Trading - Benelux bank Fortis is set to start trading gas at the Belgian Zeebrugge hub. Fortis signed an agreement with Zeebrugge operator Huberator on 18th April to start trading within a couple of months, it said.
This means Fortis plans to be present at three European gas hubs by the end of the year. Fortis started trading the British NBP in January 2007 and is looking to become active on the Dutch TTF by the end of the year. It would be trading as a physical player on all three, with a single gas desk in charge.
“We have a large Belgian and Dutch client base and we want to be able to offer financial hedging to our clients. You need to be a physical player to be able to manage the portfolios, because there isn’t enough liquidity in the European financial gas and power markets,” head of energy trading and sales Stany Schrans told Heren Energy.
Like most banks, Fortis would start trading the curve contracts to then move onto the prompt, Schrans said, in spite of the limited liquidity of curve contracts at Zeebrugge.
Eight other banks are members of the hub (Barclays Capital, BNP Paribas, Deutsche Bank, Lehman Brothers, Macquarie, Merrill Lynch, Morgan Stanley and Goldman Sachs’ commodity subsidiary, J. Aron Company).
Fortis was not looking at trading the French PEGs or German BEB or EGT zones “at present”, Schrans added. The group does plan to start trading the power markets in the Netherlands, France, Belgium from this summer, however, and has been trading on the German power market since the end of last year.
Competition – Belgian incumbent Distrigas remains the dominant force in the country’s gas market in 2006, although its grip has loosened somewhat, regulator CREG said in its 2006 annual report.
But the pending merger between Suez and Gaz de France could wipe out any progress made, CREG said. “The merger would create a group controlling practically 95% of the wholesale gas market,” the regulator said.
Distrigas now has a 79% share of all gas transported through TSO Fluxys’ network, down 6% year-on-year. Rival Wingas – the Wintershall and Gazprom joint venture – more than doubled its market share of gas on the network to just above 10%, bringing it to parity with Gaz de France.
Distrigas’ share of gas delivered to end users also continued to fall year-on-year. The group now accounts for around 45% of the end user market, a 5% loss since 2005. Wingas and independent power producer SPE made the biggest gains in the end user market, with 6% and 5.5% respectively.
In total, 102.2 TWh was transported on the Fluxys network, while 190.4 TWh was sold to end users. Some end users are now buying gas directly from the Zeebrugge hub or at the cross-border interconnections in order to by-pass Distrigas’ dominance.
Distrigas still effectively controls almost all pipeline capacity to transit gas through Belgium or access the Zeebrugge hub. TSO Fluxys is the official owner, but as Distrigas has signed long-term contracts for the capacity, it continues to act as a grid operator to some extent, according to earlier reports published by CREG. A transfer of Distrigas contracts to Fluxys was planned for the beginning of 2007, but the parties are still locked in negotiations. In the meantime, Fluxys has a mandate to manage the transit contracts on Distrigas’ behalf.
Tariffs - Gas transmission tariffs in Denmark are set to be cut by up to 8% from 1st October 2007, according to Energinet.dk, the transmission system operator (TSO).
Energinet.dk said there were no firm details on the size of the tariff reduction, as Denmark’s TSO had yet to receive its “ordinary budget”, which precedes the fixing of gas transmission tariffs. The cut in tariffs is expected to be in the region of 5-8%. The final figure is also subject to the findings of an internal tariff project.
A spokesman for Energinet.dk said the setting of tariffs “is usually done later in the year. But with the Dong Energy gas release programme, we wanted to give a ballpark figure to the market, beforehand.”
No figures were available for the excess revenue earned during 2005, but the spokesman said the 2005 figure was in the region of EUR 4-5 million.
Energinet.dk said its gas-year 2007 final tariff figures would be announced before the end of August. The TSO is set to cut tariffs in an effort to repay “excess revenue” from previous years. A full list of current transmission fees and charges is available on the TSO’s website, www.energinet.dk.
Trading - Hungary’s MOL has re-joined the gas trading market, launching its 100%-owned subsidiary MOL Energy Trading Kft this month, having received a gas trading licence from the Hungarian Energy Office on April 21.
MOL left the traded market when it sold its former gas trading and storage arms in March 2006 to Germany’s Eon Ruhrgas International, which now operate as Eon Foldgaz Trade and Eon Foldgaz Storage.
Competition - Hungary’s government passed a law to abolish its golden shares in formerly state-owned companies this month, possibly paving the way for consolidation of a regional champion, according to analysts.
Xavier Grunauer, oil and gas analyst for global emerging markets at Nomura, told Heren Energy: “Before, the government could step in at the last minute, now the gates are open for some consolidation, and there is a need for this.”
He pointed out that Austria’s OMV already owned 10% of MOL, the formerly state-owned oil and gas company, and if the former (with the larger market capitalisation) were to merge with MOL, it would strengthen its stake in the Nabucco consortium. OMV’s interest in Petrom in Romania would also create a supply corridor to the Black Sea for oil tankers. He said: “To join those two companies would really diversify the region’s energy supply.”
Grunauer pointed out Russian oil companies would be an obvious fit, given MOL’s ambitions to acquire upstream Russian interests, but described this as a “no-go zone” for the company’s management, given the political implications involved.
Hungary agreed to abolish golden shares as part of its accession to the EU, but the slow pace of legal reform caused the European Commission to threaten the government with legal action in the European Court. This takes away the government’s right of veto over strategy for companies such as MOL, gas and power distribution companies, power plants and the power system operator Mavir.
Investment - Italy’s gas transmission system operator, Snam Rete Gas has revised its investment plan for 2006-2009, raising it by 20% to EUR 4.2 billion. Snam is still predicting annual gas demand growth of 2% in the four years from 2007 to 2010, mainly as a result of increasing gas-fired power generation. The TSO believes gas demand will reach about 95 Gm3 in 2010 and about 115 Gm3 in 2020.
At its AGM, Snam Rete Gas reappointed chairman Alberto Meomartini. The shareholders also approved a new board of directors, which will include a further eight members: Carlo Malacarne, Massimo Mantovani, Massimo Mondazzi, Davide Croff (independent), Renato Santini (independent), Giuseppe Airoldi, Roberto Lonzar and Roberto Lugano as directors.
Snam is owned 55% by oil and gas incumbent Eni, with this share set to come down to 20% by the end of 2008 according to government legislation.
LNG - German gas shipper VNG has made its first foray into the LNG market. VNG bought part of a spot LNG cargo from Belgian gas incumbent Distrigas at the terminal in Zeebrugge.
“This LNG deal is a good opportunity for VNG to familiarise itself with LNG trading procedures,” the group said. A spokesman declined to comment on whether the volumes were part of a bigger deal with Distrigas, only saying VNG was interested in expanding its LNG business in the long-term. Currently, the group’s purchasing portfolio is dominated by long-term supply contracts, complemented by some trading to optimise gains.
The second shipment under Distrigas 33-cargo contract with Qatari Rasgas train five arrived at Zeebrugge on 14th April on board the Simaisma. The third shipment arrived on Wednesday 25th April on board the Al Deebel, according to the website of the Belgian port authority. It was unclear whether the volumes bought by VNG were part of any of these two shipments.
The LNG terminal at Zeebrugge is not yet linked to the hub under TSO Fluxys’ platform service. This means VNG would have to strike separate contracts to flow the gas from the terminal to either the hub or towards Germany.
Exports - Talks on the deal to take a 9% share in the planned Nord Stream gas pipeline are “in good progress”, a spokesman for Dutch Gasunie told Heren Energy.
The spokesman declined to provide a timeline for the deal, however, stressing that there were no fixed dates. “That belongs to the normal dynamics of business talks about complex projects such as participation in Nord Steam and BBL pipelines,” he said.
This month, reports suggested the deal would be signed by July, citing Marcel Kramer, head of Gasunie. Gasunie signed a Memorandum of Understanding (MoU) in October last year to take a stake in the project, currently owned by Russia’s Gazprom and Germany’s Eon and BASF. In return, Gasunie would give the Russian monopoly a stake at the BBL gas pipeline from the Netherlands to the UK.
“When Gasunie’s interest in established, at the same time there will be an opportunity to establish an interest in BBL,” Kramer told the London Economic Forum this month: “It’s not a swap in the sense that the assets have an identical value,” he added.
Last month, Sergey Korovin, head of the international project at Gazprom, told Heren Energy the deal would be finalised by the end of March.
Competition - Spanish gas incumbent Gas Natural has become the country’s fifth largest power producer, according to Spain’s energy regulator, CNE. The Barcelona-based company replaced Enel Viesgo, a subsidiary of Italian utility Enel, while Spanish power incumbent Endesa remains at the top of the country’s power company list.
Gas Natural remains the principal natural gas supplier in Spain, CNE said.
Competition - New shares in Spain’s power company Iberdrola have begun trading on the Spanish stock exchange after the firm completed its EUR 17.2 billion takeover bid for Scottish Power.
The Edinburgh-based court of session gave its approved to the merger representing the final step in the takeover process after Iberdrola had been given the green-light by UK, US, EU and Spanish authorities.
The quick completion of the takeover is in stark contrast to the wrangling that has plagued foreign attempts to buy Spanish power incumbent Endesa, and transforms Iberdrola from Spain’s second largest power company to Europe’s third largest energy group. Iberdrola is now worth approximately EUR 65 billion. With a total installed capacity of almost 40,000 MW, Iberdrola has increased its energy generation by more than 25% and boosted its installed renewables capacity to 16,500 MW. Of this total, 5,000 MW comes from wind farms.
Trinidad and Tobago
E&P - The UK’s Centrica has been awarded a 32.5% interest in an exploration block by Trinidad and Tobago as part of the company’s plan to develop an upstream gas business, the company said. Centrica will partner UK independent E&P Tullow Oil and will act as the operator of block 2AB, upon successfully developing the gas field. LNG export facilities are located close by and the investment provides Centrica with access to its customers in the US and Canada through Direct Energy.
Centrica is targeting “LNG focus countries” that are capable of delivering into Atlantic basin markets, in addition to investing in long term gas contracts to support delivery into the UK. Licence blocks in Nigeria and Egypt are also being developed by Centrica.
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