Regulation of natural gas pipeline transportation and storage

Buying and infrastructure

Describe in general the ownership of natural gas pipeline transportation, and storage infrastructure.

Under the Eu dynamics of the liberalisation of the gas market, the vertically integrated companies Engie (formerly GDF-Suez) and Total had to legally divide their monopolistic activities (transmission, distribution, storage and LNG businesses) nether commodity 12 of Police No. 2004-803 of 9 August 2004 on electricity and gas public service.

In 2002, an authorisation regime replaced France's concession framework. Such authorisations were, therefore, granted to the onetime concessionaires, which have go the owners of the gas transmission pipelines subsequently purchasing them from the state. These authorisations are subject to specifications and constraints, especially in terms of public service obligations and environmental and rubber rules.

The gas transmission infrastructure is currently owned and managed by ii operators: GRTgaz (for around 32,000km) and Teréga (for around v,000km). GRTgaz, equally a 75 per cent subsidiary of Engie, is a private company. However, it should exist noted that 24.1 per cent of Engie'due south capital and the remaining 25 per cent of GRTgaz'due south capital are owned respectively by the state and by a land-owned consortium, and that the land owns a golden share in Engie's capital, co-ordinate to Prescript No. 2007-1790, dated 20 Dec 2007; this gilt share gives the correct to oppose every decision of Engie, any successor to Engie or Engie's relevant French subsidiaries, entailing, directly or indirectly, the transfer of some strategic assets located on the French territory or of the right to operate these assets; the assets are defined equally the pipelines belonging to GRTgaz's transportation grid, the assets belonging to GRDF and linked to the distribution grids, the underground storage sites operated by Storengy and the LNG facilities owned past Elengy (now a GRTgaz's subsidiary) or its subsidiaries.

Pursuant to Police No. 2014-384 dated 29 March 2014, which applies to all companies where the state has to exist a minority shareholder across a threshold, this threshold is to be construed in terms of either capital or voting rights, and it may exist revised downwards for no more than two years. Notwithstanding, the PACTE bill, adopted at first reading by the National Assembly, proposes merely deleting article L.111-68 of the Free energy Code, which currently obliges the country to concord more than one-tertiary of ENGIE's upper-case letter. Likewise, the PACTE bill was also voted on past the lower House with an amendment to article 50.111-46 of the Energy Code past laying downward that the capital of GRTgaz shall no longer be held solely, but majority owned, by ENGIE, the land or state-owned entities. The reason for these amendments is that the gold share and the regulation of the gas sector should suffice to secure the guarantee of supply.

Teréga, formerly known as TIGF, is also a privately owned visitor, which was previously a joint venture between ELF and GDF, and then a subsidiary of Total. Full sold all the shares in 2013 to a consortium, consisting of SNAM, the Italian gas transport and storage operator, GIC (also known as GIC Private Limited, formerly known as Government of Singapore Investment Corporation, which is a sovereign wealth fund established by the Government of Singapore in 1981 to manage Singapore's foreign reserves) and EDF; consequently, the Energy Regulatory Committee confirmed, by a deliberation dated 3 July 2014, the certification of TIGF every bit a gas TSO. Teréga is currently owned by several companies or funds (40 per cent by SNA, 31 per cent by GIC, eighteen per cent by EDF and 10 per cent by Predica, which is also known as Prévoyance Dialogue, a subsidiary of Crédit Agricole SA); once again, the Energy Regulatory Commission confirmed, on 4 February 2016, the certification following the entry of Predica in the capital), since a TSO is obliged to notify any element probable to justify a new test of its certification, such as a change in its organisation or its shareholdings (article Fifty.111-4 of the Free energy Code).

As an essential facility, the infrastructure is considered as being owned as a monopoly, and involves public service obligations on the part of the possessor. Transmission grid operators therefore accept the obligation to ensure non-discriminatory access to their infrastructure, and are prohibited from carrying out activities in the non-regulated sector (production and supply).

Gas storage in aquifers, and salt caverns (also possibly in depleted reservoirs, but not in French republic at the moment) is assimilated to mines nether French law, and may be operated only through a concession granted by the government. The associated infrastructure is endemic and managed by the operators – currently Storengy (xiv sites, 103 TWh), a 100 per cent subsidiary of Engie, and Teréga (ii sites, 32 TWh) – merely the gas storage site as such is the property of the state. The elapsing of a concession may be extended by a prescript.

Regulatory framework

Describe the statutory and regulatory framework and any relevant authorisations applicative to the construction, ownership, operation and interconnection of natural gas transportation pipelines, and storage.

Real estate law

Underground natural gas manual pipelines are exempted from obtaining building permits (manufactures R.421-1 and R.421-4 of the Planning Lawmaking).

Environmental police

According to article Fifty.431-1 of the Energy Code, 'provisions on the dominance procedure for the construction and operation of natural gas transmission pipelines are listed in Affiliate Five of Title 5 of Volume 5 of the Environmental Code'. The regulatory framework applicable to authorisations for the construction and operation of natural gas transmission pipelines is provided by manufactures Fifty.555-1 et seq of the Environmental Lawmaking. The applicant should provide the administration with a safety report (article L.555-7 of the Environmental Code). The say-so may be preceded by an impact study and a public research (article L.555-1 of the Code) in compliance with Affiliate Two or Affiliate III of Championship Two of Book I of the Environmental Code. Nether commodity R.555-4 of the Code, the authorisation is given past way of a ministerial order, by a prefectural order or, pursuant to a simplified procedure, by an authorisation granted via a prefect, according to the blazon of pipeline. Articles R.554-43 to R.554-52 of the Ecology Lawmaking, created by Decree No. 2017-1557, dated 10 November 2022 on the safety of transmission and distribution works and on the conformity of the installation of equipment and materials contributing to the use of combustible gases, lay down prescriptions applicable to the construction, committee, operation and control of pipelines. Article 62 of Law No. 2018-727 dated 10 August 2022 provides that projects leading to modify or extend gas manual pipelines (regulated past article L.555-1 of the Environmental Code) are subject to an environmental cess only if the authoritative potency then decides. Furthermore, gas manual pipelines are non considered equally classified installations inside the meaning of commodity L.511-1 et seq of the Environmental Code. Only compressor stations can be facilities classified for ecology protection (ICPE) according to their compression or combustion capacity; this equipment may benefit from the 'unique environmental authority' created by Constabulary-Decree No. 2017-eighty dated 26 January 2022 on environmental authorisation. This Constabulary-Decree provides that, since 1 March 2017, the diverse environmental procedures and decisions required for installations classified for environmental protection and installations, and works and activities bailiwick to authorization are at present merged into a unmarried environmental authorisation. More than precisely, the single say-so for facilities, structures, works and activities (collectively known as IOTA in French) governed by the Law No. 2006-1772 dated 30 Dec 2006 on water and aquatic environments (the Water Police) and the unmarried authorisation for ICPE are merged into a single potency, governed by one Affiliate of Championship Viii of the beginning Volume of the Environmental Code (new articles Fifty.181-i to L.181-31 of the Environmental Code). The single environmental say-so concerns all IOTA and ICPE that are subject area to authorisation, as well as projects bailiwick to environmental touch on studies, simply non to an authorisation government that sets avoidance, reduction and bounty measures every bit to a projection'south negative impacts. The environmental dominance replaces a dozen decisions regulated past the Environmental Lawmaking, the Forestry Code and the Energy Code. This single dominance is issued by a unmarried administrative section.

Police-Decree No. 2017-80 dated 26 January 2022 on environmental say-so also created an article L.555-2 within the Environmental Code, which provides that gas transmission pipelines are non subject to the provisions of articles L.214-3 to L.214-half-dozen of the Environmental Code. Nevertheless, gas transmission pipelines remain subject to certain provisions of the H2o Police force (articles L.214-2, L.214-8, L.214-17, 50.214-18 of the Environmental Code) and to articles 50.211-1, L.212-1 to L.212-11, L.216-6 and L.216-13 of the Ecology Code, also every bit to the measures taken pursuant to the Decrees provided for in one° of Ii of article L.211-three of the Ecology Lawmaking. In add-on, the location of natural gas transportation pipelines must accept into account laws and regulations related to:

  • registered and classified sites (article Fifty.341-one of the Environmental Code);
  • national parks (article L.331-i of the Environmental Code);
  • national and regional nature reserves and areas protected by a biotope ministerial order (commodity L.332-1 of the Environmental Code);
  • biological heritage (commodity 50.411-1 of the Environmental Code);
  • archaeological heritage (commodity L.521-ane of the Heritage Lawmaking);
  • historical monuments, sites and protected areas (article Fifty.621-1 et seq of the Heritage Lawmaking); and
  • coastal and mountain laws (Town-Planning Lawmaking).

Administrative decisions may be challenged, for reasons of legality, before the relevant administrative courtroom within two months of the official notification or publication of the decision. The requirement of official information includes derogations in the case of an implied decision (unsaid rejection, for example). Decisions may be interrupted by an authoritative appeal for consideration or a hierarchical administrative entreatment, and the filibuster caused past such interruption may be extended for claimants living in overseas territories or abroad. To enforce its decisions, the administration uses the principle of 'prior privilege', which means that authoritative decisions are directly enforceable, without the demand for a judge's approval.

State rights

How does a company obtain the land rights to construct a natural gas transportation or storage facility? Is the method for obtaining land rights to construct natural gas distribution network infrastructure broadly similar?

According to article Fifty.555-25 of the Environmental Code, when the construction and functioning of natural gas transportation pipelines is of general interest because they contribute to the national or regional energy supply, to the expansion of the national or regional economy, or to the national defense, the corresponding work may exist declared of public utility if the applicant and then requests.

The declaration of public utility gives the character of public works to construction works, functioning works and maintenance works. This may course the basis of expropriations. Information technology also follows, inter alia, that damages suffered by 3rd parties must be fully compensated, without any fault of the constructor, by the authoritative courts.

This proclamation provides the holder with the right to occupy the public domain and privately endemic properties (ie, easements), express, however, to what is necessary for construction, maintenance and operation of the natural gas transmission pipeline. Article L.555-27 of the Environmental Code provides that private owners shall exist indemnified for easements running on their property by mutual understanding between the holder of the authorisation and the owners of the soil or, failing that, in accordance with the provisions relating to expropriations for public interest. Any disputes related to this compensation fall under the jurisdiction of the courts competent for expropriation for public interests.

Apropos the construction of gas distribution networks, it should first be specified that these networks are operated nether concessions awarded past the local authorities. Nevertheless, the concessionaire for the gas distribution network remains the contracting authority for the construction of a new pipeline (even if the local authority still owns the works), and is granted by the concession contract the correct to deport out all the works necessary for the construction of the filigree on and under the public roads (commodity 50.433-3 of the Energy Code). Indeed, the concession itself authorises the occupation of public roads, in the form of permits. In accordance with commodity L.433-5 of the Free energy Code, structure works may be alleged of public utility at the asking of the concessionaire or grantor of the concession. The declaration of public utility is always preceded by an touch on report and a public inquiry if the work projects are, attributable to 'their nature, size or location . . . likely to have significant impacts on the environment or the human health' (commodity 50.122-i of the Ecology Lawmaking). The declaration of public utility gives the character of public works to structure works (commodity 50.433-6 of the Energy Lawmaking). The proclamation of public utility allows the concessionaire to benefit from the onerous public works regime, which allows temporary occupation of individual properties and the establishment of underground pipelines on privately owned backdrop. The declaration of public utility also allows the institution of public utility easements on privately owned properties. These easements are subject area to compensation if the owner sustains direct, fabric and sure damage. The compensation is ready by the judge in the absence of an amicable understanding.

Access

How is admission to the natural gas transportation arrangement and storage facilities bundled? How are tolls and tariffs established?

Transmission and distribution

Third-party admission is regulated. Article Fifty.111-97 of the Energy Code guarantees customers, suppliers and their agents a right of access to natural gas transmission and distribution networks (too every bit to LNG facilities), including facilities delivering ancillary services under conditions defined by contracts. When the operator and the user are not split up legal entities (ie, they are within vertically integrated undertakings), 'protocols' controlled by the regulator organise their relations. More generally, all these contracts and protocols are forwarded to and controlled by the Energy Regulatory Commission (CRE).

The tariff is set up by the Energy Regulatory Authority for each manual system operator (TSO) and distribution system operator (DSO) for iv-twelvemonth periods on the basis of an analysis of their expenses (including costs of public service obligations), including a regulated benefit.

According to article 50.441-3 of the Free energy Code, TSOs and DSOs (too as operators of LNG facilities) freely negotiate with one or several suppliers of their pick, the natural gas supply contracts necessary for the operation of their ain facilities on a competitive, not-discriminatory and transparent ground, including through public consultations and using organised markets.

Law No. 2017-1839 created new commodity Fifty.452-1 in the Energy Code, which provides that the tariffs for use of the manual networks, the commercial atmospheric condition for the use of these networks, as well as the rates for coincident services provided by the operators of these networks or by the operators of the storage infrastructures mentioned in article L.421-three-one, are established in a transparent and non-discriminatory manner in club to cover all the costs borne by the TSOs and the operators of the storage infrastructures mentioned in commodity L.421-3-1, insofar every bit such costs stand for to those of efficient operators. These costs take into account the characteristics of the service rendered and the costs associated with that service, including obligations laid down by law and regulations also as costs resulting from the execution of the public service missions and contracts referred to in article 50.121-46 of the Energy Code. The TSOs pay back to the secret storage operators referred to in article Fifty.421-iii-1 role of the amount and then recovered, in accordance with procedures prepare forth by the CRE.

On 23 January 2020, the CRE published a decision on the tariff for the apply of the natural gas manual system of GRTgaz and Teréga, known equally the ATRT7 tariff, which applies from 1 April 2022 for a period of 4 years with an annual update. The main objectives of the ATRT7 are as follows:

  • the proper operation of the gas market place with simple, anticipated rules and in the continuity of the previous tariffs;
  • a controlled evolution of tariffs: subsequently the end of a cycle of major investments and in the context of a drop in capacity subscriptions on the transport networks and the development of gas consumption by 2030;
  • the support to the energy transition: tariffs provide operators with the resources they need to incorporate biomethane into their networks and for research and development; and
  • a high level of safety in gas infrastructures.

Law No. 2017-1839 likewise created new articles L.452-1-ane (for the apply of the distribution networks) and L.452-1-two (for the use of LNG facilities) in the Energy Code.

On 23 January 2020, the CRE published a conclusion on the tariff for the use of the natural gas distribution system of GRDF, known as the ATRD6 tariff, which shall apply from 1 July 2022 for a period of iv years with an annual update. The main objectives of the ATRD6 are equally follows:

  • maintaining a maximum level of prophylactic of the gas distribution network by taking over all of GRDF's safety-related operating costs and enabling GRDF to implement its investment policy;
  • supporting the free energy transition by allocating new resources to GRDF for the inclusion of biomethane in the networks and for research and evolution;
  • controlling the level of the tariff in the context of a subtract in gas consumption; and
  • taking into business relationship the start of the industrial phase of the gas changeover project, which consists of converting the B-gas zone into an H-gas zone past integrating the forecast costs related to this project into the tariff.

The current tariff for the use of the Elengy and Fosmax LNG terminals, known as the ATTM5 tariff, came into force on one April 2017, pursuant to the CRE'south deliberation dated 18 January 2022 on the tariffs for the use of regulated LNG terminals, for a period of approximately 4 years. The new tariff for the employ of LNG terminals, known as tariff ATTM6, shall come into force on 1 Apr 2022 (Deliberation of the CRE dated 3 December 2022 on the draft decision on the tariff for the employ of regulated LNG terminals).

Each TSO is in accuse of balancing on its filigree.

Underground storage

The Court of Justice of the European Union (CJEU) answered a preliminary question asked by the Council of Land (the highest administrative court in France) to clarify the meaning of article 8(ii) and (v) of of Regulation (EU) No. 994/2010 of the European Parliament and of the Council of twenty October 2010 on measures to safeguard the security of natural gas supply (CJEU, xx Dec 2017, example 226/sixteen, Eni SpA, Eni Gas & Power France SA, Uprigaz). These questions remain relevant. Eni and Uprigaz, the claimants, considered that Decree No. 2014-328 was contrary to those provisions, because: on the one hand, information technology irregularly extended the concept of 'protected customers' to customers other than those listed in the Regulation; and, on the other mitt, it would require gas suppliers to hold only French territory 'sufficient' natural gas storage capacities. Still, commodity viii(2) of Regulation No. 994/2010 provides that member states may, under certain weather, impose on natural gas suppliers measures intended to ensure the supply of gas to a wider category of customers than the list of 'protected customers' of article 2 of the Regulation. The CJEU ruled that the implementation must strictly comply with several conditions: among others, risk assessment, compliance with competition law and not hindering the internal gas market place. The Court considered that article viii(ii) of Regulation No. 994/2010 must be interpreted as significant that it does not preclude national rules imposing additional obligations on gas suppliers, but that theCouncil of State had to verify that these obligations comply with the conditions laid downwards in the Regulation. Regarding the 2nd signal, article 8(5) of Regulation No. 994/2010 provides that natural gas suppliers may fulfil their obligations as regards supply standards 'at regional or Spousal relationship level', whereas Decree No. 2014-328, combined with onetime article L.421-four of the French Energy Lawmaking, requires gas suppliers to concord a certain gas stock threshold in France, while providing that the competent Minister takes into account the other modulation instruments available to the supplier to check that the supplier is compliant with its obligations. The claimants argued that these national provisions were contrary to their freedom to comply with their obligations anywhere in the European union. The CJEU held that the Regulation opposes such a national regulation, merely the judgment specifies that it is upward to the Quango of Land to check whether the faculty given to the competent Minister 'to accept into account the other modulation instruments available to the suppliers concerned' grants to the suppliers the constructive possibility of fulfilling their obligations at regional or European union level.

Pursuant to this judgment, the Council of State ruled that the expanded definition of 'protected customers' was (i) based on the cess of risks affecting the security of supply was carried out in accordance with the Regulation of 20 October 2010, (ii) included in the preventive action plan provided for in commodity 5 of that Regulation (notified to the European Commission), (iii) established for technical and organisational reasons, and, therefore, (4) conspicuously defined, transparent, proportionate, non-discriminatory, controllable and not distorting competition in the internal gas market. Furthermore, to appraise whether suppliers fulfil their obligation, the Minister should take into business relationship the 'other modulation instruments bachelor for each supplier', that could be storage at regional or EU level; in other words, the challenged provisions could not legally have the effect of imposing on natural gas suppliers the obligation to store gas exclusively on French territory (State Quango, eighteen July 2018, ENI SpA, ENI Gas Power, and UPRIGAZ, req. 380.091).

Co-ordinate to article Fifty.421-iii of the Energy Code, as modified by Police force No. 2017-1839, natural gas storage infrastructures contribute to the balancing of the transportation organisation, the continuity of routing on the transportation grid, the optimisation of the gas system and the security of supply of the territory. Every bit a reminder, the three gas storage operators in France are currently Storengy, Teréga and Geomethane.

The storage of natural gas is governed by the provisions of the Free energy Code. They are based upon two main principles: transparent, objective and non-discriminatory admission; and obligation for gas suppliers to contribute to the continuity of supply of natural gas in wintertime by an obligation to store gas during the rest of the twelvemonth (article Fifty.443-8-1 of the Energy Code). In this respect, Decree No. 2018-276 dated 18 April 2022 forces suppliers to approximate the consumption of their customers according to the consumption profiles and extreme cold constraints set by the Minister (commodity R. 121-4-ane of the Energy Lawmaking).

The Free energy Transition Law No. 2015-992, dated 17 August 2015, empowered the government to set a new general framework for access to the natural gas transportation arrangement and storage facilities to ensure suppliers' admission to storage capacities under transparent, objective and non-discriminatory conditions. This reform was integrated into the Hydrocarbon Ban Police force, enacted on 30 Dec 2017, and published in the Official Journal on 31 December 2022 (Law No. 2017-1839).

This reform of gas storage aims at reducing the toll of storage in France, and obliging the suppliers to actually fill in the capacities. The Law phased out the Free energy Code provisions that fix upwardly the legal framework of a negotiation between shippers and storage operators, and replaced this with a regulated scheme, based on public auctions for the allocation of capacities.

More precisely, Law No. 2017-1839 (mainly new articles L.421-5 and Fifty.421-v-ane of the Energy Lawmaking) establishes the principle of auctioning the storage capacities and puts in place measures to ensure the filling of the storages up to the level considered by the state every bit necessary for the security of supply. It besides organises a regulated access of third parties to underground natural gas storage. In this regard, it defines the telescopic of regulated storage: the storage capacities are auctioned, and the difference, if negative, betwixt the sale acquirement and the regulated income of the storage operators is compensated by the revenue enhancement recovered past the natural gas transmission network operators, in addition to their tariffs (otherwise, the storage operator returns the surplus to the grid users, through the grid tariff). The amount of this compensation is recovered from the shippers on GRTgaz'southward and Teréga'due south manual systems, by applying a storage tariff term based on the winter modulation of their customers connected to the public gas distribution systems. The conclusion of 23 January 2022 on the tariff for utilize of the natural gas transmission systems (the ATRT 7 conclusion) provides that each shipper'south modulation corresponds to the sum of the modulations of each of its customers subject to payment of storage compensation: in this determination dated 23 January 2020, the CRE provided for the methodology for calculating the storage tariff term in the tariff for use of the natural gas transmission networks of GRTgaz and Teréga. In awarding of this decision, CRE'southward conclusion dated 26 March 2022 ready the level of this tariff term, applicable as of ane April 2020, to take into business relationship changes in the authorised income of storage operators and the amounts received past the latter in the context of the marketing of surreptitious natural gas storage capacity (Decision dated 26 March 2022 setting the level of the storage tariff term in the tariff for the use of GRTgaz's and Teréga's natural gas manual systems as from one April 2020). The storage tariff term is calculated as the ratio between the forecast corporeality of compensation for the French grid and the forecast value of the ground for collection of this compensation. The value of the bounty base corresponds to the sum of the shippers' modulations (section v.2.3.2 of the CRE conclusion dated 23 January 2022 laying down the ATRT7). Police force No. 2017-1839 empowers the regulator to prepare the methodology for establishing the regulated income of hugger-mugger storage operators, which it did by its Deliberation No. 2018-068 dated 22 March 2022 (tariff ATS1). This decision sets the level of authorised acquirement for gas storage infrastructure operators, provides for an ex-post regularisable tariff framework (ie, revenues tariff level strictly equal to the operator'southward regulated income, taking into account its actual expenditure) and organises a machinery to encourage storage operators to maximise the capacities proposed to the market, and the income drawn from the auctions. The revenues of storage operators accept been regulated for an initial menses of two years. Further to its decision dated 23 January 2022 on the tariff for the use of Storengy, Teréga and Géométhane's clandestine natural gas storage infrastructures (ATS2), the CRE harmonised the regulatory framework for storage operators with the other infrastructure tariffs; the new storage tariff, known as the ATS2 tariff, shall apply from 2022 for a four-yr period. In add-on to the objectives of simplicity, predictability and continuity, the ATS2 tariff provided answers to the following requirements:

  • extending to storage infrastructures the principles of incentive regulation implemented to ensure the efficiency of all regulated infrastructure operators; and
  • decision-making the evolution of operators' costs in a context marked by a downward trend in gas consumption.

The conditions of the auction are as well set past the regulator upon proposal of the operators, and they shall include the marketing schedule, the reserve prices, the marketed products and the type of bids. They shall be published on the operators' websites. By Deliberation No. 2018-039 dated 22 February 2022 on the modalities for marketing of storage capacities in the context of implementation of regulated third-political party access to storage underground natural gas in France, the regulator set out the terms and conditions for the auctioning of storage capacities. Teréga and Storengy organise capacity auctions on carve up days, co-ordinate to an allocation schedule, in order to market capacity past reasonably sized lots; the auctions just embrace the 2018–2019 storage year, and the auctions are organised in a transparent manner (both for products and prices) and are of a fixing type. The principal objective of these auctions is to maximise storage capacity subscriptions, and then to maximise auction revenues of the storage operators. The auctions that took identify from 5 March to 26 March 2018, further to this deliberation, made it possible to sell about all the capacities for the 2018–2019 storage year, thus exceeding the minimum level necessary to guarantee the security of supply for the winter of 2018–2019 gear up by a Ministerial Club dated 13 March 2018, at a price between €0 and €2.02 per MWh. The total cost of gas storage was €714.6 million for 2018, excluding incentive regulation. The Deliberation No. 2018-039 dated 22 February 2022 also immune the creation of the Storage Concertation, a forum for discussion where storage operators accept been able to bring feedback from this first marketing and study possible development strategies for the following commercialisation steps. At the end of these meetings and in accordance with the Deliberation of 22 February 2018, Teréga and Storengy submitted to the CRE, at the end of June 2018, their detailed proposals concerning the marketing methods for capacity in Oct 2018. In gild to obtain the market players' opinion on these proposals, the regulator conducted a public consultation from 11 July 2022 to 27 August 2018. In its Deliberation No. 2018-202 dated 27 September 2018, the CRE took note of the feedback from all storage operators following the March 2022 auction with a view to improving the marketing methods for future storage capacity:

  • storage operators had to offer all 2019–2020 capacities between Nov 2022 and February 2019, and operators could marketplace a maximum of 10TWh per twenty-four hour period, excluding 50-gas storage;
  • storage capacities for 2020–2021 onwards will be marketed according to a schedule that will be specified sufficiently in advance of the auction;
  • unsold capacities of an auction may be added to the capacities marketed during subsequent auctions of the same product, or on an unused auction slot, inside the limit of 10TWh per twenty-four hour period; and
  • each yr, in October, Storengy and Teréga shall publish on their websites the listing of products they offering, with their precise characteristics, including the catamenia rate per book.

For the rest, the terms of the Deliberation of 22 March 2022 are confirmed.

Storage capacity auctions for the winter 2020–2021 were a success. They took place in two stages: 32 TWh were sold in the multi-twelvemonth sale of June 2019, and 96 TWh in the 3-week sale sessions that took place from 12 Nov 2022 to 27 Feb 2020. The totality of the marketed capacities were allocated, ie, 128 TWh. These good results guarantee French republic's security of natural gas supply for winter 2020–2021. They also ostend that the auction procedures set past the CRE are operation well. The average auction price of €3.85/MWh is significantly higher than the price resulting from the terminal two campaigns. This is due to a larger seasonal gas price spread than in a previous marketing years, as well equally an increase in the number of auction participants. The revenues from the capacity for winter 2020–2021 take thus doubled compared to those of winter 2019–2020. The sums collected in 2022 comprehend 63 per cent of the authorised acquirement of storage operators, compared to 26 per cent in 2022 and 2019. As a upshot, the level of the storage term applicable from one April 2020, set past CRE at €78.63/MWh/d/twelvemonth, is downwardly 63 per cent compared to the previous year.

The providers of the H-gas to B-gas conversion service shall book, before the get-go of any auction, the capacity necessary for the performance of their tasks, according to the marketing methods laid down by the regulator. In add-on, for the storage capacities for 2019–2020, storage of B-gas will exist accessible to all market participants, with priority access for suppliers of the service for the conversion of H-gas into B-gas; and, exceptionally, storage capacities of B-gas may be marketed in a single auction, with a reserve cost published by Storengy at the opening of the auction, calculated according to a specific formula (pursuant to CRE's Deliberation No. 2018-202 dated 27 September 2018).

The TSOs shall also volume, earlier the showtime of the auctions, the capacities necessary for carrying out the tasks defined in commodity L.431-3 of the Free energy Code or specified by the regulator co-ordinate to article Fifty.134-2 of the Energy Code, in accordance with the marketing methods set by the regulator. By style of exception, bilateral agreements may be concluded by France with an European union or European Costless Merchandise Association (EFTA) member state to provide for storage capacity reservations to storage operators before the beginning of auctions, again pursuant to the marketing methods set by the regulator; this should be used at to the lowest degree with Switzerland, according to the discussions held before the Parliament (such an international agreement was made with Switzerland in 2009, to secure winter supply on both sides of the border). The CRE specified that operators from states with which a bilateral agreement has been concluded may learn storage capacities inside the limits of the capacities provided for in this understanding. These capacities shall be reserved at a price determined co-ordinate to a formula prepare by the CRE in its Deliberation No. 2018-039 dated 22 Feb 2018, and not marketed through the auctions.

Under new article L.421-vi of the Energy Code, in the result the Minister for Energy notices that, at the finish of the round of public auctions, the capacities corresponding to the minimum natural gas stocks referred to in article L.421-4, set by a Ministerial Order, currently an Order dated xiii March 2018, relating to the stocks necessary to guarantee the security of supply during the menses betwixt i November 2022 and 31 March 2022 adopted pursuant to article Fifty.421-four of the Energy Code, take non been subscribed, this Minister may force either the suppliers, or the storage operators, or all of them, to book boosted capacities, after having consulted the regulator. Decree No. 2018-221 dated 30 March 2022 relating to the constitution of complementary stocks of natural gas, codified in articles D.421-seven to D.421-13 of the Energy Code, provides a framework for the constitution of the additional stocks mentioned in commodity Fifty.421-half dozen of the Energy Lawmaking. First of all, the TSOs and storage operators are subject area to reporting obligations, consisting in sending to the Minister for Free energy a declaration each year including, in item, for the TSOs and DSOs, an estimate of the consumption of all consumers connected to their network equally well equally the contracted capacities and, for the storage operators, the capacities subscribed in their storage infrastructure (manufactures D.421-7 and D.421-8 of the Energy Lawmaking). When auctions practise not make it possible to accomplish the minimum stocks fix by the Ministerial Order (the above mentioned, dated 13 March 2018), the storage operators must build up additional stocks and transport the characteristics of these stocks to the Minister by 15 November at the latest (commodity D. 421-9 of the Energy Code). These additional stocks must be kept past the storage operators from 1 November to 31 March, unless when these additional stocks are requested past a TSO to balance the system or because the gas is needed for the continuity of the transportation. The CRE specifies the marketing methods for these stocks (article D.421-10 of the Energy Code). If the subscribed storage capacities and additional stocks are insufficient to reach the minimum required stock, the Minister may set, past an Order published no later than 11 June, the level of the total stocks that the suppliers must build up on 1 Nov (article D.421-12 of the Energy Lawmaking). In this example, under a Ministerial Order dated 9 May 2018, storage capacities may be subscribed in other EU member states, provided that the suppliers so doing have unused transmission capacities between the storage capacities and the French transportation network.

The new article L.421-7 of the Energy Code provides that natural gas suppliers that take subscribed chapters in the storage infrastructures mentioned in article Fifty.421-3-ane shall ensure, on 1 November of each year, a higher level of filling of these capacities than the level set by a ministerial order. Storage operators shall transmit to the Minister, before 15 Nov of each year, the filling level of capacities available for each supplier. The filling obligation may be lifted by another ministerial social club. The breach of the storage obligation provided for by the start paragraph of article Fifty.421-6 of the Free energy Code may trigger penalties, or the withdrawal of the supply licence, or both, as provided by commodity L.142-31 of the same Lawmaking. The amount of the financial penalty may not exceed twice the value of the missing gas storage. A Ministerial Order was issued on nine May 2022 that relates to the taking into account of storage capacities subscribed in another member country of the Eu for the awarding of article D.421-12 of the Free energy Code; it specifies the methodology for determining the value of gas stocks in default and is used to determine the amount of the financial penalization in the event of non-compliance, the minimum level of filling of storage capacities subscribed on 1 November also equally the deadline for transmitting the data necessary to assess the need to build additional gas stocks.

More generally, the access to surreptitious gas storage facilities is now governed by the provisions of the Prescript No. 2018-276 dated 18 April 2022 amending various provisions of the regulatory part of the Energy Code relating to the natural gas sector, which defines storage capacity as the useful storage volume within an cloak-and-dagger storage site, with an extraction and injection rate. It added that TSOs have priority access to hugger-mugger gas storage facilities and so that they tin can ensure the proper functioning and balancing of their grids. Chapters non used past TSOs is marketed to suppliers, pursuant to article R.421-3 of the Energy Code). The Decree also specified that storage infrastructure operators must publish on their website the available storage capacities and storage levels for each storage site (commodity R.421-6 of the Energy Lawmaking).

Interconnection and expansion

Tin customers, other natural gas suppliers or an authority require a pipeline or storage facilities owner or operator to aggrandize its facilities to accommodate new customers? If and then, who bears the costs of interconnection or expansion?

The development of transmission facilities is controlled by the CRE.

Pursuant to articles L.134-three and L.431-half-dozen of the Energy Code, gas TSOs are obliged to submit their annual investment programmes to the CRE for approval.

The CRE bases its decisions approving the investment programmes of gas TSOs (as amended, if necessary) taking into business relationship the presence in the investment programme of:

  • network development projects or studies necessary for the proper performance of the market place;
  • bear witness of the transparent and not-discriminatory treatment of market participants, in item with regard to connecting LNG terminals and the gas-fired combined cycle; and
  • evidence of control of the cost of the projects included in the investment programme, in particular equally regards the impact of the investment on the using rates of gas transmission networks by their users.

The extension of a transmission grid is decided past the grid operator, and must exist consistent with the Ten Year Evolution Plan, which is compulsory under Directive 2009/73/EC; this consistency is controlled annually by the CRE. The European Commission likewise annually approves investment programmes for the next year, and may oblige operators to make any investment that is necessary in light of the Plan (commodity L.431-6 of the Energy Code).

New interconnections, also as contrary flows on existing ones, are usually decided on the footing of the positive event of an open flavour.

Distribution business is carried out under the concession government. The geographic extension of an existing concession is decided by the parties to the concession agreement (ie, the operator and a local corporation, or a grouping of such corporations).

Storage is field of study to mining law, and investments in new storage require new concessions. Moreover, article Fifty.421-three-1 of the Energy Code, created past Law No. 2017-1839, rules that hush-hush natural gas storage infrastructure that guarantees the security of supply of the territory in the medium and long term and that guarantees the compliance with bilateral agreements relating to the security of natural gas supply ended by France with an Eu or EFTA fellow member state are provided for by the multiannual energy programme fabricated compulsory past article 50.141-1 of the Energy Lawmaking. These infrastructures are maintained by authorised operators, either concessionaires or lessees. The multiannual energy programming (PPE) likewise deals with storage sites that have been bailiwick to a reduced operating licence or the capacities of which accept ceased to exist marketed, as well as sites under evolution. The previous PPE established in 2022 was to be amended in 2018, but the French government had announced merely a few broad outlines of its content on 27 November 2022 (run across Determination dated 30 November 2022 resulting for the public contend on the revision of the multiannual free energy programme), and nothing was said regarding gas storage. The concluding version of the PPE because of the wide public debate beginning mid-January 2019, was made public in 2020: the PPE Decree was signed on 21 Apr 2022 (Prescript No. 2020-456 dated 21 April 2022 related to multiannual energy programming). Article x of the PPE Decree provides a list of undercover natural gas storage infrastructures considered every bit necessary for the security of supply of the territory in the medium and long term. All these sites represent a storage chapters of 138.v TWh in book and two,376 GWh/d in withdrawal rate for a filling corresponding to 45 per cent of the useful volume.

In addition, Law No. 2017-1839 created a new article L.421-seven-i in the Free energy Lawmaking, which provides that the executive direction of a storage facility should provide the regulator with an annual investment programme for approval: the regulator shall brand sure that the investments needed for the proper development of the storage are foreseen, and that the transparent and equal access to storage facilities is constructive. For case, by Decision No. 2020-019 dated 23 January 2020, the CRE approved an investment programme foreseen past Storengy for the corporeality of €1897.6 million.

Processing

Describe any statutory and regulatory requirements applicable to the processing of natural gas to excerpt liquids and to ready information technology for pipeline transportation.

Cloak-and-dagger storage facilities are subject to:

  • the Mining Lawmaking (the legislative section already exists, whereas the regulatory section is currently in training);
  • Decree No. 2006-648 of 2 June 2006 on mining rights and underground storage rights;
  • Decree No. 2006-649 on mining works, hugger-mugger storage works and the policy on mining and undercover storage; and
  • Ministerial Society of 17 January 2003 on the prevention of major accidents at cloak-and-dagger storage facilities for gas, liquid hydrocarbons or liquefied hydrocarbons.

Mining concessions are awarded by a Council of State decree, whereas the technical provisions specific to underground storage facilities are established by a prefectural social club, every bit the case may be.

The construction and operation of gas pipelines and their related structures are specifically governed by the Environmental Code since the entry into force of Prescript No. 2012-615 of two May 2012 relating to the hydrocarbon pipeline transmission regime.

A Ministerial Lodge of 5 March 2022 regulates the safety of the pipelines used for the transportation of natural gas or similar substances, hydrocarbon and chemical products. It specifies the construction and operational safety rules applicable to pipelines throughout their life span. This Ministerial Order is based on a benchmark standard and approved professional guidelines.

Contracts

Draw the contractual government for transportation and storage.

Article L.111-97 of the Free energy Lawmaking guarantees customers, suppliers and their agents right of admission to transmission facilities and natural gas distribution besides as LNG facilities, including facilities supplying ancillary services, under weather defined past contracts. When the operator and the user are not carve up legal entities, protocols govern their relations. These contracts and protocols are forwarded, upon request, to the CRE.

Still, such access may be limited or prevented if and when the relevant infrastructure lacks acceptable available capacity. Any refusal to conclude a contract must ready out the reasons for the refusal, and be notified to the applicant and the CRE (articles 50.111-102 and L.111-103 of the Energy Code).

Transmission

Since 1 January 2012, GRTgaz has been implementing a modular transmission contract for admission to its network by shippers. The manual contract is made up of sections applicable to all shippers as well as optional sections. The transmission contract documents are the following: full general terms and conditions, upstream network, downstream network, access to virtual exchange points and annexes.

Storage

Police No. 2017-1839 of thirty December 2022 organises a regulated access of shippers to underground natural gas storage facilities. In this regard, information technology puts in place measures to ensure the filling of the storages necessary for security of supply, it establishes the principle of auctioning the storage capacities, it defines the telescopic of regulated storage, and it provides for the inclusion of a taxation dedicated to compensate the storage operators, in case the price met at auction is bereft, in the tariff for utilise of natural gas transmission networks. The Law empowers the regulator to set the methodology for establishing the tax, as well equally the marketing methods for selling the storage capacities. At the cease of December 2017, the Regulator launched a public consultation on the implementation of the third-political party regulated admission to surreptitious natural gas storage facilities in French republic.

Third-political party regulated access to underground natural gas storage aims to ensure the filling of storages necessary for the security of supply, while ensuring the transparency of storage costs and removing the complexity of the previous system of individual obligations. The CRE deliberated on 22 February, 22 and 27 March 2022 to implement the reform of third-party access to gas storage, which led to three deliberations relating respectively to the methods for selling the storage capacities, the storage facilities tariffs and the introduction of a storage tariff term in the transmission tariffs.

To go a client on the hole-and-corner storage market, the operators must possess a supply licence and have concluded with a TSO a transportation contract to access the storage transport interface points (PITS). Nether this contract, a banking guarantee deposit may be required. Equally shortly as the customer fulfils these requirements, he or she can consult the storage operators' offers, in society to submit the bid or bids on the storage operators' platforms. For instance, every bit regards Storengy, customers shall sign a master agreement (too called a framework agreement) with a storage operator, which sets along the terms and conditions, including prices, nether which the storage operator markets and provides a service to the customer in the form of a storage product. The chief agreement determines the conditions under which the storage operator performs gas storage services for a storage group, Including the delivery and redelivery of quantities of gas to the corresponding PITS using these storage products and provides the associated services offered past the storage operator. For whatever subscription of a storage product, the parties sign an application contract in accord with the model available on the storage operator's website. This application contract specifies in detail the proper noun of the storage product subscribed, the subscribed nominal storage chapters, the duration of the subscription, the price of this subscription and its payment terms in accordance with the provisions of the master agreement and the information necessary for the operational management of this subscription.