCE : RESEAU ET ZONES TARIFAIRES
- REFERENCE - EMETTEUR 322/10/2006
Gaz de FranceGaz de France
CFMCFM
GSOGSO
UndergroundUndergroundStorageStorage
Lussagnet
Izaute
Soings
Etrez
Tersanne
Manosque
CervilleBeynes
St-ClairGermigny
NetherlandsNorway
UK(16 Bcm)
Taisnières
Russia(8 Bcm)
Obergailbach
Algéria(6 Bcm)
Fos
Lacq
Chemery
Céré-la-Ronde
St-Illiers
AlgériaNigeria(8 Bcm)Montoir
Gournay
Larrau(2 Bcm)
Norway(12 Bcm)
Dunkerque
Oltingue(5 Bcm)
FRANCE : GAS INSFRASTRUCTURES
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FRENCH ENERGY LAW
« Loi d’Orientation sur l’énergie »
The energy law has 4 goals :
• Energy independence and the security of supply;
• Protection of the environment;
• Energy at low cost for households and industries;
• Social and territorial cohesion.
4 means to achieve these goals:
• To control the demand;• To diversify the French energy mix ;• To oversee the development of the grid & storage capacities
of sufficient gases and oil;• To develop research on energies.
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=>Main objective of the French energy policy
Gas suppliers wishing to supply customers have to prove that they have a sufficient and diversified portfolio of gas (Obligation of « Service Public »). � Suppliers must hold “sufficient” gas stocks to satisfy their contractual obligations
Development of the gas infrastructures
Development of the storage sites (Right to storage: suppliers have a right of access to the storage capacities )
the operators of storage, GDF and Total, must offer an access under transparent and nondiscriminatory conditions
SECURITY OF SUPPLY & GAS
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SUM UP
Main national preoccupation : Security of supply
Geographic situation => Strategic position
Opening up to competition process…
French law - EU integration
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PART 3 – GDF, GAZ DE FRANCE
1- Key figures
2- European Concentration
3- GDF - SUEZ
GDF Suez
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1st LNG importer 1st in transmission (French network 31 000 km) 1st in distribution in Europe (180,700 km in France) 1st in terms of number of customers (11million in France 14 million in the
world)
N°2 in Storage Facilities in 2005 (14 sites – 9.8 bn m3 of working capacity) N°2 in Regasification in 2005 (17 bcm of capacity)
KEY FIGURES 2005
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3rd European sellers of natural gas in volume
4 th natural gas purchaser
No longer state owned firm since nov. 2004 (value of 29 G€)
Total revenue 2005 : 22,4 G€ 35% of revenue not in France Employees : 53 000 Operating income: 1,907 M € EBITDA : 2,520 M €
KEY FIGURES
Sales (Gm3) in 2005
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• Long term contracts portfolio the most diversified in the EU
• Buy Short term through GAZELYS to optimize its portfolio
• Development of its own production : capacity 4,6 bn m3 with its won reserves 80 bn m3
SECURITY OF SUPPLY
gas supply (2005)
Algéria21%
UK4%
Norway26%
Netherlands15%
Short term market11%
Russia22%
Nigéria1%
GDF PORTFOLIO
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DOMINANT POSITION
National firm in its domestic market2005
Country (Firm)
Gas imports Gas production
Belgium(Distrigaz)
90-100% -
Danemark (Dong)
- 80-90%
France (GDF)
90-100% -
UK 20-30% 40-50%
Germany(Rurhgas)
90-100% 80-90%
Italy (ENI) 60-70% 80-90%
Netherlands (Gasunie)
50-60% 90-100%
National firm in its domestic market2005
Country (Firm)
Gas imports Gas production
Belgium(Distrigaz)
90-100% -
Danemark (Dong)
- 80-90%
France (GDF)
90-100% -
UK 20-30% 40-50%
Germany(Rurhgas)
90-100% 80-90%
Italy (ENI) 60-70% 80-90%
Netherlands (Gasunie)
50-60% 90-100%
National firm in its domestic market2005
National firm in its domestic market2005
Country (Firm)
Country (Firm)
Gas importsGas imports Gas productionGas production
Belgium(Distrigaz)Belgium
(Distrigaz)90-100%90-100% --
Danemark (Dong)
Danemark (Dong)
-- 80-90%80-90%
France (GDF)France (GDF)
90-100%90-100% --
UKUK 20-30%20-30% 40-50%40-50%
Germany(Rurhgas)Germany(Rurhgas)
90-100%90-100% 80-90%80-90%
Italy (ENI)Italy (ENI) 60-70%60-70% 80-90%80-90%
Netherlands (Gasunie)Netherlands (Gasunie)
50-60%50-60% 90-100%90-100%
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1996 2006 1 BG 16.8 EON 61.3 2 Veba 13.6 EDF 61.3 3 Endesa 10.6 Enel 41.3 4 RWE 9.1 Suez 34.9 5 Vivendi 8.7 RWE 32.5 6 Electrabel 8.0 GDF 25.3 7 National power 7.5 Endesa 23.0 8 Iberdrola 6.3 National grid 22.0 9 Powergen 4.9 Iberdrola 20.6 10 Viag 4.8 Veolia
Environnement 15.7
11 Suez 4.3 Fortum 15.0 12 Scottish Power 4.2 Scottish Power 14.8 13 United Utilities 3.6 Centrica 13.2 14 VEW 2.9 Scottish& Southern 12.8 15 Tractebel 2.8 Gas Natural 10.5
EUROPEAN OLIGOPOLY
Source : Datastream (2006)
Billion of euros
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C E N T R IC A1 6
R E P S O L4 4
G D F11
S U E ZLY O N N A IS E
3 5 T R A C T E B E L1 9
R U H R G A S1 0
C o n tro l
IB E R D R O L A 7
N O R S K H Y D R O
B A S F
M O N T E D IS O N
C E P S A1 2
E le c tra b e l8
D is tr ig a z
W IN T E R S H A L L
E N IS n a m
Ita lg a s4 8
E X X O NM O B IL
2 2 6
O il & G a s G a s P o w e r M u lti-e n e rg ie s C h e m ic a ls
1 0
E N D E S A1 6
S H E L L1 6 3
B PA M O C O
1 6 2
TO TA LF IN AE L F11 4
E D F3 4
E N E L2 5
E .O N93
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R W E6 3
S a le s in B illio n
G A S U N IE9
MAIN ACTORS IN THE ENERGY INDUSTRY
Source: Cambridge Energy Research Associates.
2002
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KEY FIGURES 2004
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GDF - SUEZ
Total revenues 2005 Gas Sales 2004 (TWh)
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COMPETITIVE PRODUCTION MIX
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GLOBAL PRESENCE
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CONCLUSION
Between a short term logic and a long term logic
For the States (and EU ?)
For actors (shareholders, customers, politicians….
For Firms
Challenges : To manage the transition and be caught between these two logics
At the EU level :
•Competition / concentration ?
•Towards a European Energy Policy thanks to External European Energy Policy (international negotiations, Russia, OPEC…) ?
New risks appear in this uncertain and complex environment ….
Market risks
Regulation risks
Environmental constraints
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CGEMP
Thanks for your attention
www.dauphine.fr/cgemp/
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Source: EIA, 2005.
Table 2: Energy Consumption and Carbon Emissions in EU Countries, 2002 Energy Consumption
Percentage of Total
Total* Oil Natural
Gas Coal Nuclear Hydro Other Net
Imports
Carbon Dioxide Emissions ( Million Metric Tons)
Austria 1.4 39.6 21.5 11.2 0.0 25.8 1.8 0.2 70.5 Belgium 2.7 46.9 21.1 13.3 17.1 0.1 0.6 1.0 146.3 Cyprus 0.1 98.7 0.0 1.3 0.0 0.0 0.0 0.0 8.31 Czech Republic
1.6 22.6 21.6 43.4 12.8 1.6 0.4 -2.1 103.6
Denmark 0.8 49.4 24.5 18.4 0.0 0.0 8.6 -0.9 54.9 Estonia 1.6 68.8 27.4 6.5 0.0 0.0 0.1 -2.7 12.1 Finland 1.2 35.9 13.2 13.0 17.6 8.8 8.2 3.3 54.3 France 11.0 37.4 15.2 4.9 39.0 5.6 0.4 -2.4 407.3 Germany 14.3 39.8 22.1 23.4 11.1 1.6 1.9 0.1 838.3 Greece 1.4 62.2 5.7 28.6 0.0 2.0 0.7 0.9 104.4 Hungary 1.1 28.1 45.0 12.6 12.7 0.2 0.1 1.4 56.1 Ireland 0.6 60.0 25.5 12.1 0.0 1.5 0.7 0.3 45.1 Italy 7.6 50.4 33.3 6.9 0.0 5.3 1.9 2.3 448.7 Latvia 0.2 48.8 31.4 0.8 0.0 16.2 0.0 2.9 9.8 Lithuania 0.4 46.1 22.8 0.7 33.5 2.0 0.0 -4.9 20.2 Luxembourg 0.2 62.5 27.4 2.2 0.0 0.6 0.5 6.8 10.33 Malta 0.04 100 0.0 0.0 0.0 0.0 0.0 0.0 2.77 Netherlands 3.9 48.1 40.1 9.1 0.9 0.1 1.2 1.4 256.2 Poland 3.3 23.0 13.3 63.5 0.0 0.6 0.3 -0.7 268.4 Portugal 1.1 65.5 11.1 13.6 0.0 7.2 1.9 0.6 67.0 Slovakia 0.8 19.2 32.5 19.7 24.2 6.3 0.0 -1.8 38.8 Slovenia 0.3 33.5 12.1 27.9 17.6 11.2 0.2 -2.5 16.7 Spain 5.9 53.8 14.1 15.5 10.4 3.9 2.0 0.3 341.5 Sweden 2.2 31.6 1.5 4.1 29.6 30.0 2.4 0.8 54.8 United Kingdom
9.6 35.6 37.0 15.0 10.9 0.5 0.7 0.3 552.8
Total/Average 73.3 40.2 22.4 15.6 13.0 3.9 1.3 3.5 3,989.2 United States 97.6 39.3 23.7 22.8 8.3 2.6 3.1 0.1 5,749.4 * Total Quadrillion Btu Source: Energy Information Administration Note: Percentages may not add up to 100% due to independent rounding.
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Imports : 75 % for the North East => Gas pipelines
25 % through LNG (Montoir de Bretagne & Fos sur Mer)
Stocks : Total capacity of 12 Gm3
16 underground storage facilities -Participation GDF (GDF DGI) and TOTAL (Total Infrastructures Gaz France (TIGF)) 75% and 25% respectively
LNG :2 LNG terminals : Fos & Montoir, but a lot of projects…
Transport / Distribution
• Distribution Networks of 180 700 km (2nd largest network in the EU)
• Transmission : 2 operators Gaz de France Reseau Transport and TotalInfrastructures Gaz France (TIGF)
•Distribution : Gaz de France Distribution , 20 LDCs
INFRASTRUCTURES
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EUROPEAN UNION
EU in 2005
Population in 2005
UE (15) = 380 M citizensUE (25) = 450 M citizens
US = 289 M citizensChina = 1.283 bn citizens
GDP per capita in PPS in 2005
UE (15) = 23 400UE (25) = 19 500
US = 30 148
Source : European Commission (2006)
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80% of Russian gas production from 3 fields (Urengoi, Yamburg and Medvezhye)
The Yamal-Nenets corridor transports 90% of Russian gas
Ukraine transits 80% of Russian gas exports to central and western Europe
Transmed (Algeria/Italy) transports 33% of Italian consumption
GME (Algeria/Spain) transports 30% of Spanish consumption
More than half of Norwegian production and exports from Troll and associated pipelines (Norway).
TRANSIT - FACILITY : CONCENTRATION
Source: IEA (2005)