ENTSOG Gas Regional Investment Plan South 2017 - Main Report

5.5 Future Challenges of Gas

Markets in the South Region

5.5.1 HUBS

The analysis of historical flows and bookings at IPs shows that flows from North to South have been prevailing for years, with a physical bottleneck at the North South Link in France. Several factors should encourage the development of gas hubs in the South Region in the coming years. \\ In France: the creation of a single hub by the end of 2018, merging PEG Nord and TRS will lead to an attractive and competitve gas market over the long term with a single national price. In addition to the commissioning of the necessary infrastructures in order to remove the bottleneck between North and South of France, the Val-de-Saône and Gascogne-Midi projects, additional market- based mechanisms are being developed to ensure a smooth running of the future single marketplace in all circumstances.  1) \\ Spain: – – Recently created PVB, is expected to gain liquidity, as traded volumes increase in the future as it has happened with the main European natural gas hubs in their first stages. Infrastructures might be developped in accord- ance to support this flexibility – – Convergence of prices between Iberian Peninsula and Northern Europe is possible at the moment for a limited period of time during the year, while during stressed periods price spreads increase. – – In addition, the merger of zones in France could have an impact on price convergence between the Iberian Peninsula and France. – – A new analysis should be done after its implementation in order to assess the evolution of price convergence and potential lingering spreads and to evaluate the need for further convergence. As it has been described in the supply chapter, LNG covers an important share of the gas demand in the South Region; therefore future developments of worldwide LNG market might have an impact on LNG prices arriving to the South Region and consequently on the natural gas hubs prices of this region. The LNG global market has been constantly growing these last years, with new exporting countries, increasing diversification of supply sources and security of supply for countries importing LNG. It is uncertain how supply and demand for LNG might evolve in this global LNG market: \\ On the demand side, the gradual restart of nuclear energy in Japan and development of emergent markets like China or India will definitely play a key role. \\ On the supply side, significant new liquefaction capacities will start production, specially in the USA and Australia. With an adequate balance between supply and demand, a more flexible and liquid traded LNG market could be expected in the future.

5.5.2 LNG

 1) For further clarification on Projects creating a single market in France please go to Infrastructure chapter section 6.2 Projects in the South Region

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