UNECE Working Party on Gas Market and regulation
Sándor Fasimon, Managing Director 18th January 2005, Geneva
Contents
1.
Europe and the Eastern-European region
2.
The Hungarian gas system - Description - Legal framework - Unbundling and Entering the European Union
3.
Liberalisation - The key players on the Hungarian gas market - European comparison - Its effects on MOL’s gas business
European pipeline-system
Regional pipeline-system Ukraine Ukraine
Poland Poland 7 UGS 1.269 mcm mobile capacity 22,8 peakcapacity
Slovakia Slovakia 1 UGS 2.500 mcm mobile capacity
Brzeznica Swarzow
29 .0
bc m
48.0 b
Zukov
Tranovice
m Lobodice 3
cm m 3
Trallesbrunn Schonkirchen Zwerndorf
Lab
.0 324.4
m bc
m
3
b 0.0 12
3
90
.0
bc
m
m
3
Pozsony
bc m
m
bc m
m
3
m
1
1.
cm 3b
m
3
cm
m3
Romania Romania 1 UGS 2.000 mcm mobile capacity
Hajduszoboszlo
3
22
.5
Budapest
3 cm m 3.0 b
Austria Austria
Puszlaederics Pusztaszolos
Zsana
4 UGS 2.900 mcm mobile capacity 32,7 peak capacity
3 3.
Algyő—Maros-1
bc m
Ljubljana
3 m
5 UGS 3.380 mcm mobile capacity 44,4 peak capacity
m
Starmberk
Uhrice
4.0 bcm m3
bc
Strachocina
Dolni Bojanovice Tvrdonice
Dolni-Dunajovice
Bécs
Hungary Hungary
4.0
Husow
13 UGS 36.300 mcm mobile capacity
Okoli Banatski Dvor
Croatia Croatia
Czech Czech Republik Republik 9 UGS 2,800 mcm mobile capacity 46,5 peak capacity
Belgrád
UGS
1 UGS 500 mcm mobile capacity 38 peak capacity
Pipeline – par of the European system Other pipelines Source: Wood Mackenzie, Cera és MOL
13
The Hungarian energy consumption is mainly based on natural gas Dynamism Dynamism
Primary Primary energy energy consumption consumption by by fuel fuel type type (Mmtoe) (Mmtoe) Oil
– 48% of Hungary’s energy consumption comes from gas
Coal
Nuclear
Other 33,2
30,7
– Gas consumption is forecast to grow by appr. 40 % by 2020
28,8 0,8 24,8
Share Share of of Hungarian Hungarian primary primary energy energy supply supply by by fuel fuel
Gas
24,1
3,2
3,2
3,6
3,2
25,3
25,0
3,2
3,2
3,4
3,3
3,8
1,0 4,0 1,5
31,9 1,1 4,0 1,7
1,2 4,0 1,7
2,4
Nuclear 13%
16,9
15,3
16,0
8,9
9,1
9,4
2010
2015
2020
14,1 Natural gas 48%
Coal
10,3
10,9
12,0
12,1
6,8
6,7
6,4
2000
2001
2002
13%
7,7 Oil 26%
7,7
Total (2002) = 25 mmtoe 1995
2005
Source: BP Statistical Review of World Energy (all excl. gas), MOL (gas), Wood Mackenzie
8
Natural gas import play a key role in the gas supply of Hungary Share Share of of natural natural gas gas in in primary primary energy energy supply supply
Facts Facts 71%
Belorussia 55%
Russia Hungary
48% 47%
Ukraine 41%
Romania
40%
Netherlands Great-Britain
36%
Doemstic
Lithuania
Import
(15oC)
33%
Italy
Denmark
Sources Sources of of natural natural gas gas supply supply (bcm (bcm ))
39%
Slovakia
Ireland
– Hungary has a relatively high share of natural gas as primary energy supply source – Natural gas is predominantly sourced from imports (>80 %) – Share of imports is expected to markedly increase as Hungary’s natural gas production decreases
30%
14,6
15,1
15,7
17,0
17,8
16,7
13,4
13,4
8,9
10,1
10,3
11,7
12,4
12,9
14,8
3,3
3,2
3,1
2,9
2,7
2,8
2,2
1,1
2000
2001
2002
2003
2004
2005
2010
2015
12,1
26% 25%
Turkey
23%
Germany
23%
Average Europe 2002: 32%
Source: BP Statistical Review of World Energy (all excl. gas), MOL (gas)
9
The Hungarian high-pressure gas transportation network Brotherhood pipeline HAG pipeline
From the Ukraine 10 bcm annual capacity 29.5 mcm daily peak
From Austria 4.4 bcm annual
capacity
capacity. 12 mcm daily peak capacity
Domestic production 7 entry points 3.5 bcm annual
capacity 11.2 mcm daily peak
capacity
The daily peak capacity of the gas system is 96 mcm (Storage: 44 mcm, domestic production: 11 mcm, import: 41 mcm), whereas the contracted daily peak demand for the winter period 2004/2005 is 89 mcm
Transit
12 mcm daily peak
capacity
20
The Hungarian storage system Total 44.4 mcm daily
Hajdúszoboszló
peak capacity 3,380 mcm mobile capacity 4,636 mcm cushion gas
19.2 mcm daily peak
capacity 1,400 mcm mobile
capacity 2,133 mcm cushion gas
Pusztaederics Kardoskút— Pusztaszőlős
2.7 mcm daily
peak capacity 330 mcm mobile
Algyő—Maros-1
capacity 347 mcm cushion
gas
Zsana 18.0 mcm daily
peak capacity 1,300 mcm mobile capacity 1,647 mcm cushion gas
2.2 mcm daily peak
capacity 150 mcm mobile capacity 250 mcm cushion gas
2.3 mcm daily peak
capacity 200 mcm mobile
capacity 260 mcm cushion gas
41
Legal framework of the Hungarian gas market •
The new Gas Act (entering into force with effect of 01. 01. 2004) –
Market split into regulated and competitive markets until July 1, 2007
–
RAB-based returns for storage (10 %) and transmission (8,5 %) businesses
–
Wholesale gas prices in regulated market based on average gas import prices, storage and transportation costs and other accepted costs
–
Compensation fund for the residential sector is based on the increased mining royalty for local production (appr. 3 bcm) paid by MOL
–
Competitive market prices in open market part of wholesale, marketing and trading and in Storage for competitive market, no competitive market pricing exists for transmission
–
Obligatory public supply from single licensed public service wholesaler, with priority over the competitive market
–
Third party access to transmission and storage after allowing for public supply
–
Introduction of several new licences including natural gas trading licence, system operation licence, operation licence of organised natural gas market and cross-border trading license
–
Security of supply based on long term TOP obligations
Unbundling and Entering the European Union
•
Even before the accession to the European Union the Gas Act saw for unbundling the gas activities -> Separate legal entities for production, storage, transmission (and
MOL Natural Gas Supply Plc.
MOL Natural Gas Storage Plc.
system operation) and trade as of 1st January 2004
•
MOL Plc. – Exploration & Production
The country opted for no derogation in this respect during the accession talks
•
The EU Gas Directive is to be applied to the Hungarian gas market
MOL Natural Gas Transmission Plc.
Liberalisation of the Hungarian gas market
•
The Western investors have been long present in the distribution companies, the liberalisation is a fact since the mid-90’s
•
The effective degree of the liberalisation is 70 %, as of 1st July 2007 the residential sector is also free for competition
•
Presently we have a dual market – regulated and open market
•
Russian gas dominance in the region
•
If there is real demand for extra volumes, different alternatives of the present gas supply will have to be taken into consideration –
LNG, Nabucco – in the phase of a feasibility study
Key players in the Hungarian gas market Source Source
Transit Transit
Storage Storage
Wholesale Wholesale
Distribution Distribution
End End user user
Distribution system
Eligible customers (regulated market)
Domestic production by - MOL - El Paso - Pogo
Regulated market
Transport
Import
MOL WMT as sole market player
Length of the pipeline system: 5,226 km
Import contracts: - Gazprom - Ruhrgas - GdF - Others
Regulated market
Open market Open market MOL WMT has 50 % of market
Transit
Opereted by the distributors - DDGÁZ - DÉGÁZ - ÉGÁZ - FŐGÁZ - KÖGÁZ - TIGÁZ - Other smaller companies
Non-eligible customers (regulated market)
Eligible customers (open market)
(2004)
Serbia & Bosnia 12
Liberalisation in Hungary and in Europe Success Success story story
Approximately 10 % of the customers who could, opted out for the open market (in volume). Thus the
liberalisation of the gas market can be regarded as successful, as after only one year the market is open to a higher degree than most of the European markets The share of the market that was opened in 2003 by the law
50% NL 30-50 %
40%
F 20-30 %
20% I 10-20 %
* Full liberalisation by 2007
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)
(2 0
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ar ng
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(1 9 Hu
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*
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(2
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10%
iu m
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E 20-30 %
30%
Be lg
an
60% UK >50 %
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Fr
What share of the eligible customers has changed gas-trader
HUN
B
