The consolidation of German transport and trading areas continues with five major gas network operators forming a single new company.

On 1 October 2009, five major German gas network operators, Gasunie Deutschland Transport Services GmbH, Ontras – VNG Gastransport GmbH, Wingas Transport GmbH & Co. KG, Dong Energy Pipelines GmbH, and StatoilHydro Deutschland GmbH, merged all of their respective market areas, to form a new company, GASPOOL Balancing Services GmbH (GASPOOL).

GASPOOL creates a new market area for transporting and trading H-Gas (high-calorific) in Germany that includes more than 300 virtual networks.

Background

In July 2006, the associations representing the grid operators in Germany, in consultation with the Federal Regulatory Authority (BNA), published a cooperation agreement (the Cooperation Agreement), which sought to standardise the grid access scheme in Germany. Following the publication of the Cooperation Agreement in 2006, the German gas market initially was divided into 19 market areas, or ‘balancing zones’; however, this was reduced to 12 market areas at the end of 2008, and the BNA regularly has declared its intention to reduce the number of market areas to just two, one for H-gas and one for L-gas (low calorific).

The Merger

Five major gas network operators (Gasunie, Ontras, Wingas, Dong, Statoil) have now merged all of their market areas (in Hanover, Leipzig, Kassel, Emden, and Kiel) and set up a new company, GASPOOL, which will be responsible for balancing pool management.

Under the proposed new structure, the aforementioned operators will keep their responsibilities as network operators, and will market the capacity of their networks independently from other transmission system operators.

The GASPOOL market area commenced operation on 1 October 2009 and has received clearance from the German Federal Cartel Office.

At this time, Balancing Group Contracts which have been entered into with Gasunie, Ontras, and the other balancing group operators, will be transferred to the new market area GASPOOL as of the operational effective date, when the current Balancing Group Contracts will expire.

Practical Consequences for Gas Traders

Market participants that previously accessed any of the five distinct market areas now merged, will need to sign up to the GASPOOL General Terms and Conditions which replace the network conditions of the previously independent market areas. However, these conditions are broadly on identical terms to those being replaced, in accordance with the requirements of the Cooperation Agreement.

Old Balancing Group Contracts will expire and be replaced with the GASPOOL Balancing Contract.

Market participants wishing to trade at GASPOOL under the terms of the European Federation of Energy Traders’ General Agreement (EFET), will need to enter into the GASPOOL Appendix which was published by EFET on 1 October 2009. To the extent that participants have already been trading at the Gasunie market area under the terms of the old Gasunie Deutschland (GUD) Appendix, this will need to be replaced with the GASPOOL version, for which EFET has published a side letter on its website.

As with the GUD Appendix, the GASPOOL Appendix addresses issues such as priority of transaction terms, force majeure, failure by a party to perform, and ‘off-spec’ gas.

Conclusion

The creation of the New GASPOOL market area highlights the continuing effort of German regulators to consolidate the German gas market into two market areas, one for H-gas and one for L-gas. On a practical level, market participants will need to ensure that their documentation is updated accordingly.