The Status of Gas TSOs in Europe

EU energy market liberalization and increasing gas imports are major challenges facing gas Transmission System Operators (TSOs). Understanding the European gas transportation landscape is vital in comprehending the important role of gas TSOs in achieving a single European energy market.



Report Highlights
TSOs generate extremely high revenues, regardless of their ownership status. Despite regulatory pricing oversight, on the whole, TSOs generate higher profit margins than the major gas utilities in their respective markets. Storage and LNG facilities allow TSOs to compete outside their monopoly. TSOs can therefore provide storage services for base load and peakload demand to mitigate their regulatory risk. Stagnating gas production and growing consumption have led to greater import volumes through EU member states. This continuing trend means that gas transit is an important part of a TSO’s operations.


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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
This brief analyses TSOs from the EU's 15 leading gas consuming markets 2
TSOs vary widely in their legal status and in the services that they offer 2
There is a weak relationship between national gas penetration and network length 3
The majority of TSOs are affiliated to a VIU 3
TSOs have high profit margins, providing VIUs with a disincentive to divest them 5
Storage facilities allow TSOs to compete outside their monopoly 6
LNG facilities allow TSOs to enter the commercial arena 8
Increasing EU gas imports will create greater challenges for gas TSOs 9
Gas transit between networks is increasing alongside gas imports 9
Gas transit has become an intricate issue for many TSOs 10
TSO co-operation with balancing rules is necessary for market cohesion 11
Increased legislation aims to enhance gas market competitiveness 13
Transmission networks are a major feature of the EU's Third Energy Package 13
Network ownership unbundling remains unresolved 14
Formalizing co-operation between TSOs would lead to improved network management 16
Rules on transparency and record keeping are to be enforced to enhance investor confidence 17
Regulatory oversight of access to storage and LNG facilities is to be re-examined 18
APPENDIX 19
Country definitions 19
Definitions 19
Further reading 19
Datamonitor Consultancy 20
Ask the Analyst 20
Disclaimer 20

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Figure 1: TSOs under analysis, by market and 2006 national gas consumption 2
Figure 2: Network length and gas volumes transported, 2006 3
Figure 3: The independence of transmission systems 4
Figure 4: TSO and utility profit margins, 2006 5
Figure 5: Regulatory pricing regimes, 2006 6
Figure 6: Markets where TSOs offer natural gas storage, 2006 7
Figure 7: Markets where TSOs offer LNG facilities, 2006 8
Figure 8: Stagnating gas production and growing consumption have led to greater import volumes through EU member states 9
Figure 9: Transmission networks are a major feature of the EU's Third Energy Package 13

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