ENTSOG Gas Regional Investment Plan South 2017 - Main Report

DEMAND EVOLUTION TYNDP 2017 demand scenarios show a slightly declining trend of the total demand in France, while it grows in Spain and in Portugal, with previsions up to 2035. The same trend is observed in final demand forecast for the three gas systems in the South Region. Natural gas demand for power generation in the Region is expected to increase, regardless of the considered scenario, because of the foreseen coal displacement and the role of gas complementing renewable generation. Nevertheless, future of gas demand strongly relies on the adopted energy policies regarding penetration of renewable energies in the energy mix, as well as displace- ment of coal as the main fuel for power generation and the development of the LNG potentials such as its use as an alternative fuel for marine and road cargo transpor- tation. SUPPLY SOURCES Countries in the South Region strongly depend on LNG imports, entailing a 28% of its 2015 gas supply share, remaining higher than the European average (12%). This fact guaranties the access to a flexible supply portfolio, allowing the diversification of LNG sources and the convenient arbitrage between them in order to face global de- mand and prices variations. In this sense, LNG enables the connection of the South Region to the global market. Even though LNG comes primarily from Algeria, Nigeria and Qatar, the entry of USA LNG cargos in the South Region regasification terminals is expected in the upcom- ing years. Regarding pipeline imports, the French gas system benefits from the Norwegian and Russian gas, while most of Portuguese and Spanish gas imports come from the interconnection with Algeria. In the side of indigenous production, mostly sited in Norway and the Netherlands, an accelerated decline is expected for 2035, due to the absence of discovery of new gas fields and environmental issues regarding the extraction in the existing ones. GAS MARKETS Gas markets in the South Region have seen major evolution these last couple of years. Two events must be remarked in this sense: the creation of the Organised Gas Market in Spain operated by MIBGAS, in December 2015, and the merger of PEG Sud and the TIGF trading regions in one single trading hub (Trading Region South, TRS) in April 2015. Gas market will be further simplified with the merger of zones in France in 2018. The different level of maturity of these new markets is reflected in the traded volumes, being much higher in PEGnord than in TRS or MIBGAS, and in the high spread of prices between MIBGAS and TRS on one hand, and PEGnord on the other hand.

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