The Hellenic Gas Network
And
Regulatory Integration
Dimitrios Kardomateas
General Manager for
Projects, Regulatory Issues &
Strategic Planning
Maribor, April 2008
THE HELLENIC GAS
NETWORK
THE HELLENIC GAS NETWORK
• Three (3) import points out of which 1 LNG
Receiving Terminal
• Trunk line 512 Km long (36”, 30“)
• Branch lines 566 Km long (10’’- 36’’)
• Under expansion
REVITHOUSSA LNG
TERMINAL
THE HELLENIC GAS NETWORK
LNG TERMINAL: characteristics & role
• STORAGE CAPACITY 78 mcm
(TEMPORARY STORAGE)
• PEAK SHAVING
• PRESSURE STABILIZATION
• SECURITY OF SUPPLY
• DIFFERENTIATION OF SUPPLY
THE HELLENIC GAS NETWORK
IMPORT POINTS CAPACITIES
CAPACITY (bcm/yr)*
GREEK/BULGARIAN
BORDER
5,3
CONTRACTED QUANT.
ON LONG-TERM
(bcm/yr)
2,8
GREEK/TURKEY
BORDER
11,0
0,75
REVITHOUSSA LNG
TERMINAL
*
~ 3,0 (FIRM incl.
0,7
PEAK
SHAVING
)
WITH M STATION AND/OR
COMPRESSOR
UPGRADES
~ 5,0 (TOTAL)
THE HELLENIC GAS NETWORK
• Feeds urban network in four (4) cities as well
as eight (8) electricity production units and a
number of industries.
• Current market: ~ 4 bcm/yr. Consumption for
electricity production accounts for ~75% of
the total
• With upgrade by compressor stations the
Transmission Network can sustain a market
of ~ 9 bcm / yr
EVOLUTION OF THE GREEK MARKET
YEAR
TOTAL
1996
12
1997
148
1998
806
1999
1421
2000
1905
2001
1886
2002
2019
2003
2284
2004
2502
RUSSIA
(Mil. Nm3/yr)
LNG
12
148
806
1421
1461
444
1419
467
1535
484
1766
518
2052
450
AZERBAIJAN
EVOLUTION OF THE GREEK
MARKET
REGULATORY INTEGRATION
Two (2) Vehicles for the policy of
Liberalization :
• Regulatory Authority for Energy
(R.A.E.)
- Powers in accordance with the directives
03/54 & 03/55
– Consultant of the Minister of
Development on technical &
competitions issues
– Economic Independence
– Members appointed by the Minister but
not allowed to be replaced (unless for
special reasons)
REGULATORY INTEGRATION
• DESFA S.A. (Hellenic Gas
Transmission System Operator)
¾ Established in April 2007 as the T.S.O. for
the Greek Transmission System
¾Spin-off from DEPA in order to fulfill the
legal unbundling obligation of directive
03/55
¾Additional characteristics:
– Owner of the Greek Transmission
Network
– Board of Directors appointed by the
Government for the first 10 years
– Development plan approved by RAE
and the Minister of Development
REGULATORY INTEGRATION
IMPORTANT MILESTONES
• DETERMINATION OF ACCESS FEE TO
THE NETWORK & LNG TERMINAL
Ministerial Decision – Issued
• MODEL TRANSPORTATION
AGREEMENT
Ministerial Decision – Issued
Applies to the use of existing network
REGULATORY INTEGRATION
IMPORTANT MILESTONES (cont.)
• NETWORK CODE
Ministerial Decision – To be issued
Will include the rules for booking of
capacity, guarantees, etc.
• MODEL CAPACITY RESERVATION /
TRANSPORTATION AGREEMENT IN
CASE OF CREATION OF NEW
CAPACITY
To be included in the Network Code
TRANSPORTATION FEE
------------------------------------------------------------• Regulated Asset Basis (RAB) : All
undepreciated assets (Existing – future)
• Operating Costs
• Weighted Average Cost of Capital
(WACC)
-------------------------------------------------------------Required annual revenue
TRANSPORTATION FEE (cont.)
Required annual revenue
+
---------------------------------------------------------------------------------------------------
• Geographical distribution
- Postage Stamp
- Zonal System
- Entry / Exit
• Percentage of costs to be recovered through capacity /
Commodity charge
• Possible smoothing / levelization
-----------------------------------------------------------------------------------Structure of access fee
TRANSPORTATION FEE (cont.)
Structure of access fee
+
---------------------------------------------------------------------------------• Escalation / review arrangements
• Relaxation limits & overbooking/underbooking
penalties
• Special modalities
-------------------------------------------------------------------Complete price Schedule
TRANSPORTATION FEE in GREECE
MAIN FEATURES
• "POSTAGE STAMP" FEE (due to emergent
market)
INCLUDES:
100 % OF TRANSPORTATION
PIPELINES
95% OF LNG TERMINAL
• ADDITIONAL FEE FOR USERS OF LNG
TERMINAL
INCLUDES 5% OF LNG TERMINAL
TRANSPORTATION FEE in GREECE
MAIN FEATURES (cont.)
• CAPACITY / COMMODITY = 90 / 10
• REVIEW OF FIGURES FROM YEAR
2009
• REASSESSMENT OF SYSTEM FROM
YEAR 2011
FORMULA TYPE (Firm capacity)
(Yearly €) = a *(peak daily Q) +b*(Yearly
Q)
• The user needs to state in advance only
the (peak daily Quantity)
• The points of entry/exit should also be
stated to the T.S.O.
FORMULA TYPE (Firm capacity) (cont.)
The same formula can be expressed in
terms of the load factor (LF) and the yearly
Q:
(Yearly €) = [a/( LF*365)+ b] .(Yearly Q)
with
(LF)= (Yearly Q/365) / (peak daily Q)
REGULATORY INTEGRATION
SPECIAL MODALITIES FOR THE ACCESS
FEE
For Power Plants
• Peak daily quantity = (Maximum daily rated
consumption) * (0,85)
• For open cycle gas turbines : (load factor) ≥
0,13
AVERAGE FEE (2007)
FOR THE GREEK MARKET
€/MWh
€/1000 Nm3
TRANSPORTATION
2,47
27,7
LNG REGASIFICATION
0,30
3,4
--------------------------------- ---------------TOTAL
2,77
31,1
REGULATORY INTEGRATION
TRANSPORTATION FEE FOR TRANSIT
• NOT ESTABLISHED YET
• WILL BE PART OF THE NEW PRICING
SYSTEM TO BE VALID FROM 2011
• UNDER PREPARATION BY DESFA AND
RAE
PROPOSED NEW PIPELINE PROJECTS IN
SOUTHEAST EUROPE
T.E.N. PRIORITY AXIS NG3: CASPIA SEA, MIDDLE EASTEUROPE
T.E.N. PRIORITY AXIS NG6: EAST MEDITERRANEAN
GAS RING
PROPOSED NEW PIPELINES IN SOUTHEAST EUROPE
IMPORTANT CONSIDERATIONS BY
INVESTORS
• Political & Regulatory stability in all transit
countries
• Commercial guarantees
Exemption
• Availability of gas
T.P.A.
PROPOSED NEW PIPELINES IN SOUTHEAST EUROPE
Two possible models:
• The section of the pipeline in each country
belongs to the National Network of the
respective country or to a local company
(e.g. Inerconnector TGI, South Stream)
• One international company owns the
whole pipeline in all transit countries (e.g.
Nabucco)
PROPOSED NEW PIPELINES IN SOUTHEAST EUROPE
PROJECT PROMOTERS
Although theoretically not required, commercial
considerations make necessary the participation
of pipeline user(s) and/or gas supplier(s) in the
pipeline companies.
Indeed, all projects, esp. the most progressed,
have started as an initiative of specific pipeline
user or supplier
PROPOSED NEW PIPELINES IN SOUTHEAST EUROPE
FACTS
• Many transportation routes proposed but not
sanctioned yet
• All projects opting for Caspian or Middle East
gas involve route through Turkey, which does
not belong to the Energy Community
• Gas supplier market
• The regulatory framework in E.U. promotes
regulatory stability
• The regulatory framework in E.U. does not favor
central planning
many smaller projects
PROPOSED NEW PIPELINES IN SOUTHEAST EUROPE
Who is responsible for security of supply ?
¾ incumbent gas supplier ? Not any more
¾ T.S.O. ? Can secure only the internal gas network.
Not a gas supplier
¾ Regulator ? Can help by providing TPA exemption. Not
a gas supplier, nor an investor
¾ Government ? Can help by Interstate Agreements with
upstream countries, and by facilitating authorization. Not
a gas supplier, nor an investor
¾ E.U. ? Can help by providing TPA exemption and/or
financial aid. Not a gas supplier, nor an investor
¾ Gas projects need big investments and commercial
commitments and a development period of at least 5
years
SECURITY OF SUPPLY WILL BE THE NEXT
THANK YOU FOR YOUR ATTENTION