1. DRAFT DG TREN Staff Working Paper on LNG
Madrid Forum XV Follow-up: LNG workshop: Introduction by European Commission
DRAFT DG TREN Staff Working Paper on LNG
Heinrich Hick
DG TREN C 2
12-13 March 2009, Bilbao
Heinrich Hick
DG TREN C 2
XV Madrid Forum
6 November 2008
EUROPEAN COMMISSION
EUROPEAN COMMISSION

2. Current EC policy context for LNG
LNG featuring in both internal & external energy policy dimensions:
Political: - European Council of 19/20 March 09: Follow-up 2nd SER: SoS, crisis mechanisms, infrastructure, etc.
- Preparation of Communication “A secure and competitive EU Gas Policy”
- integrated view on EU gas policy
- no separate “LNG Action Plan” as referred to in SER2
Legal: Second Reading on 3rd IEM Package
- gas specfic Trilogue only next week
- target: agreement within this legislature
- Revision of Security of Gas Supply Directive
Operational: MF XV homework, GGPLNG

3. 3rd IEM Package perspective (1)
Package provides more solid basis [depending on final second reading outcome !] for taking workshop issues further:
TPA (Art 15) [new Regulation, some differences between EP and CP !]
CAM/CMP (Art 17) [new Regulation, some differences between EP and CP !]
offer same services under equivalent contractual terms & conditions
offer services compatible with use of interconnected gas transportation
system  ref. to cooperation with TSOs
make « relevant information » public on use and availablility of services
 meet TUs « reasoable commercial needs »
ambitious and balanced provisions: efficient and maximum use of capacity
& facilitate investment in new infrastructure
LSO to offer unused capacity on primary market

4. 3rd IEM Package perspective (2)
Transparency (Art 19) [new Regulation, some differences between EP and CP !]
Trading of capacity rights (Art 22) [new Regulation, some differences between
EP and CP !]
disclosure of information re. services offered, conditions applied and
technical information
information on contracted and available capacities (regular, rolling basis,
user-friendly, …)
disclosure requirements also for exempted terminals
some provisions on confidetiality
[PM: role of NRAs ?]
all SOs shall ensure harmonized « contracts and procedures on primary
market to facilitate secondary trade »

5. LNG Policy rationale for regulatory framework
Many terminals in EU have capacity (almost) fully booked in long-
term contracts. Parties seeking long-term capacity booking depend on participation in terminal enhancement / construction project.
BUT … capacity committed in long-term contracts is not used all the
time (overcapacity in regasification) and access to short-term
capacity (primary and secondary) is becoming more important
- substitute scarce long-term capacity
- capture potential of short-term trading opportunities
What does EU market need ?
Fair level playing field & investment friendly conditions:
arbitrage possibilities across EU terminals (if price differentials allow)
no regulatory distortion ?
prevention of capacity hoarding !
Transparency for services offered and tariffs charged !
Certain alignment of services offered by LSO ?

6. Set-up and ambition of workshop
Discuss Action Points: dynamic view (perspective of 3rd
Package, business cycle, question well-known established
views ..)  selection of priorities
IV thematic blocks of Action Points: “lead stakeholder” per
block, stakeholder presentations, discussion, conclusions on
consolidated position of group
Consolidate stakeholders’ views on Action Points to report
back to next MF
consider input into wider EU energy policy process under
way (COM Communication on gas ?)

7. Running order (1) BLOCK I BLOCK II  Eurogas to kick-start
1) Preliminary findings from monitoring GGPLNG
2) Further analysis of tariffs and revenue regulation applied to LNG
terminals
 ERGEG to kick-start
BLOCK II
1) Application of CAM principles to past capacity bookings
2) Need for harmonisation of anti-hoarding notification periods and anti-
hoarding rules regarding the effect on capacity rights
3) [if the analysis above concludes that harmonisation is needed]
recommendation on what such notification period and anti-
hoarding rules should be
 Eurogas to kick-start

8. Running order (2) BLOCK III BLOCK IV  GLE to kick-start
1) Identification of all technically possible and commercially relevant
“unbundled services”
2) Benefits of detailed requirements for tradability of terminal access services,
and possibilities and benefits of standard contracts offered for the same
LSO services
3) Need for rules on prospective transparency
4) Need for detailed rules on transparency with regards to services offered
 EFET to kick-start
BLOCK IV
Steps to improve cooperation between LSOs and interconnected TSOs
Assess costs & benefits of minimum gas quality requirements at the entrance of terminals in the development of standards issued to CEN
 GLE to kick-start