ENTSOG GRIP South - Main Report

6.2.2 HHI approach

InFigure6.9, wecan see theaveragehistorical supply basket for eachcountryof theSouthRegion.Historical data for the period 2009–2011 shows that the share of LNG in the total imports was:

HHI atSupply

Spain

Portugal

France South& TIGF

France North

\\ France: 29%. \\ Portugal: 60% \\ Spain: 72%

0.14

0.42

0.26

0.19

Figure 6.12: HHI at Supply (Source: Internal development)

Figure 6.12 shows the Herfindahl Hirschman Index, HHI, at “supply”  1) for the average period 2009– 2011 indicating the level of supply concentration of each country. The level of supply concentration in Portugal is the highest while in Spain is the lowest. The level of sup- ply concentration for France obtained by the HHI at supply show a value in the middle. So, we can conclude that Spain and France have a better level of diversification of gas origins by country thanPortugal. Totally different results are obtained calculating the HHI at “supply&price” , i.e. grouping the supply sources by correlated prices. In this case, due to the LNG globalmarket, LNG is grouped as a single supply because it is linkedwith a single price. In Figure 6.13 we see the results of the Index. Spain,Portugal and theGRTgazSouthandTIGFzones in France have a “supply& price” concentration reaching about the double of GRTgaz North. So, we can conclude that the southern area of the South Region is undiversified regarding the sources of gas, i.e., the southern area of the SouthRegionhas a high dependence on LNG prices. In order to capture the effect resulting of the creation of thenewcorridor “Bidirectional flowsbetweenPortu-

HHI atSupply&Price

Spain

Portugal

France South& TIGF

France North

0.57

0.52

0.53

0.29

Figure 6.13: HHI at Supply&Price (Source: Internal development)

PotentialHHI atSupply&Price

Spain

Portugal

France South& TIGF

France North

0.35

0.35

0.28

0.28

Figure 6.14: Potential HHI at Supply&Price (Source: Internal development)

gal, Spain, France and Germany” in the convergence of prices into the South Re- gion as well as with the others Europeanmarkets, we have estimated the evolution of the HHI “supply&price” with the newpotential annual levels of LNG supply and spreading the current share of supply by pipelines in theNorth of France to the rest of theRegion. As a result we can observe the convergence in the potential HHI “supply&price” , i.e., a potential price convergence into the South Region and others European markets. The vulnerability onprices due to the ligature to LNGpriceswhich currently strongly affect the IberianPeninsula and the South of Francewoulddecrease. The corridor “Bidirectional flows between Portugal, Spain, France and Germany” is crucial eliminating prices divergence into the South Region and with the rest of central Europe, contributing to create fluidity and liquidity in the gas market, and therefore increasing competition into the SouthRegion and inEurope.

1) ∑  i ( ) 2 when Si: supply from country "i" and "S" is the total supply Si s total

ENTSOG–GRIPSouth 2013–2022 |

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