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Gas transit regulation ( Slovakia as a country with standard TPA for transit )

Gas Transit Workshop Brussels , 24th January 2007. Gas transit regulation ( Slovakia as a country with standard TPA for transit ). Milan Sedlacek , SPP - preprava, Slovak Re p ublic. The presentation focuses on the treatment of gas transit

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Gas transit regulation ( Slovakia as a country with standard TPA for transit )

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  1. Gas Transit Workshop Brussels, 24th January 2007 Gas transit regulation (Slovakia as a country with standard TPA for transit ) Milan Sedlacek, SPP - preprava, Slovak Republic

  2. The presentation focuses on the treatment of gas transit in Slovakia. Slovakia has standard TPA for gas transit. Only gas transmission is recognised by law. Equal treatment is an underlying principle. 1. Introduction, network description 2. Regulation of gas transmission in Slovakia 3. Practical experience with gas transit regulation 4. Summary

  3. Infrastructure data 2007 year: - capacity of the transmission system was nearly 94 bcm/y

  4. Slovak transmission system

  5. Transit flows are predominant The transit flows have varying degree of importance via-a-vis overall gas flows in the transit country. In some countries, transit volumes are quite substantial relative to domestic supply. 93 % + 7 % = 100 %

  6. 1. Introduction, network description 2. Regulation of gas transmission in Slovakia 3. Practical experience with gas transit regulation 4. Summary

  7. Situation in transit regulation Till 2003: Fully negotiated conditions Unregulated Conditions agreed by parties After 2003: Fully regulated Transit no longer recognised by law Standard TPA for transmission Source: Shell

  8. Access to the network

  9. Access to the network – ctd.

  10. Current Entry – exit tariff model

  11. 1. Introduction, network description 2. Regulation of gas transmission in Slovakia 3. Practical experience with gas transit regulation 4. Summary

  12. Is transit always the monopoly pipeline?

  13. Impact of competition Impact of Yamal construction (minus 18 bcm/a, 5 years)

  14. Transit Capacity – competition effect Questions: - how does this competition fit into the image of monopolies sitting on transit lines? - who pays for the investment? Cost basedregulation=decreasing volumes means increasing tariffs. - Where is the incentive to invest into new infrastructure? - Is this a risk free business for which only low rate of return is justified?

  15. Competition effect – cost based pricing For the sake of simplicity, some generalisation in modelling was done. General tendency was correctly reflected.

  16. BENTRY BEXIT DENTRY DEXIT AENTRY AEXIT CENTRY CEXIT Entry – Exit system in practice Although simple and user-friendly, entry-exit system is an approximation model. X ü If AENTRY is big to have A-D and A-C cost-reflective, than A-B is deformed If AENTRY is small to have A-B cost-reflective, than C-D and D-C are deformed m * n formulas, (m+n) variables min Q = S[Yi - fi(l)]2

  17. Difference in services • A final customer will often only be able to use one system, whereasthere are competing transit-systems • The service rendered in a transit contract may be different from a domestic transportation contract : for instance, lower balancing tolerances and higher load factor for transits ; • Balancing provisions in old transit contracts: • Perfectly balanced • What physically goes in = physically goes out • Differences in magnitude of percents are not available on the spot market or storage • Brave new world x old world certainty. • Beware - Supplier side looks to love old world more.

  18. IP IP Operational issues on EU borders TSO #1 TSO #2 TSO #3 OBA TSO#1/TSO#2 OBA TSO#2/TSO#3 Contract Nomination, matching, re-nomination, rescheduling and confirmation analogical at each IP Based on OBA (EU rules = allocated quantity is matched/confirmed quantity) EASEE Gas EASEE Gas

  19. Operational issues on EU borders • m3 • 20 degrees C • 8-8 business day • long-term contracts • customised balancing and allocation rules • pressure drops • OBAs • kWh • 6-6 business day • daily contracts • standardised balancing and allocation rules

  20. 1. Introduction, network description 2. Regulation of gas transmission in Slovakia 3. Practical experience with gas transit regulation 4. Summary

  21. Conclusions • Growing import dependence of Europe • Gas transit is a security of supply issue • Competitive routes do exist • Stable regulatory framework is • necessary plus the need of • positive investment climate • Standard TPA for transit works, • but sometimes there are grand • complications

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