Gas shippers call for short-term capacity conversion

29 March 2017 06:30 Source:ICIS
European Commission headquarters in Brussels

European gas shippers have called for short-term capacity conversion offerings in order to avoid paying twice for booked capacity.

As required under the EU’s capacity allocation mechanism (CAM), transmission system operators (TSOs) across the bloc will need to offer annual, quarterly or monthly capacity conversion products for bundled firm capacity by 1 January 2018, but there is no requirement to offer a within-day or day-ahead service.

Doug Wood, chairman of the European Federation of Energy Traders (EFET), said that while the service being proposed by industry association ENTSOG is a step in the right direction, the demand for the capacity conversion service will be more related to day-ahead and within-day capacity.

“As this [short-term service] is likely to be the most sought-after service, some TSOs might struggle to offer it on a manual basis at times of peak demand,” said Wood.

“If an automated service is not possible, we would be willing to engage with TSOs to discuss whether a simplified version would help at the most popular locations.”

British system operator National Grid said earlier in March that it was not planning to offer a conversion service for day-ahead or within-day capacity, while no other TSO has outlined plans to offer short-term products (see ESGM 10 March 2017) .

“The proposed [monthly, quarterly or annual] service is welcome insofar as it is an improvement on the current situation. That much can’t be denied.

However, some might suggest that the proposals reflect a degree of ‘ticking the box’ or offering the bare minimum rather than what is required by the market,” said a regulatory expert at a large shipper.

Current CAM rules

Under the existing version of the CAM network code, firm capacity can only be sold as a bundled product that comprises entry and exit capacity on both sides of an interconnection point.

This is a problem for shippers that already own capacity on one side of an interconnection point, as they are unable to acquire the missing half of the entry/exit capacity pair by purchasing a bundled capacity product without double booking the capacity they already own.

“For me, it would be better if the capacity conversion service could be used short term. Of course, shippers would prefer more optionality, and to have this available on a short-term basis would be very useful,” said a logistics head at another shipper.

Industry stakeholders met in Brussels on Tuesday to discuss the CAM network code, while a separate workshop on the EU’s tariff network code will be held on Wednesday.

The amended CAM code is due to go live in April 2017. jack.elliott@icis.com

By Jack Elliott