EFET urges Hungary to explain BRUA pipeline changes

27 July 2017 11:42 Source:ICIS
pipeline

The European Federation of Energy Traders (EFET) has urged Hungarian authorities to set out the reasons for bringing radical amendments to the EU’s flagship BRUA pipeline so the industry can find a solution for the resumption of the original project.

In a letter addressed to the Romanian, Hungarian and Austrian regulators and transmission system operators on Wednesday, EFET said it had been ‘taken aback’ by a decision by the Hungarian grid operator FGSZ to remove Austrian partners from the Bulgaria-Romania-Hungary-Austria (BRUA) pipeline.

Last week FGSZ announced it was no longer in a position to hold an open season on the Romanian-Hungarian-Austrian section of the pipeline.

Instead, FGSZ said, the only ‘economically viable’ part of the BRUA pipeline would be the existing Romania-Hungary interconnector, which could be expanded from its current capacity of 4.4 billion cubic metres (bcm) to 5.26bcm/year.

Under the proposals exports of new sources of gas would stop in Hungary, rather than travel further to the Austrian Baumgarten hub.

“This is a surprising development as the Hungarian regulatory framework would seem to foresee the possibility not to invest into new transmission capacity even in cases where one can reasonably expect that an open season [would] result in sufficient capacity commitments at regulated tariffs,” the EFET letter said.

FGSZ said last Friday it had contacted the Romanian grid operator Transgaz with a view to conduct an open season procedure just on this point. The procedure would have an almost identical draft for the Romania-Hungary project only.

If the rulebook is approved by Romanian regulator ANRE, the original start date of commercial operations of 1 October 2022 would still apply, according to FGSZ.

Risks

Referring to the new rulebook proposed by FGSZ and its Romanian counterpart Transgaz, EFET said: “We note that FGSZ and Transgaz are putting forward a revised rulebook for a Romanian-Hungarian open season which offers capacity at the Romanian-Hungarian border with no reverse flow from Hungary to Romania and at different economic parameters.

“We stress that market participants regard such changes as having a material and economic nature and as possibly increasing the risks involved in making capacity booking commitments.”

Romanian and Hungarian officials have until 1 August to approve the rulebook. If they fail to do so, the procedure has to start from scratch, but will then need to be in line with the European capacity allocation mechanisms network code.

EFET remained sceptical that the two regulators could meet the 1 August deadline, but said that if they decide to proceed with the current changes the Romanian and Hungarian grid operators should be in a position to offer incremental capacity at the Romanian-Hungarian border based on the terms of an open season rulebook.

“We point out that the determination and modification of the detailed dates for the Romanian-Hungarian open season timeline should be subject to a future technical consultation with interested stakeholders without the need for another approval of capacity allocation methodologies.”

It is not known whether the Romanian regulator would approve the new rulebook.

In a statement published on its website on Tuesday, Transgaz pledged its commitment to the original BRUA projects, noting it would take into account its proposed objectives for diversification of supplies and routes, when planning and conducting the open season procedure for the pipeline. The statement came only a day after Ion Sterian, Transgaz’ general manager wrote in a letter to the European Commission and seen by ICIS that Transgaz “would not have anything against” changes to the open season procedure proposed by its Hungarian counterpart FGSZ. aura.sabadus@icis.com

By Aura Sabadus