Role of the TSOs in a Transition Scenario Transmission Committee March 2019 Gas transmission networks bring first energy and economic development and therefore opportunities for creating new markets ID: 932709
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Slide1
Brazilian Gas Market VitalityRole of the TSOs in a Transition Scenario
Transmission Committee – March 2019
Slide2Gas transmission networks bring first energy and economic development and therefore opportunities for creating new markets. Secondly, they bring optimization by giving the possibility to create hubs. But what is the situation in each area of world? How is the synergy between gas and electricity in each area? What are the different ways to use gas pipelines in each part of the world?
Study Group 2:
Gas transmission networks for market vitality
How does transmission assets contribute to commercial portfolio security ?
Chapter 2:
Slide3summaryBrazilian Transmission
network Overview
TBG at a glance
Brazilian gas Market
Scenario
Role of the TSO
open season AUCTION
Challengers
Slide4Brazilian TRANSMISSION NETWORK Overview
Slide5TAG
Associated Transmission Company4500 km extension
75 millions m³/day capacity
TAG
NTS
TBG
NTS
New Southeastern
Transmission Company
2000 km extension
75 millions m³/day capacity
TBG
Boliva-Brazil Gas Pipeline
Transmission Company
2600
km extension
30
millions m³/day capacity
Slide6TBG at a glance
Slide7Relevant business data:
TBG Pipeline pass through Midwest, Southeast and South regions, which responds for more than 50% of Brazil`s GDP (IBGE).
Serves
7
Local Distribution Companies with:
1931
Industrial consumers;
19.546
Commercial consumers;
507
Vehicular natural gas stations;
1.944.601
Residential consumers;
4
Thermoelectric plants.
Source
: 2018 data
from
Local
Distribution
Companies
TBG owns and operates Bolivia-Brazil Gas
Pipeline,
being the pioneer gas transmission company in the country
Slide8Brazilian gas Market Scenario
Slide9CONCENTRATED AND LOW MATURITY MARKETThe Brazilian natural gas industry is characterized by a high concentration of both supply and demand, and is in a stage of low maturity and market dynamism. REPOSITION OF INCUMBENT AGENTThe Brazilian Petroleum S.A
. (Petrobras), as the dominant agent of this industry, due to the need to focus in the of shore explorations, has been carrying out important divestments in the natural gas and energy
value chain.
COMPETITIVENESS OF SUPPLY
In addition, the global gas industry is undergoing a major revolution in terms of resources and prices, which can requires Brazilian market attention regarding competitiveness gas prices. These
factors add up to the possibility of
accelerate the pre-salt
gas development in
this decade.
LACK OF SYNERGY BETWEEN GAS AND ELECTRIC
SECTOR
Lastly
, the penetration of renewables in the electricity sector, with variable production, and the increasing difficulty of taking advantage of water potential for increasing
capacity of hydroelectric plants increases the need for thermoelectric plants in the system, with natural gas being the natural fuel.Brazilian Natural Gas Industry TransitionCurrent Scenario
Slide10PETROBRAS coordinates and supplies the gas market
Responsible
for 81
%
of
Brazilian
gas
production
Buys
99,8%
of
other
producers
100%
100%
Petrobras owns shares in 20 of 26 Brazilian
Production
Natural
Gas
Processing
Plant
Regas
City
gate
LDC
transmission
Production
Regas
City
gate
LDC
escoamento
transmission
Bolivia
Imports
Bolivia
Imports
New Players
New players
New
Hiring
Regime
Demand
for new
suppliers
Petrobras
takes
100%
of
the
idle
capacity
and
risk
Shared
risks
in
gas
supply
and transmission
> Competition in accessing essential facilities
Storage
Future
Scenario
Current
Scenario
Off shore pipelines
Announced
decision
to
reduce its share on gas business
Brazilian Natural Gas Industry Transition
How
does transmission assets contribute to
commercial
portfolio security
?
Slide11FIRST BRAZILLIAN Transmission CAPACITY AUCTION
Slide12Existing Contracts and
Following Open Season for Accessing TBG Pipeline
New Hiring Regime“Entry Exit System”*
*Diretrizes ANP (RANP 11/16)
2019
Open
Season
Slide13NEW REGIME OF CAPACITY ALLOCATION MODELED Entry/Exit System
LNG Terminal
Interconnection
Points
Interconnection
Points
Free Consumers
Local Distribution Companies
LDCs
Legacy
Contracts
Entry/Exit Contracts
LDCs
TBG
Pipeline
Slide14Independent contracting of input and output capacities.
It
may or may not be done by the same agent, depending on your willingness and negotiation to purchase
gas
.
Higher liquidity for molecule transactions.
The
gas injected into the system can be withdrawn at any point of exit. Model aligned with the existence of a Gas Marketing Hub.
Greater liquidity for the assignment of transmission contracts.
They
will deal with inbound and outbound capabilities rather than pre-defined routes.
Promotion of secondary market establishment.
Balancing settlement pushes network users to commercial diversification.
Standardization and multi capacity products.Provision of long term and short term capacity contracts.
Opening new environment to development of the natural gas industry in Brazil through the model of contracting
transmission capacity in a entry
and
exit regime
Advantages
THE regime PROPOSED
Slide15CHALLENGERS
Slide16REGIMES
OF CAPACITY ALLOCATION IN BRAZIL
Slide17Shipper
1
Shipper
2
Shipper 3
ENTRY
EXIT
CURRENT SITUATION:
SEPARATED MARKET LINKED WITH IPS
POSTAL AND POINT-TO-POINT CONTRACTS
Market
Area 1
Shipper
4
Shipper 5
Market
Area
2
Shipper
7
Shipper
8
Shipper 9
Market
Area
3
IPS
Shipper
6
IPS
1
2
3
IP: INTERCONECTION POINT
Slide18Produção
GNL
Shipper
2
Shipper 3
ENTRY
EXIT
FUTURE INTENDED FRAMEWORK
INTEGRATED MARKET
IP: INTERCONECTION POINT
Market
Area 1
Shipper
4
Shipper 5
Market
Area
2
Shipper
7
Shipper
8
Shipper 9
Market
Area 3
Shipper
6
IPS
IPS
1
2
3
Single
Market
One Single Market
Shipper
1
Slide19Final considerations
Slide20The Brazilian natural gas market is about to face a significant transition, from a vertical integrated structure to a competitive scenario. Despite of incumbent agent interest of its market share repositioning, it is still hard to predict its pace
.In a strategic perspective
, the transmission system is the locus where agents can exchange value. Market Security shall raise, if
the a target is set to a integration network pushing a competitive
multi agent scenario
.
Anonymous gas exchange, price discovery, multiple suppliers and an integrated transmission system is a
new way
of thinking the natural gas business in
Brazil. Moreover
it necessary an
accurate regulatory framework with the
right economic
incentives, enabling, at the same time, flexibility, security of supply and competitive prices.FINAL CONSIDERATIONS
Slide21Thank you for your attention!