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New Austrian natural gas law approved, paving way for virtual hub

20 Oct 2011 16:56:43 | esgm

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The Austrian parliament has approved a new version of the natural gas law in a late-night deal on Wednesday. This ends a long period of political wrangling over the so-called Gaswirtschaftsgesetz (GWG) and could boost liberalisation and liquidity in the market.

At the same time, the parliament extended the deadline for to overhaul the Austrian gas market to 1 January 2013.

The GWG amends the Austrian gas industry law and streamlines it with the new rules outlined in the EU's third energy package.

The most important change that will be triggered by the law is the introduction of a virtual gas trading hub with just one entry/exit zone.

Austrian regulator E-control already has stated that it will start discussions with market participants as soon as possible to have the market design cleared by spring 2012.

At present, Austria has a physical trading hub for gas in Baumgarten and separated transit and internal grids. Traders regard this as a complicated and expensive system hindering liquidity.

The law will scrap this system and reduce the Austrian market zones to just one from the current three regional market areas and separate transit zone. In a recent interview, E-control director Walter Boltz said the new market model would boost activity and narrow the price spreads between Baumgarten and the German NCG hub, where gas prices are generally lower than on the Austrian market (see ESGM 13 October).

"The liberalisation is going to facilitate the whole Austrian gas trade. Competition on the market and availability of gas will be improved, which will help Austria to work on its role as a transit hub for Europe," E-control director Martin Graf says in a statement.

Third package

The new law also requires the Austrian TSOs to present new grid development plans every year and continue their unbundling activities. All three Austrian TSOs OMV, BOG and TAG have chosen to unbundle through the so-called independent transmission operator model, which allows the most supplier involvement out of the three options allowed in the third package.

The Gaswirtschaftsgesetz had been stuck in political bargaining since March because the far-right party FPÖ was opposed to an expropriation clause in the amendment. MH

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