New investments in infrastructure are urgently needed to secure and improve the functioning and competitiveness of the German natural gas market. This has been recognised by both German and European policy makers. However, the new German regulatory framework for gas transport may well prevent infrastructure owners and investors from making these investments in time. This is mainly because the allowed actual achievable returns on existing networks and on new pipeline investments in Germany are too low. If this results in delays, it could seriously harm the interest of consumers in Germany and in neighbouring countries, which depend on the expansion of German gas infrastructure for their efficient and reliable gas supply. At the World Gas Conference this week a number of key gas suppliers, importers and infrastructure companies highlighted their serious concern with regard to this issue.

Security of supply
Gasunie, as an owner and operator of a major gas transport system in Northern Germany, has received over 25 confirmed and specific requests from gas companies for new transport capacity.
Marcel Kramer, CEO of Gasunie: 'Many of these companies are working hard to attract new gas flows for the future and to build new storage capacity to enhance the security of supply. This triggers the need for adjustments in the pipeline system.' One example is DONG Energy, the Danish company, which has recently contracted  new supplies to Denmark. As Denmark in the future is going to be more and more dependent upon importing natural gas in order to ensure security of supply, the pipeline connection through Germany to Denmark needs to be expanded.
Adequate gas supplies will increase competition, enhance sustainability and strengthen the crucial position of Germany in the European gas market. Kramer: 'New gas flows, for example through Nord Stream, must be accommodated by new infrastructure and cross-border connections. Without these, new bottlenecks are inevitable, imposing a threat to security of supply, the financial interests of gas sellers, buyers and consumers - and the strategic position of Germany as the heartland of the EU gas market.'
The effects of an inadequate infrastructure in Germany have a European dimension and deserve the attention of exporters to the German market, also from outside the EU.

Investments at risk
As transmission network operators (TSO’s) are increasingly becoming stand-alone companies (the regulations also move the industry towards "unbundling"), they can no longer rely on financial support from parent companies which produce or sell natural gas. Transport is their only source of revenue, and they must be able to attract capital for investments in the capital market.
'At first sight the reduction of transport tariffs looks like a smart thing to do', says Marcel Kramer. 'But imposing these excessive tariff reductions may become counterproductive. There is now a serious risk that one goes too far and delays the investment which is needed to achieve what we all want and need, namely security of supply at competitive costs. While regulation can be appropriate for parts of the system, there is little point in blocking investments by establishing maximum returns that are too low in practice. We have seen examples of this in other parts of the world, and the results were sometimes catastrophic. Unfortunately, the dire consequences became obvious only after a number of years.'

Immediate action needed
Gasunie is keen to serve the German market in the same way it serves the market in the Netherlands. 'We are more than ready to work with German authorities to identify the financial bottlenecks due to regulation', Marcel Kramer said. 'It is in the interest of German consumers that we do this soon, so we, together with others, are able to attract capital, to invest and thereby to meet market demand and dispel security of supply concerns. And, these days it is also important to note that such major investments will give a boost to employment in construction and related areas.'

Gasunie
Gasunie is a European gas infrastructure company. Our network ranks among the largest high pressure gas pipeline grids in Europe, consisting of over 15,000 kilometres of pipeline in the Netherlands and northern Germany, dozens of installations and approximately 1,300 gas receiving stations. Annual gas throughput totals approximately 125 billion cubic metres. We serve the public interest in the markets in which we are active and work to create value for our stakeholders.
Gasunie is the first independent gas transport provider with a cross-border network in Europe. We offer transport services via our subsidiaries Gas Transport Services B.V. (GTS) in the Netherlands and Gasunie Deutschland GmbH in Germany. We also offer other services in the gas infrastructure field, including gas storage and LNG. We consider the wishes of our customers to be of prime importance. We aim for the highest standards in safety, reliability, efficiency and sustainability. Due to its reliability and strategic location in relation to expanding international gas flows, the Gasunie network forms the core of what is called the North West European 'gas roundabout'.

Gasunie Deutschland (GUD)
Gasunie Deutschland is a 100% Gasunie subsidiary and responsible for the management, the operation and the development of a long-distance pipeline grid in North Germany of around 3,100 kilometres. In total, Gasunie Deutschland employs about 210 employees. Because of its geographical location in the north of Germany, Gasunie Deutschland's transport network is part of the 'gas roundabout' function within the European natural gas transit system. (www.gasunie.de)

More information: press@gasunie.nl