GTS manages the national gas transport network in the Netherlands and is responsible for its management and development.
Balance between short and long term
The activities of GTS have both a short-term and a long-term dimension. Investing in gas networks requires a clear long-term vision. At the same time, the trade in gas is increasingly dominated by short-term interests. As a result, GTS faces a dual challenge. In the short term, it has to provide the infrastructure and services that make the gas trade possible, while in the long term it needs to guarantee a healthy business.
In 2012, GTS transported more than 1,025 billion kWh (105 billion m3) of gas – an increase on the previous year (996 billion kWh, 102 billion m3). The new infrastructure that became operational at the end of 2011 was used during the cold spells at the beginning and end of 2012 to make extra gas available to meet the strong domestic demand and to transport more gas to foreign destinations. With its gas transport and related services, GTS achieved a revenue of € 1 billion in 2012.
Developing the liquid gas market
The Netherlands is attractive for suppliers of gas. The gas roundabout policy has led to good contacts with our surrounding markets, as a result of which gas can be brought in from various sources and directions. Many gas suppliers are active in the Gasunie network. This serves to promote trade, and the virtual gas trading point TTF also plays an important role in facilitating this. In addition, trading on TTF grew dramatically in 2012, further strengthening TTF’s leading position on the European mainland.
This leading position ensures that the gas prices on TTF serve as the benchmark for the rest of Europe. As a result of this lively trade in gas, TTF is increasingly attracting the attention of international parties. In the meantime, every day, on average some 100 gas traders are active on the trading point. Large financial parties have also entered the TTF. A well-operating trading hub like this is in the interest of gas users in the region: it is good for the security of supply and ensures that the laws of supply and demand can create a proper and reliable balance. This has a favourable effect on the price that end-users pay for their gas.
Compared to 2011, the volume traded on TTF in 2012 grew by almost 20% to an annual volume of 7,569 billion kWh (775 billion m3). This volume consists both of bilateral trade (OTC) and trade via exchanges. The physical volume that flows via TTF (the net TTF volume) grew to 417 billion kWh (42.7 billion m3) in 2012. As a result, for the first time, the physical TTF volume was more than the domestic gas consumption. This clearly shows that now export markets are also being supplied from TTF.
The liquidity of the TTF trade continued to grow in 2012. On average, every m3 was traded more than 18 times before delivery took place. In 2011, this figure was 17. On 5 June 2012, the number of active TTF traders reached 100. The average daily number of parties active during 2012 was 98, with a maximum of 104 being active on any one day.
In comparison with neighbouring gas trading points in Europe, only the British NBP is larger, although the difference in liquidity is rapidly decreasing. Compared to the other continental gas trading points (Zeebrugge, Gaspool, NCG and PEGs), TTF is by far the largest. In 2012, the traded volume on TTF was about 2.5 times the volume of all these other continental trading points put together.
Customers and service provision
The customer base of GTS is growing and is becoming increasingly diverse. To answer the wider range of questions being asked, the website has been redesigned. A Customer Desk has also been set up to answer customers’ questions. In addition, in order to increase brand recognition, the name of GTS was changed to Gasunie Transport Services B.V. in October 2012.
Sharing best practices
GTS is increasingly working together with other parties and is intensifying the interaction with those involved. For example, GTS communicates extensively with customers and local distribution companies about maintenance and replacement work on older parts of the network. This improved communication will enable us to share best practices more effectively.
Clarity regarding tariffs
In 2012, a definitive method of regulation was set up, ratified by the CBb. This clearly specifies how our standardised asset value is to be determined and the tariffs to be charged from 2006. It is expected that in the course of 2013 the NMa will specify new method decisions for GTS’s regulated tasks, to come into force on 1 January 2014.
Application for certification
GTS has requested certification as an independent system operator in line with the requirements of the European Third Package for energy legislation. Under the Third Package, national energy regulators are required to check whether their national system operators comply with the European unbundling requirements and operate wholly independently from the production and delivery of energy. In the Netherlands, the NMa must check whether GTS conforms to the European requirements. The NMa is expected to take a decision on certification in the course of 2013, after the European Commission has issued its advice.
The transport of natural gas takes place in a market with internationally operating parties. The European Commission develops policy for, amongst other things, cross-border gas transport. Codes are being developed which will require system operators to create extra transport capacity, to be auctioned, in the first instance, for short-term use. The EU requires TSOs to work closely together and to optimise their investments. GTS is pleased with this development, given that gas transport has become an international matter. However, this internationalisation process will only take place if national regulatory frameworks permit it.
PRISMA European Capacity Platform
The development of the PRISMA European Capacity Platform was an important step towards an integrated European gas market, connecting the gas markets of seven different countries at the heart of Europe. Together with other TSOs, GTS was one of the originators of this initiative. The platform is managed by PRISMA, which is based in Leipzig. PRISMA is facilitating work on a uniform system which, in due course, will enable all customers – regardless of the country they are based in – to benefit from new possibilities for cross-border gas transport and gas trading, as they will be able to book capacity at the European border points through a single platform. Joining up the gas markets in this way creates a larger market with more suppliers. This is good for supply and demand, because it results in greater competition – which is in the interest of all gas users in the region. PRISMA was chosen as Project of the Year at the European Gas Conference in Vienna.
Infrastructure and market forces
Every two years, GTS holds a new ‘Open Season’. This is a set period of time during which GTS asks its customers to notify it of their long-term need for transport capacity. This enables GTS to determine whether it needs to expand the national gas network. The past three Open Seasons revealed that the need for capacity was so great that GTS would need to lay new pipelines and installations to be able to keep serving the market. The outcome of Open Season 2017 (held in 2012) was that customers’ requirements can be met on the basis of the existing infrastructure. However, it also transpired that demand for transport capacity for shorter periods is growing. It also emerged that there are opportunities for secondary trading in capacity.
Multi-year replacement programme
In order also to be able to continue to meet safety standards and guarantee transport availability in the future, in 2012, GTS started a multi-year replacement programme. This programme ensures a sustainable security of supply. It is based on an extensive study, which has precisely mapped out which elements in the network need to be replaced and when. Most of the gas transport system has now reached an age at which systematic replacement and renewals are necessary. The programme focuses especially on the renewal of valve stations, gas receiving stations, and metering and regulating stations. The replacement programme will run for 15-20 years.
Composition of gas in the future
A topic that will require close attention in the near future is the composition of Dutch gas. Most Dutch gas traditionally comes from Groningen, with the result that it is more homogeneous than elsewhere in Europe. Equipment in the Netherlands is based on that narrow ‘bandwidth’. As production from the Groningen gas field shrinks, that bandwidth will need to be widened. It will be GTS’s task to ensure that the integrity and the security of the system remain unaffected.