Dutch EU presidency can boost Third Party Access

Jan 25, 1997 01:00 AM

The Dutch Presidency of the European Union is helping to boost the development of Third Party Access in gas transmission across Europe. And Third Party Access -- allowing users other than the pipeline owner access to gas pipelines and to the owner's customers -- is at the heart of the Gas Directive currently under discussion, so progress towards Third Party Access (TPA) is, in effect, progress towards eventual approval of the Directive. Nigel Thornley, Business Development Director of Amoco Western Europe Gas, told a conference that the Netherlands is making progress towards deregulating its own gas market. "Now that the Dutch have the presidency, they are well placed to lead, not follow," he said. Under a White Paper published in December 1995, the Netherlands proposes opening both its high-pressure, trunkline systems and its low-pressure local distribution system to access on a non-discriminatory basis, to be overseen by an arbitrator. The arbitrator would perform a similar role to industry regulator Ofgas in the UK. The Netherlands will divide gas users into three groups and deregulate markets accordingly, Thornley said. Consumers of 10 mmcm or more a year will be free to choose suppliers as soon as the legislation is in place. Users of 170,000 cubic metres or less will not benefit at all. And the intermediate group using between these two amounts will have to wait five years before competition is introduced.
In contrast to the mature gas market of the Netherlands, Thornley described the Spanish market as young, fast growing, heavily dependent on imports and not an immediate model for deregulation. But Spain has already opened its market to the largest users, following a Royal Decree published last year. At present only users of more than 1.2 mmcm a day -- or nearly 440 mmcm a year, over 40 times the Dutch threshold -- can shop around for gas, restricting the right to huge users such as power generators and the largest industrial concerns. Spain expects to modify this volume gradually. But when the EU's Irish presidency last year suggested a figure of 25 mmcm a year as the threshold for eligible customers, it did not meet with much support, according to Thornley, with most member states considering it too low. Even this would restrict entry to large industrial users, in contrast with Britain which next month enters the second phase of an experiment to extend deregulation to the retail level, with individual householders in parts of southern England free to choose supplier. But with these exceptions, few EU member states have made any progress towards introduction of TPA, even though gas transit -- carrying gas across at least one EU border and using the high pressure trunk lines of another member state without using the low pressure system to deliver to consumers -- is well established. Graham Shuttleworth, associate director of National Economic Research Associates, told the conference that Algerian gas already transits Spain on the way to Portugal; Dutch gas goes to Italy via Germany; Norwegian gas to France, Spain and Italy via Belgium and France; Russian gas to Italy, Germany and France via Austria and Germany; and, from next year, UK gas will transit Belgium on the way to customers in Germany and possibly elsewhere once the Interconnector pipeline linking Bacton in Norfolk with Zeebrugge is complete. Noting that TPA was seen as crucial to bringing competition to production in the electricity sector when the electricity directive was under discussion, Shuttleworth pointed out that there is already competition in gas production and TPA will not make an impact in this sphere. But he said that in the areas of Transmission, Storage and the wholesale markets, TPA should further competition and bring down costs. He believes TPA will facilitate more trade than transit on its own can, although there is a danger that disputes will arise over the ownership of rent -- for example, through disputes over how much of the value of the gas should be paid to companies carrying gas across countries located between the producer and the country of delivery.

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