GIE Annual Conference Bratislava, 28-29 September 2006 Ensuring Secure and Competitive European Gas Supplies Johannes ENZMANN European Commission DG Energy and Transport Unit Electricity and Gas

EU25 - Demand and Supply Growth of demand: 37% Growth of imports: 135%

The growing role of LNG World LNG trade: LNG in the EU: mid 1970s 10 bcm at a global scale Mid 1990s 80 bcm Since then more than doubled to 180 bcm in 2004 Further growth is expected, some analysts forecast another 180 bcm by 2010 LNG in the EU: In 2004, EU LNG imports accounted for 12% of imports (34 bcm) and 7% of total consumption Unevenly distributed, some Member States import around 60% of their needs in form of LNG Underlying reasons: techology & economies of scale; market opening and market opportunities

From regional to global markets Growing demand for gas is a global tendency Growing role for LNG not only in Europe, but also other regions (US, India, China etc) Contractual developments of LNG contracts allow better exploiting market opportunities Competition between gas consuming regions likely ...but also a more diversified supply portfolio and thus enhanced security of supply

Investments in an attractive market Supply and demand developments clearly point to the need for new investments in gas infrastructure as well as E&P IEA figures suggest infrastructure investments in the order of € 200 bn by 2030 An attractive market: No operational barriers to enter the market No barriers to market the gas Free flow of gas allowing exploiting buisness opportunities Competitive prices

Some Preconditions to Be Met Unbundling TSOs geared to market capacity Entirely independent of supply interests Clear rules for investments Providing a stable, clear and reliable framework Taking into account the regulatory environment In line with non-discrimination and transparency Non-discriminatory and transparent capacity allocation mechanisms including effective congestion management Sufficient level of transparency etc

Investments in existing and new infrastructure Non-discriminatory and transparent capacity allocation mechanism Overall transparency on available capacity Open season, open subscription period Lead time corresponding to duration of the contract Clear rules concerning tariffs Economically viable investments including cross border Coordination among and between relevant authorities and TSOs Obligation to respond to market demand

Conclusions Obvious need for investments Need to define clear rules in line with the requirements of a competitive market Main elements are available, but may turn out not to be sufficient Further efforts are necessary…