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TRF : The unified market area in France

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GRTgas and Teréga , the two French gas TSO (Transport System Operators), launched the unique market place for gas, the Trading Region France (TRF) in November 2018. From this day, the PEG (Point of exchange of gas) price is the unique price on the gas wholesale market in France, without any distinction between the North and the South ex-areas.

The TRF is the achievement of major investments in the gas infrastructures and the setting of new offers, built with the market actors and French regulator (Commision de régulation de l’énergie – CRE).

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A progressive fusion of the balancing zones

Until 2005, the company Gaz de France (GDF) – partly in partnership with TOTAL – had managed all the natural gas value chain at a national scale. From the exploration & production to the transport, distribution, and providing gas activities to the final consumers, the entire gas business in France was managed by a single company.

In 2005, with the opening of the natural gas market for final consumers supply allowed by the regulator, only the transport and distribution network operation and maintenance is still operated by a unique actor to guaranty the  exploitation of the gas networks while respecting the security conditions required by the regulator. Gaz de France therefore separated its activities of distribution and transport. For the activities of transport, the management of the natural gas network will henceforth be done by GRTgaz (subsidiary company of GDF) on the largest part of the territory , and by TIGF (as of now Téréga) in the South West of France.

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Origins of the balancing zones in France before their division in 2005

 

In order to ensure a progressive opening of the natural gas market, five balancing zones have been established in 2005. These zones have been identified according of the entry and exit points of gas: two zones for the LNG terminals in the southern and the western regions, one for the pipeline entry point coming from North of Europe, one for the Russian gas and the last one, for the exit point to Spain. To unify the prices and ensure more fluidity at a national scale, the fusion of the different zones has been carried out progressively.

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Different steps for the creation of the gas market in France

Large scale investments

After different engineering studies realized in partnership with the market actors, the CRE decided in 2014 a solution combining measured investments in the complementary infrastructures and mechanisms to manage the residual congestions observed on the gas transport network. The network reinforcement projects, Val de Saône for GRTgaz, and Renforcement Gascogne-Midi for Teréga had therefore been launched.

 

The Val de Saône project, inaugurated in October 2018, was particularly ambitious. Launched in March 2017, the works have come to the construction of a 190km pipeline of 1,20m diameter, between Etrez (Ain) and Voisines (Haute-Marne); the creation of an connexion station at Etrez and the reinforcement of the existing compression station, and the development of the connexion stations located at Palleau (Saône-et-Loire) and Voisines. The Val de Saône corridor will allow to route up an addition of 250 GWh per day of gas from the North to the South of France.

 

The second project, Renforcement Gascogne-Midi carried out by Teréga allows to connect the South West regions as well as Spain to the LNG port of Fos-sur-Mer with the construction of a 62km pipeline.

Thanks to these two projects, the gas transport flow from the North to the South has increased by 42% on average, allowing a larger availability of the network including in winter.

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The grand network reinforcement projects 

An original model of co-construction

GRTgaz and Teréga have created the TRF on the foundation of essential principles: a permanent co-construction with the market actors and the willing to deliver the expected service at the lowest possible cost. Specific mechanisms, only used in case of residual congestion on the network, will allow to ensure the proper operation of the market. The objective is to implement a mutualized management of all the transport network to limit the impacts on the market.

To do so, several measures have been taken by the CRE to ensure the continuity of the gas market in case of congestion: inter operators agreements, momentary discontinuation of the interruptible capacities, non-commercialization of the not subscribed capacities, local spreading and finally mutualized restriction as a last resort. Simultaneously, a control of the filling level of storage is operated by GRTgaz and Teréga to ensure the well-functionning of market mechanisms.

The creation of a unique PEG, an opportunity for the French competitiveness

The implementation of this unique market area presents economic benefits for all the actors implied in the gas market. The creation of the unique PEG has unified the North-South spread and has led to lower gas prices for the benefit of all consumers. The wholesale price of gas throughout France is now comparable to that of the TTF. With the PEG, all the French market is, from now on, linked to the major European market places and has become more attractive, including for LNG arrivals at one of the country’s four LNG terminals. In 2019, France became the leading LNG destination in Europe with a delivery record of 232 TWh, or +93% compared to 2018.

Shippers, the users of the transport network, have a better access to the Southern gas storage facilities and the transit to Spain. Thus, the attractiveness of the French market is reinforced in a long-term perspective and the price volatility should be reduced.

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Connexions between the major European market areas