The increasing importance of storage KlausDieter Barbknecht GSE

The increasing importance of storage Klaus-Dieter Barbknecht GSE President GIE Annual Conference 2005, Athens 3 -4 November 2005 GIE Annual Conference 2005, Athens 1

Storage New Economy 3 -4 November 2005 GIE Annual Conference 2005, Athens 2

2. Why storage? Balancing seasonal variations in consumption Securing gas supply in case of Covering demand interferences in production, peaks transport or supply Enhancing cost effectiveness of gas transport Traditional roles of storages as important guarantor of security of supply 3 -4 November 2005 GIE Annual Conference 2005, Athens 4

Storage volumes Overall working gas volume in Western Europe: 57 bcm 3 -4 November 2005 GIE Annual Conference 2005, Athens Storage volumes in Europe need to expand by 3 bcm per year until 2025! 5

Shrinking EU gas production Source: Global Insight, 2004. 3 -4 November 2005 GIE Annual Conference 2005, Athens 7

Growing gas demand in EU-25 Source: European Commission, 2004. 3 -4 November 2005 GIE Annual Conference 2005, Athens 8

Longer transportation routes North Sea 850 k 1300 k m Norwegian Sea Yamal Barents Sea 48 k 00 m m > 5000 km >4 Turkmenistan 000 km Iran 3 -4 November 2005 GIE Annual Conference 2005, Athens 9

Future role for storage Ø Seasonal modulation and security of supply (technical availability) seconded by products to support the new market Ø Storage is and will be part of the flexibility market Ø Security of Supply remains the most important target 3 -4 November 2005 GIE Annual Conference 2005, Athens 10

Conclusions Increasing demand for storage in order to: - Balance declining production swing (e. g. need for strategic storage in UK) - Meet growing demand of natural gas (e. g. in East and Southern Europe) - Make use of market flexibilities (e. g. price arbitrage) - Overcome delivery bottlenecks through long distance transports (e. g. producers entry to European market like Gazprom) Ø Need for allowing storage activities to be in line with market expectations Ø Need for regulative stability and positive investment signals 3 -4 November 2005 GIE Annual Conference 2005, Athens 13

Epilogue: Outcome Madrid X Ø Progress of Storage System Operators recognized Ø Overall compliance in the field of transparency and secondary market edentified as “construction sites”: - Publication of Operational Datas vs. Confidentiality Requirements - Bulletin boards not yet established with all SSOs - Limited secondary trade of unbundled services – solutions in sight Ø GSE Workshop on this issues : Nov. 16. Brussels 3 -4 November 2005 GIE Annual Conference 2005, Athens 14