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Indira Kaliaskarova BG Group Energy Security: Overview of the UK Gas Market Interdisciplinary Seminar on Recent Developments in Euro-Asia November 17 2004,

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Presentation on theme: "Indira Kaliaskarova BG Group Energy Security: Overview of the UK Gas Market Interdisciplinary Seminar on Recent Developments in Euro-Asia November 17 2004,"— Presentation transcript:

1 Indira Kaliaskarova BG Group Energy Security: Overview of the UK Gas Market Interdisciplinary Seminar on Recent Developments in Euro-Asia November 17 2004, Reading

2 European Market Overview – Headlines Growth in gas demand is driven by economic growth and modest levels of new gas to power Market Integration of UK, Northern Europe and Italy The Triumvirate of dominant suppliers: Norway, Russia and Algeria look to be joined by a fourth: Exxon/Qatar; with dominant buyers Eon/Ruhrgas, ENI, Gasunie, GdF and Centrica Gasunie and Statoil look to control flows in Northern Europe as markets and distribution becomes more accessible - unpredictably

3 Interconnected European Markets 1.Interconnected markets: EU7 UK & Ireland, Belgium, Netherlands, France, Germany, Austria, Italy 2.Island markets Southern France, Spain, Portugal 3.Transit countries Poland, Czech Republic, Slovakia, Austria 4.Other accession countries Romania Markets along the UK Demand 2003 There are 4 Markets EU7 Market 2003-15 101 89 76 44 42 16 9 377 27 bcma UK Germany Italy Netherlands France Belgium Austria Total EU7 Spain 20032015 Power 90 130 Other287360 Total377490 aai2.2%

4 NW Europe Supply - Demand Challenge to supply Northern Europe after 2008 EU7: UK, Belgium, Netherlands, Germany, France, Italy, Austria European Supply /Demand EU7 Source: BG View

5 Access to Markets: Neither closed nor open Good Moderate Poor EU liberalisation progressing but at different speeds National policies a balance of EU and Member State issues Regulation and competition law Price vs security Control vs market UK: Accessible and competitive market Becoming less liquid. Belgium: Effectively closed Germany: No effective competition but competition law may provide opening in mid term France: prospect of competition for large industrials in NW France Source: DG TREN, 2004 Netherlands: limited competition amongst large industrials Gasunie de-merger stalled Italy: competition restricted to wholesale market and large industrials Today: Markets and transmission becoming more accessible, but sporadically Overview of Market Access Liberalisation Spain: Island market with Gas to Gas competition

6 Incumbents Response to Competition EU7: UK, Belgium, Netherlands, Germany, France, Italy, Austria German companies vertically integrating to East, and into the UK Centrica - concentrating on UK Gaz de France - expanding into Germany through acquisition ENI – protecting Italian markets by exporting supply Gasunie - Main buyer in NL; aims to be dominant producer and supplier of swing in Northern Europe Incumbents Actions Source: BG View 2010 Contract Share in EU7

7 Summary Underpinned by oil-related gas pricing Managing Price Risk Accessing new markets Competing on value Managing Volume Risk Niche under incumbents umbrella Creating new markets, eg power Incumbents Integrate Competitive Market Key Play:

8 Gas demand EU7: UK, Belgium, Netherlands, Germany, France, Italy, Austria EU7 Gas Demand EU7 market growth 2003 to 2015 is 2.0% aai Upside new generation could add xx bcma by 2015 EU7: Comments 2003: bcma Total 378 Power 90 Other288 2015: bcma Total 490 Power 130 Other360 Spain Spain could grow from 27 to 45 bcma over same period Source: BG View Section 1

9 Players/ownership - notes PAST - Who was whoCURRENT - Who is who DISTRIGAS Belgian monopoly energy operator and owner of network. Distrigas was split into Distrigas - natural gas marketing and trading, Fluxys – grid owner and operator, and Electrabel – electricity production / distribution / marketing SUEZ Owns 47% of Distrigas and 47% of Fluxys. Owns 55% of Electrabel through its subsidiary Tractebel. Electrabel is active in power generation in Belgium, the Netherlands, Spain, Hungary, Italy, Poland and Portugal EdF Electricity production, distribution and marketing in France EdF Owns 34.5% of German utility EnBW, 15% in Italian utility Edison, 100% of UK utility EDF Energy (formerly London Electricity), and has stakes in two Hungarian gas distribution companies ENI Energy production, transmission and marketing in Italy. Some activities were split off: Italgas – gas retail, - Snam Rete Gas – gas storage and transmission, and Enipower – power generation and marketing ENI Owns 100% of Italgas, 50.07% of Snam Rete Gas, 100% of EniPower. Jointly with EnBW, owns almost 100% of German gas distributor GVS. Owns stakes in utility companies in Hungary, Slovenia, Spain, Greece GdF Gas exploration, production and supply in France GdF In addition to activities in France, has acquired stakes in upstream and downstream in Germany, and has further downstream interests in Hungary, Slovakia, Italy, Belgium, Austria, Portugal VEBA – Vereinigte Elektrizitaets- und Bergwerks AC VAIG – German conglomerate (merged into EON in 2000) EON-Ruhrgas European energy supplier. Dominates large part of German market, acquired gas giant Ruhrgas, owns Powergen in UK, and owns stakes in players in Swedish and Dutch electricity market, and in energy markets in Czech Republic, Slovakia, Hungary RWE Established in 1898 as the Rheinisch-Westfälischen Elektrizitätswerks Aktiengesellschaft (RWE), Essen, (Power station cooperation Rheinland Westfalen, Essen) RWE Fully owns Thyssengas in Germany, Innogy in the UK, Transgas in Czech Republic. Owns significant stakes in energy utilities in the Netherlands, Hungary, Slovak Republic, Poland, Austria VNG Verbundnetz Gas Aktiengesellschaft, Leipzig, a supra-regional gas merchant company primarily active in the east German states and the German capital city of Berlin VNG 48% owned by German regional gas supplier EWE of Oldenburg. Remaining shares owned by local authorities VNG has significant stakes in Polish and Slovak energy companies Section 1


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