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Gas Regional Investment Plan of the South Region 2017 |
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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.
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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)
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Spain:
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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
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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.
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In addition, the merger of zones in France could have an impact on price
convergence between the Iberian Peninsula and France.
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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.
5.5.2 LNG
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:
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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.
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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.
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