Zeebrugge set to be a single virtual and physical natural gas hub

The new natural gas entry/exit model that Belgium’s transmission system operator (TSO) Fluxys plans to launch on 1 October 2012 will comprise of one single trading hub where both virtual and physical services will be available.

This is the final proposal – part of a larger reform of the Belgian transmission system – submitted by Fluxys to the country’s energy regulator CREG for approval on 15 March, the TSO said on Monday.

More specifically, Fluxys has submitted to the regulator the final versions of the Standard Transmission Agreement, the Access Code for Transmission and the Transmission Programme. These documents define the new entry/exit transmission model and have been modified, taking into account the feedbacks received during a market consultation which started at the end of November 2011 and ended on 27 January.

As to the launch of a virtual trading point in Belgium, the Zeebrugge Trading Point (ZTP), the market consultation revealed three different points of view.

Some parties expressed their interest in a single Belgian hub and a single price benchmark at the ZTP. This proposal backed the idea that a single hub would lead to trade growth in Belgium while the existence of a second, physical hub at the so-called “ZeeBeach” would kill off liquidity at the new virtual trading point.

Others supported the plan of keeping ZeeBeach only as an over-the-counter (OTC) market while at the same time focussing on the development of ZTP. According to these parties, there should not be any anonymous trading activities at ZeeBeach.

The third type of feedback proposed maintaining ZeeBeach for physical trading activities while at the same time developing virtual trading at ZTP.

Following the market consultation, the proposal submitted by Fluxys to CREG consists of one single hub combining ZTP and ZeeBeach.

As to the introduction of a daily balancing system, there has been no significant change to the initial proposal of having a new market-based balancing system and within-day balancing activities. The balance between gas entering and leaving the grid will be monitored during the whole of each gas day and will be updated on an hourly basis.

Fluxys underlined that only the new ZTP will be used for balancing purposes.

Further adjustments made

During the market consultation, the TSO received feedback from 17 parties, mostly active users of Fluxys’ network. The feedback led to some clarifications and adjustments.

In particular, the changes applied by the TSO to the transmission model are in line with the adjustments already introduced by Fluxys into its Standard Storage Agreement, approved by CREG in December (see ESGM 23 December 2011) after a first rejection in November (see ESGM 04 November 2011).

“The adjustments we have introduced in the standard contract for our transmission services are in line with those that we have already applied to the contractual agreements for storage services as we expected the regulator to request the same kind of adjustments also for our transmission system,” Fluxys said.

The changes requested by CREG were mainly related to the issues of gas quality and to the secondary market, CREG said last November.

There is no fixed deadline for CREG’s approval of the proposed documents, but Fluxys said it hopes to receive the final go-ahead in April in order to be ready for the implementation of the new model on 1 October 2012. DB