TSOs and Long-term Security of Gas Supply in Europe Peter A. Hodal Vice President of Gas Transmission and System Operations, Energinet.dk TSOs and Long-term Security of Gas Supply in Europe

TSOs and Long-term Security of Gas Supply in Europe Framework: Natural gas will continue to be an important part of the energy-mix in Europe! Increasing demand for Energy in EU Today natural gas constitutes 24% of Europe’s energy-mix Expected to be at least 28% i 2030 (IEA) IEA (WEO 2007) estimates that EU demand for natural gas will increase by 1,4%/year from 2005-2030 (550 bill. m3 to 771 bill. m3) The fastest growing primary energy source in the developed world Gas to power generation a main driver The Climate issue Fossil fuels will continue to be an important part of the energy-mix - cannot be ruled out ’overnight’ – unless dramatic fall in overall energy demand! Natural gas has the lowest CO2-emission of the fossil fuels – almost 1:2 compared to Coal! TSOs and Long-term Security of Gas Supply in Europe

TSOs and Long-term Security of Gas Supply in Europe Framework: Natural gas will continue to be an important part of the energy supply in Europe! Characteristics/advantages of natural gas Main producers are close – Worlds largest reserves in the neighbouring countries/regions - Russia, Norway, Africa, Middle East It can be traded globally – Increasing relevance of LNG It can be stored TSOs and Long-term Security of Gas Supply in Europe

TSOs and Long-term Security of Gas Supply in Europe But also… EU indigenous production decreasing: Increasing import dependency Increased global competition on fossil fuels – coal, oil, gas Secure and ’cheap’ supplies can no longer be taken for granted! Gas will have to be transported over longer and longer distances to come to Europe TSOs and Long-term Security of Gas Supply in Europe

TSOs and Long-term Security of Gas Supply in Europe What can be done? Need for massive investment in infrastructure in EU, particularly cross-border. IEA estimates 400 bill. $ towards 2030 (of these 160 bill. $ on transmission & distribution) Better integration of the European network, physically and in terms of network codes/rules, procedures, IT-platforms Diversification of suppliers/supply routes TSOs and Long-term Security of Gas Supply in Europe

TSOs and Long-term Security of Gas Supply in Europe What can be done? Necessity of longer-term contracts (but not for the full capacity!) Increased need for storage! (consequence of the longer transports) Need for European, not national, security of supply strategies due to falling domestic production, EU/TEN funding of strategic projects (such as the Nabucco feasibility study) Strategic storages – Denmark already has such a setup TSOs and Long-term Security of Gas Supply in Europe

Market and security of supply – brothers in arms! Suppliers (Shell): ”An open and competitive, liquid and interconnected single European market is crucial” Will make gas move around quickly Harmonisation of rules on a European level: The importance of an effective coming ENTSOG, composed by independent TSOs But also focus on regional strengthening to secure faster development of markets! What will help diversification of supplies? Big buyers with negotiating powers - or a liquid, competitive market with many players?! TSOs and Long-term Security of Gas Supply in Europe

The role of TSOs in gas supply security Security of supply lies within the ’task-portfolio’ of TSOs TSOs has the know-how, expertise and overview TSOs must show the necessary will and courage to invest – the need is there! Necessity of improved demand-supply information and forecast by unbundled/neutral TSOs Improved options for collaboration between TSOs and SSOs Open season procedures conducted by the TSOs (in pairs for border points) Neutrality/Objectivity: Independent and unbundled TSOs are the best to play this role! TSOs and Long-term Security of Gas Supply in Europe

What is Energinet.dk doing today? Denmark is currently exporter of natural gas But North Sea gas production will go ’off plateau’ within 5 yrs. Led to GISA - Gas Infrastructure Analysis project, where Energinet.dk assesses all options Diversification of supply routes TSOs and Long-term Security of Gas Supply in Europe

Does the 3’d package provide the tools? Points in the right direction as regards security of supply: Ten years statement/forecasts on a national and European level Effective ENTSOG for faster code and rule development (but ownership or ISO unbundling crucial for strong and credible ENTSOG development) ACER and the Commission are granted important roles to assist and ensure ENTSOG progress. Improved options for cross-border investments: Regulators and ACER to secure investment decisions are made TSOs and Long-term Security of Gas Supply in Europe