Germany questions need for northbound Italian gas project

Matilde Mereghetti

27-Apr-2015

A project to allow gas to flow from Italy to northern Europe faces uncertainty after an unsuccessful open season in Germany caused the German energy regulator to question the necessity of the upgrade.

Italian and Belgium transmission system operators (TSOs) Snam and Fluxys continue to commit to the project, which is expected to enhance security of supply, market integration, competition and diversification of gas sources for the whole European gas system.

The project will allow shippers to move gas north from Italy into Germany and France via Switzerland. The existing system only allows gas to move south.

“Up to now neither Fluxys nor any other TSO provided solid evidence that the measures were necessary on grounds of security of supply or market demand – from today’s perspective or for the next decade. On the contrary, BNetzA has doubts concerning the necessity of the TENP reversal measures,” German regulator BNetzA told ICIS by email.

BNetzA said other reasons for their doubts around the project’s advantages included a lack of demand, no bookings at the existing day-ahead entry capacities of the Wallbach border point and the fact that there have been no known interruptions so far.

Additionally, if shippers refuse to make bookings for newly built gas transport capacities, charges at the TSO’s other interconnection points could increase, the regulator said.

Open season and project details

Italian TSO Snam already planned to make 40 million cubic metres (mcm)/day of exit capacity available at the Passo Gries connection with Switzerland from 2018 for the project to allow gas to flow in towards Europe. This was planned to coincide with the completion of infrastructure work being carried out by Belgian operator Fluxys in Switzerland.

On the Swiss side, Belgium’s Fluxys announced in January it had taken final investment decisions to make its gas infrastructure in Switzerland (Transitgas) and Germany (TENP) physically bi-directional. This would create transmission capacity to deliver gas northwards from Passo Gries to both the French and German entry points from summer in 2018 (see ESGM 18 March 2015).

Fluxys, which aims to make physical reverse transport also possible in Germany, launched an open season process in December 2012 in order to identify market interests and allocate capacities to market players. However in 2013, Fluxys decided to temporarily suspend the process and finally cancelled the open season completely.

The proposed project’s technical dimensions have changed several times.

In the 2012 network development plan, the TENP reversal was considered a big investment, with a 28GWh/h import capacity. In the 2013 network development plan, investment calculations were lowered significantly to 10.4GWh/h. In 2014, BNetzA forced Fluxys to amend the dimensions to bring them in line with the dimensions listed in the 2012 projects of common interest (PCI), which sum up to 14.9GWh/h. After this amendment, Fluxys stated in July 2014 that due to lower-than-expected demand, it considered building a smaller version than proposed in the PCI process.

“This is the main reason why BNetzA obliged the TSO to remove the TENP reversal measures from the network development plan in 2014,” the German regulator said.

Project’s outlook

BNetzA is holding ongoing discussions on the capacities of the TENP pipeline system with pipeline owners Fluxys TENP and Open Grid Europe, while consulting the 2015 draft network development plan with all stakeholders. As consultation on the plan will end on 5 June, both Fluxys and Snam said they would not comment on the consultation’s outcome.

“BNetzA made clear that any capacity assumption at Wallbach must be verified in terms of market demand or other indications (interruptions, price signals at PRISMA auctions) – which in the end did not prove true for Wallbach. The network development plan for 2015 contains a small project (also named TENP reversal) which only features a deodorisation station and a reversal of one of the TENP compressor stations. This seems to be necessary due to local gas demand, but as well needs to be analysed in the formal examination process,” the German regulator said.

Fluxys told ICIS by email it was confident the German regulator saw the advantages of the project for Germany and the EU regarding security of supply, market integration and technical innovation and would take this into consideration in its decision.

“The project is included in the draft [2015] Network Development Plan, which has been jointly developed and agreed upon between all German TSO’s and which has been recently submitted to the BNetzA,” Fluxys also said.

“If Fluxys will present a more convincing justification for their capacity demand expectations at the cross-border points in question (Wallbach and Eynatten) in future network development plans, BNetzA will of course again examine the proposal to its full extent,” BNetzA said.

The German regulator is expected to take a position on this document after the public consultation. matilde.mereghetti@icis.com

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