Towards a single integrated gas market for Belgium and Luxembourg

Luxembourg gas transmission system operator (TSO) Creos Luxembourg and Belgian TSO Fluxys Belgium and their respective regulators, ILR (Institut Luxembourgeois de Régulation) and the Commission for Electricity and Gas Regulation (CREG), are working together closely to integrate their national markets.

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Luxembourg gas transmission system operator (TSO) Creos Luxembourg and Belgian TSO Fluxys Belgium and their respective regulators, ILR (Institut Luxembourgeois de Régulation) and the Commission for Electricity and Gas Regulation (CREG), are working together closely to integrate their national markets by the end (Q4) of 2015.

This initiative, reflecting the European Union’s ambition to create a borderless European gas market, will be the first market integration between two EU Member States – a move that will provide the regulators and TSOs of both countries with an expanded pool of knowledge and experience for further integration with other neighbouring markets.

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Market integration: what is it all about?

Like Europe’s other gas markets, the Belgian and Luxembourg markets currently make use of national entry/exit systems, with access fees applying between the two countries. In other words, to be able to transmit gas from Belgium to Luxembourg, suppliers have to pay an exit fee for gas to leave Belgium and an entry fee for it to enter Luxembourg.

With the creation of an integrated Belgian/Luxembourg market, these entry-exit access fees between Belgium and Luxembourg will fall away and the Zeebrugge Trading Point (ZTP) will become the gas trading point for the integrated market.

At a final stage, after entering into force of the amendment to the Belgian Gas Act, the balancing rules for the two countries will be harmonised. Balansys, as a joint entity, will manage the balancing of the integrated market. At the same time, Creos Luxembourg and Fluxys Belgium will keep their distinct identities and organisational structures.

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Better prices for consumers

With consumption of almost 20 billion cubic metres a year and over 70 suppliers operating in the BeLux area, there will be more competition on the new integrated market and ZTP will see its liquidity and price signalling role enhanced. Furthermore, the BeLux market's strong links with its neighbouring gas markets (the UK, France, Germany and Netherlands) will reduce the risk of price isolation. Supply means for suppliers operating in Luxembourg will be simplified by having direct access to ZTP and the LNG and storage facilities in Belgium. The industrial consumers and electricity generators operating in the two countries will also be able to optimise their supply portfolio.

Removal of the interconnection point between Belgium and Luxembourg and trading of a conditioned capacity product at Remich

With the removal of the Bras/Pétange interconnection point from the commercial offer, grid users will no longer have to reserve capacity at that point to transmit gas between Belgium and Luxembourg. Meanwhile, the interconnection point at Remich will be dedicated to the trading and operation of a conditioned capacity product, as described below in the section Features of the conditioned capacity product. Given this situation, a process will be launched involving the TSOs and the suppliers concerned to take care of the commercial transition of the current capacity subscription contracts for these points.

Enhanced security of supply for Luxembourg and offering of a conditioned capacity product between NCG and ZTP from the Remich interconnection point

Luxembourg will enjoy enhanced security of supply thanks to a two-pronged strategy:
  • The physical capacity available for flows from Belgium to Luxembourg will rise in the integrated market area, thanks to a higher level of pressure being provided by Fluxys Belgium at the interconnection point between the two countries.
  • Suppliers will have the possibility to subscribe to a conditioned capacity product, with NCG being connected to ZTP via the interconnection point at Remich. On days when Luxembourg experiences high levels of consumption, the product offered will be subject to nomination obligations to guarantee the flows needed for the security of supply of Luxembourg customers.

Features of the conditioned capacity product

The main features of the capacity product as it stands at the moment are as follows:
  • The conditioned capacity product is a product for entry to the BeLux area via the Remich interconnection point which will be offered to the market, in the form of quarterly products available at a reserve price of 0,0263 €/kWh/h/g, at auctions planned to take place on 1 June 2015 and 1 July 2015.
  • Suppliers do not need to subscribe to capacity for the Remich interconnection point at the German side. Creos Luxembourg will subscribe to and operate this capacity on behalf of suppliers who subscribed to the conditioned capacity product, making it a bundled NCG/ZTP product.
  • Use of the conditioned capacity product is subject to nomination obligations and restrictions depending on consumption in Luxembourg. The obligations and restrictions applying to the use of the product will be published before the start of the auctions.