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), worked together closely to integrate their national markets as from 1 June 2020.

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This initiative, reflecting the European Union’s ambition to create a borderless European gas market, is 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 were based on 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, network users had 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 fall away and the Zeebrugge Trading Point (ZTP) will become the gas trading point for the integrated market.

The balancing rules for the two countries are harmonised. Balansys, as a joint entity, manages the commercial balancing of the integrated market. At the same time, Creos Luxembourg and Fluxys Belgium keep their distinct identities and organisational structures.

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Better prices for consumers

The consumption of almost 20 billion cubic metres a year and over 100 network users operating in the BeLux area, ensure enough competition and liquidity on the new integrated market and ZTP. 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 network users operating in Luxembourg are 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 are also 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 is dedicated to the trading and operation of a conditioned capacity product.

Enhanced security of supply for Luxembourg and offering of a conditioned capacity product between THE 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.
  • Network users will have the possibility to subscribe to a conditioned capacity product, with THE 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.
  • Network users 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 network users who subscribed to the conditioned capacity product, making it a bundled THE/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.