German zone merger delays strike blow to competition
This month saw a major blow struck against the development of competition in Germany, as several network operators announced they would not proceed with zone mergers as planned. The planned merger of the H-gas market areas of operators GVS/Eni Gas Transport Deutschland and Gaz de France Deutschland Transport (GDFDT) is postponed indefinitely, the two companies confirmed to ICIS Heren. Just days after the announcement, network operators Eon Gastransport (EGT) and RWE announced the merger of their L-gas market areas will not go ahead as planned. Both zone mergers were scheduled to be united on 1st October, coinciding with the beginning of Gas Year 2008/2009.
Erdgas Münster Transport, EWE Netz and Gasunie (formerly BEB Transport) also want to unite their low-calorific areas in northern Germany at the beginning of the new gas year. EWE Netz confirmed to ICIS Heren that the merger was still on the agenda. Negotiations with the two other TSOs were underway and EWE was optimistic to complete all the preparations in time, a EWE transmission operations spokesman said.
As regards H-gas zones, the area of Frankfurt-based TSO Gas-Union Transport will become part of the EGT and the Wingas systems.
At present, Germany has 14 market zones, nine for H-gas and five for L-gas. A further reduction is the declared aim of German regulator Bundesnetzagentur (BNetzA) to boost trading and make it easier for customers to change suppliers. The regulator has called for the number of areas to fall to less than ten.
Had the now postponed unification of the GVS/Eni and GDFDT zones and the EGT and RWE zones not been delayed, with the remaining mergers the number of zones would have fallen to eight. Now it is unclear how many zones the German gas market will be split into when the new gas year starts.
A spokeswoman for BNetzA pointed to the German energy law which called for the number of market areas to be reduced further. BNetzA expects TSOs to keep their promises and do all they can to merge their respective market areas, the authority told ICIS Heren.
A complex process
GVS/Eni and GDFDT had underestimated the amount of work needed to successfully merge the two zones, the BNetzA spokeswoman said. The regulator is therefore asking the companies to inform all customers and find a temporary solution to possibly facilitate gas transport within both areas without a formal merger. ICIS Heren understands the TSOs are considering a new attempt, to be finalised by 1st October 2009, apparently. GVS (“Gasversorgung Süddeutschland”), a subsidiary of EnBW and Eni (each holds a 50% stake), told ICIS Heren joining the zones was a “very complex” process. In addition, necessary changes to the IT systems could not be completed in time, a spokeswoman said.
GDFDT confirmed these comments. Also, the establishment of a joint company and changes to the balancing system were taking longer than expected, the spokeswoman added. Neither GVS nor GDFDT were able or willing to give a new date for the merger which itself is not in doubt.
In January GVS/Eni and GDFDT had announced the merger of their two areas into a single one. According to GVS parent EnBW, this would facilitate access to international markets and considerably simplify gas trading.
Using the number of downstream networks as a benchmark, the southern German market territory would take second place among the German zones (behind the EGT), the utility said.
The zone of GVS/Eni is located in western and south-western Germany, comprising the state of Baden-Württemberg and including the TENP pipeline system. The pipe runs from Bocholtz, at the Dutch/German border to Wallbach at the German/Swiss border, where TENP is interconnected with the Transitgas pipeline system.
The GDFDT area comprises the MEGAL pipeline system which consists of two physically separate sub-networks: MEGAL North and MEGAL South, jointly owned by Eon and GDF. MEGAL North runs from Waidhaus on the German-Czech border to Medelsheim on the French-German border. MEGAL South connects Wildenranna (near Passau) on the German-Austrian Border with the MEGAL North pipeline.
Proceedings against RWE
BNetzA has taken a hard line regarding the merger of the L-gas market areas of RWE and EGT, planned for the start of the new gas year on 1st October. BNetzA is currently examining the possibility of starting proceedings against RWE for not fulfilling its pledge to merge as planned, a spokeswoman for the regulator told ICIS Heren.
Both TSOs had made very clear commitments to unite their zones, the spokeswoman for the authority said.
According to informed BNetzA sources, the problem lies more with RWE than with EGT. The former has offered to the European Commission to sell-off its existing long-distance gas network in order to settle an EC anti-trust case. The fact that attempts to finalise a deal with the EC more or less coincide with the planned merger and necessary preparations seems to be the main reason for a possible delay, according to the sources.
Merger of EGT and bayernets areas on schedule
By contrast, the joining of the EGT and the “Südbayern” area of TSO bayernets is going ahead as planned. bayernets, the network operator for regional gas company Bayerngas, told ICIS Heren preparations for the merger of the H-gas zones were making good progress. “It will pan out somehow” a spokesman said, adding that there was still a huge amount of work to be done.
At present, EGT and bayernets are in the process of setting up a common internet portal and establish a joint company to make it easier for transport customers to book capacity. The spokesman emphasised that the future common area was open for other partners.
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