1. A honor and pleasure to be here and to present the view of EFET (European Federation of Traders) on the important topic of Regional Markets. In the past, EFET in general and myself in particular have been involved in many discussions with GIE or GTE on a great variety of subject. Such as Guidelines Good Practices Storage System operators, on entry/exit systems, on capacity congestion and allocation mechanisms, etc, etc. At these discussions, GIE and EFET have often opposing views which is probably the result of our different businesses. However, discussions were always co-operative and always focused on trying to achieve a commonly acceptable result.
So, EFET is looking forward to discuss regional gas markets with the TSO’s, as well as with the regulators, EC, other users of the gas grid. We should not forget that, although our views will be different, we are all bound by the firm desire of the EU, namely the creation of an internal EU gas market. Regional gas markets form an interesting part in that discussion
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2. The North Sea Region: creating a regional market
A regional market: what is it?
Regional or national gas grid or balancing zone?
(Virtual) trading zone?
4 markets as defined by Gas Regional Initiatives?
Regional markets are a powerful tool in order to develop an
open, transparent internal European market, but are ‘just’
a stop-over on the road to an European market!
Sheet 14/15/16/17: as an introduction to regional markets: raise the question what are regionale markets? How are they defined: by gas grids (sheet 14) or by trading zones (sheet 15).
Main message: regional markets are fine, EFET is 'grateful' for the creating of these, but regional markets are only a stop-over in the process of the internal European energy markets. We should never forget that defining regional markets is highly subjective and can not substitute an internal European market
Feedback from the consultative meeting last Friday on the Green Paper in Brussels: the European Commission and the European regulators still aim to develop an internal European market. Their tools are (a.o.) (ownership) unbundling and a 3rd Regulation. Obviously, with the Gas Regional Initiative they support the development of regional markets, but at the same time they conclude that regional markets are just an intermediate phase to the creation of an European market
Sheet 18: to b. The other message is that Europe is totally fragmented, certainly if it is left to the grid companies which makes the creation of an internal European energy market virtually impossible European gas market. See sheet 15

3. REGIONAL HUBS AS TRADING ZONES?
Virtual hub (in-grid balancing point)
NBP
TTF
Huberator @
Zeebrugge
Physical hub ( e.g border point)
Baumgarten
Less liquid
gas trading
locations
NB. Not all trading locations are shown

4. Regional markets according to ERGEG (Gas Regional Initiative)
What should the GRI process achieve according to EFET:
Convergence on a consistent EU internal market approach
Transparency with information accessible to all stakeholders on an equal basis
Ambitious, but realistic targets, with lessons from the electricity markets and successful gas hubs
EFET looks forward to discuss with all stakeholders the GRI
in The Hague on October 9!

5. GRI N/NW: some of EFET’s concerns (1)
Gas Hub Development
Virtual trading points
Focus on existing trading points with their specific problems
Primary and Secondary Capacity
No unduly delay for implementation!
Transparency
Safeguard the interest of all new entrants
See EFET’s paper on market information transparency
Mention the different points in the recent letter to DTe/ERGEG

6. GRI N/NW: some of EFET’s concerns (2)
Gas Balancing
Closely related to hub development
Market-based balancing (i.e. on a daily basis)
Gas Quality
Should be a ‘non-issue’ on wholesale level!
Regulatory Co-ordination and Investments
Adequate investments in infrastructure: essential!
Consistency of regulation, incl. application of article 22

7. ‘My ideal regional gas market!!!’
No physical constraints (bi-directional!)
No quality issues
Consistent balancing principles
Transport:
Contractual:
Third Party Access to pipeline capacity
Market-based capacity allocation and management procedures
Liquidity:
Plentiful commodity
Plentiful flexibility
Transport: (ONLY REGULATED TRANSPORT??) (WHAT ABOUT TRANSPORT INVESTMENTS IN BBL, LNG TERMINALS?)
No physical constraints: refer to auctions and open seasons
Refer to discussion London 26/9
EFET’s principle: balancing on daily basis. Stress the importance of consistent balancing principles. Different principles are a cause for limitation in cross-border trade and thus the development of regional markets
Contractual:
TPA: refer to Piebalgs?
Auctions, open seasons only to be apllied as a way to discuss/check capacity requirements. Different issue for non-regulated assets or assets with TPA exemption. Yes, ofcourse EFET shares the general concern that Europe may lack sufficient ‘supply capacity’. But this does not mean that there is a general ‘permit’ for TPA exemptions
Liquidity:
Commodity: a matter of the market!!
Flexibility: refere to the discussion if there will be enough flexibility (from storage) with the increasing supply from LNG, long-distance pipe lines, etc

8. How ‘ideal’ is the North Sea Region?
N/NW Europe is a region with privileges:
Indigenous production
Some flexibility
Infrastructure
Some trading, some (virtual) hubs
Conclusion: not ideal (yet)

9. Conclusions on (North Sea ) Regional Market
From EFET’s perspective:
Regional markets essential:
Yes!
Regional markets end-stage:
No!
North Sea Regional Market ideal:
No!
Worthwhile to develop North Sea Regional Market:
Yes!
ALL Regional Markets are (equally) important!