Physical bottlenecks did constrain Interconnector flows to UK
Physical constraints on European networks were one of the reasons for gas failing to reach the Zeebrugge market and the UK this winter, Ian Osbourne of the European Competition Commission said this month.
“We have found some physical congestion at key points on the continental networks,” Osbourne told an Ofgem seminar, adding that there were also antitrust issues that had been identified on continental networks but that any capacity or gas hoarding was for relatively small volumes.
Another contributory factor this winter for the lack of gas flowing to the UK via the Interconnector has been the public service approach of continental players, who chose to keep gas in storage at the start of the winter rather than export it to the higher-priced UK market.
Osbourne has been seconded to DG Comp from British regulator Ofgem and is involved in the specific investigation into why Interconnector flows were way below the pipeline’s maximum capacity in November. He could not give the final results of this investigation or a date for completion.
The main onshore pipeline route to Zeebrugge runs from Germany to Eynatten on the Belgian border then on to Zeebrugge. “We have found physical congestion at German exit points,” Osbourne said.
There is also congestion on a Dutch exit point to the Belgian market, Osbourne said. His summary of the problems seemed to contradict that of Ofgem’s Sonia Brown, who had concluded that the achievement of up to 47 Mm3 of gas flow in February implied there were no physical constraints on the route to the Interconnector. Ofgem has inferred that any capacity left unused in November was a result of contractual constraints or public service obligations.
As Osbourne pointed out, there are four main sources of gas for the Interconnector: Norway (through Zeepipe), German supply, Dutch gas and Algerian gas (LNG into Zeebrugge). The last two do not meet UK quality specifications. He said the logical assumption was that when the Interconnector was delivering at maximum, increased flows through Zeepipe and Zeebrugge LNG, which cannot be directly exported to the UK as they don’t meet specifications, were displacing other supplies in the Zeebrugge area, freeing up export volumes.
Osbourne highlighted the lag in continental infrastructure expansion which has not kept up with export capacity expansion. Osbourne stressed that there will be no major changes in the continental markets next winter. “It is important to take realistic account of the structural and commercial constraints on continental players,” he said.
Roger Cornish, c.e.o. of Interconnector operator IUK underlined the view that little will change next winter. He said actual flows through the Interconnector so far were “about what we expected.” In fact average flows through the Interconnector from 8th November 2005 (when the expanded reverse flow capacity was available) to 21st March this year have only reached 26.14 Mm3/day. Which calls into question National Grid’s forecast base case flows of 42 Mm3/day at the start of the winter.
Cornish said IUK management predictions were based on a simple map of the Belgian market, showing the volumes available to reach Zeebrugge. He said there will not be any more gas available in the region next winter than there has been this winter.
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