EU regulation could stymie gas interconnector investment

Proposed rules for booking incremental capacity on future interconnectors across Europe will struggle to result in new investments, according to president of Gas Transmission Europe, Stephan Kamphues.

Incremental capacity booking falls under the wider EU network code on capacity allocation mechanisms (CAM). The rules aim to introduce a market-based process of triggering new gas transmission capacity investments where needed.

Shippers will not commit to long-term capacity on pipelines that are designed to provide security of supply in emergency situations in particular, said Kamphues speaking on the sidelines of the Gas Infrastructure Europe annual conference.

“We now need some framework that allows investors to put money into projects, even if there are no bookings (for incremental capacity),” Kamphues said. “We need a stable framework that allows us to recover costs on these pipelines. That is a big thing that is missing in CAM.”

It would also be risky for shippers to book capacity on future pipelines that cross countries that may struggle to cooperate politically, he said.

Both Kamphues and Jean-Marc Leroy, CEO of French storage operator Storengy, said in order for projects necessary for security of supply to actually be built, countries need to take a united approach in funding cross-border projects.

“Solutions should be regionally driven. What is also key [is] to be sure decisions made in one part of the EU are not detrimental to another part,” Leroy said during a panel discussion.

Under the new incremental capacity rules, demand assessments will determine if new capacity should be sold as bundled capacity auctions at an interconnection point, or through an open season. The results of the auction or open season will then determine whether investment is needed in an infrastructure project.

One example of a project that would struggle for potential booking commitments would be Slovak grid operator EUstream’s proposed Eastring pipeline, which would transport gas between Europe via Ukraine or Bulgaria and the south eastern countries of Greece and Turkey. Miriam Siers