The aim of the business unit Participations & Business Development is to strengthen Gasunie’s position as a leading European gas infrastructure company and to help make possible the transition to a more sustainable use of energy. The unit does this by developing new and existing business activities, often with partners from the business environment or the financial world, and by acting as a shareholder in the companies in which Gasunie has a stake.
Gasunie’s cross-border infrastructure in the Netherlands and Germany forms the backbone of the gas roundabout. Gas is brought to the roundabout through the incoming pipeline routes. It can then be traded on the Dutch trading point TTF and taken on to users through more than a thousand exit points. It can also be stored for later use in underground storage facilities, or be transported onward to other countries through exit routes. The system ensures that gas from all directions – not only from domestic sources but increasingly also from abroad (Norway, Russia) and by way of LNG – can be transported onwards.
Participations & Business Development works at the frontline of Gasunie’s strategy in projects aimed at strengthening the position of Gasunie as a cross-border gas infrastructure company in Europe. By taking strategic positions in the European gas transport market, Gasunie also strengthens the gas roundabout and TTF as a dominant trading point. This is important for sound, transparent pricing and for the security of supply in this part of Europe. This, in turn, is in the interest of traders, suppliers and customers in the gas sector and of society as a whole. That is why Gasunie is working on new inflow and outflow routes for the roundabout, often in conjunction with business partners. Energy is no longer a matter limited to national boundaries; it has become an international affair. By taking up good positions in Europe, Gasunie is increasing its ability to exert influence on gas flows. This will enable the company to optimise its service offering by adding cross-border service concepts, for example. In this way, it will also be able to maximise the economic value of its networks in the Netherlands and Germany, making the best possible use of the capacity in those networks. Participations & Business Development is also working on new domains, particularly in the context of the transition to sustainable energy.
Top sector policy
The energy sector already has a strong position, and has the potential to grow even more. In the light of this, the Dutch government has designated it as a ‘top sector’. This means that it will be the focus of investments by the government, industry and academia. One of the core themes of this policy is natural gas, which is seen as an important field of innovation. With its knowledge and research, Gasunie contributes to innovations in relation to energy transition, such as power-to-gas, green gas and small-scale LNG.
The Nord Stream project, in which Gasunie has a participation of 9%, was completed in 2012 according to plan, on time and within budget. This was due to excellent project management within Nord Stream and to smooth cooperation between the various shareholders of Nord Stream. This project opens up a new corridor to the western European market, for one of the largest potential suppliers of European natural gas.
East-west link complete
Gasunie now has a much stronger position in Germany. This is a very positive development, as the German gas market, together with the Dutch gas market, is of vital importance in Europe. Thanks to a number of assets, we now have an excellent position on the route from St. Petersburg to London. In 2012, the east-west link was first completed in its entirety. The BBL, which transports gas to the UK, also forms part of this link. It is now able to accommodate gas trading against the physical flow – i.e., from the UK to the Netherlands. As a result, the BBL has become a substantial link between the two largest gas trading hubs in Europe, gaining in functionality and strength.
The LNG Gate terminal – in which Gasunie, with Vopak, is the majority shareholder – has functioned perfectly since it was opened in 2011. The economic return, based on long-term capacity contracts with the customers, is also good. Since the nuclear power-station disaster in Japan, more LNG has been transported to Asia. LNG’s rising price in Asia has weakened its position in Europe. The prospects, however, are encouraging. New projects in Australia will cover the shortage of LNG in Asia, and the US is fast becoming a gas-exporting nation. It is expected that considerably more LNG will start to come on to the world market in 2015, as a result of which the situation can be normalised.
The Gate terminal takes in LNG and delivers it as gas to the network. However, important opportunities are now arising for a user’s market in LNG in its liquid form, particularly in the transport sector. This sector is subject to increasingly stringent restrictions on pollution, as prescribed by the MARPOL (MARine POLlution) treaty (an international treaty for preventing pollution by ships, drawn up by the International Maritime Organization). Appendix VI, which deals with air pollution, has been gradually tightened. As a result of an initial tightening of the treaty for the areas around the North Sea and the Baltic Sea, from 2015, LNG will become a suitable alternative solution for ships that are now still using fuel oil or diesel. By using LNG, ships will be able to considerably reduce their emissions of CO2, sulphur compounds and fine particulate matter. That is why, together with Vopak, we are developing facilities at the terminal that can process smaller quantities of LNG. A final decision will be taken in the first half of 2013, but preparations are already far advanced. Meanwhile, Shell has agreed to be launching customer, and talks are also ongoing with other customers. As part of the ‘Small-scale LNG’ Green Deal project (summer 2012), plans are being made to create the necessary infrastructure (not only in Rotterdam but also further down-stream). This would enable, for example, the refuelling of vessels in the environmentally sensitive Wadden Sea area.
Green gas (made from biomass) is an up-and-coming phenomenon that promises to become highly socially relevant. Obtained through fermentation, green gas can make a substantial contribution to improving the sustainability of the energy mix in the Netherlands. But there is still a long way to go before the target volumes are reached: there is as yet no stable market for biomass in the Netherlands. However, green gas is expected to become much more important in the future. Soon, the gasification of biomass will make it possible to scale up operations further. We are currently developing the required technology for this, together with (amongst others) the Energy Research Centre in the Netherlands (ECN).
Zuidwending, an underground storage facility for G gas near Groningen, was opened in January 2011 and completed its first operational year in 2012. It can quickly take gas in or send it out as required (e.g., in peak hours). This helps to make the gas supply more flexible. Such flexibility is becoming increasingly important, because the production of weather-dependent renewables, such as wind and solar energy, is not well aligned with the demand for energy and can fluctuate considerably. As renewables come to form a larger share of the mix, more and more flexibility will be required.
During the cold spell at the beginning of 2012, Gasunie Zuidwending offered its customers a special winter arrangement. This enabled them (within the existing flexibility contracts) to make temporary use of gas belonging to Gasunie Zuidwending along with the required storage space.
Unbundling of gas and electricity exchange
In 2012, intensive work was carried out on the unbundling of APX-ENDEX into two autonomous entities: one focusing on the electricity spot market and clearing services and the other on derivatives and the gas spot market. The latter entity focuses on the derivatives and spot trade around the successful virtual trading point TTF in the Netherlands, the UK’s On-the-day Commodity Market (OCM) and the Belgian gas trading point Zeebrugge (ZTP). On 26 March 2013, ICE, a leading operator of global regulated futures exchanges, clearing houses and over-the-counter markets, acquired a majority interest (79.12%). As current shareholder of APX-ENDEX, Gasunie retains the other 20.88%. The transaction ensures more liquidity and transparency on the continental European gas and electricity markets to the benefit of all market parties, including customers and consumers.