France Eyes Single Zone from Gas Year 2018
France's two gas grid operators GRTgaz and TIGF are mulling the merger of their zones with effect from November 2018, the energy regulator CRE said August 1, as it announced a consultation on the proposal. This will result in just one zone for the whole of France.
Fewer zones means simpler trading, cheaper gas for consumers in the south, and more liquidity. The number of zones is already down from seven in 2003 to just two: Peg Nord (run by GRTgaz), and Trading Region South (TRS) which resulted from the merger of the former Total-TIGF grid bordering the Pyrenees and GRTgaz's Peg Sud, being the Mediterranean coast and inland regions, depending heavily on often more expensive LNG.
Last winter was marked by congestion in the southeast, caused by low LNG supplies in the south of France, coupled with high consumption in this zone. Prices there spiked above those of Japan but on very thin demand driven by cold weather.
In order to relieve this and to enable the creation of a single market area common to GRTgaz and TIGF, CRE adopted in 2014 the plan to expand the Val-de-Saone pipeline and the Gascogne-Midi project.
The new infrastructure, developed by GRTgaz and TIGF, has been designed to enable the creation of a single zone at least cost but with the risk of congestion. CRE is therefore consulting on the contract mechanisms planned to relieve this congestion, such as interruptible contracts, so as to ensure the availability of firm capacity.
In order to define the most relevant mechanisms, GRTgaz and TIGF have studied the occurrence of residual congestion and the solutions that could be implemented to remedy them. In addition, pending the commissioning of new works, and while the 2016-2017 winter was marked by southeast congestion that resulted in constraints in the nomination of certain players, this public consultation also focuses on the solutions studied by the two network operators in the event that this congestion occurs again in the winter of 2017- 2018, as well as the changes in the price of imbalances.
CRE, emptying its in-tray before the holidays start, also approved last week some other proposals, including the tariff plan for small-scale (<20,000 m³) bunkering at Fos Cavaou and capacity marketing at Oltingues on the France-Switzerland border and at Dunkirk; both were published August 1.
Map showing the southern French market area TRS. Everywhere to the north in France is the more liquid gas hub of Peg Nord (Photo credit: GRTgaz)
William Powell