Regulation of natural gas pipeline transportation and storage

Ownership and infrastructure

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

The ownership and organisational structure of pipeline transportation and storage of natural gas is largely laid down at the national level subject to the minimum requirements of Directive 2019/692 (the Third Gas Directive).

The Third Gas Directive requires the structural separation of gas transmission systems (except upstream pipeline networks or high-pressure pipelines primarily used for local distribution) from production or supply activities. For transmission system operators (TSOs) that were part of a vertically integrated corporate group (a group holding interests in both transmission and production and supply), as at 3 September 2009, member states can choose one of three unbundling models (all TSOs established after that date must comply with the ownership unbundling (OU) model):

  • under the OU model, the ownership of the transmission system must be fully separated from any production and supply operation. The rules further include limitations for companies that directly or indirectly control or have any other rights (eg, majority shareholding, power to appoint board members or voting rights) over a production or supply company to appoint board members in the TSO. In addition, a board member may not be a member of the boards of both a TSO and a production or supply company at the same time. Ownership unbundling generally applies across gas and electricity markets (ie, not only within the gas or electricity markets);
  • under the independent system operator model, a production or supply company may remain the owner of the transmission system provided it appoints an independent system operator company to operate the transmission system; and
  • under the independent transmission operator (ITO) model, a production or supply company may remain the owner of a transmission system, and may even own or otherwise control the system operator company, provided that it complies with detailed rules to ensure the autonomy of the ITO – essentially, through legal, accounting and functional separation.


Exceptionally, member states may deviate from these unbundling requirements where – as at 3 September 2009 – TSOs belonged to a vertically integrated undertaking, and the structure of the TSO and the regulatory framework guarantee more effective independence than under the ITO model. The Third Gas Directive obliges undertakings to be certified by the competent regulatory authorities of the member states before they are approved and designated as a TSO. Member states notify their draft certification decisions to the European Commission (the Commission), which issues an opinion on their compliance with the unbundling rules that national regulators are required to take into account in their final certification decisions. In the exceptional case of a deviation from one of the three unbundling models, the national regulator must comply with the Commission decision.

If certification is requested by a TSO that is controlled by a company from a non-EU country, or a non-EU entity acquires control over an EU TSO (third-country clause), certification shall be refused not only in cases of non-compliance with the unbundling rules, but also if a certification would put at risk the security of energy supply of the European Union or the member state concerned.

The Third Gas Directive further requires gas companies that own storage facilities to establish at least a separate business unit responsible for storage (storage system operator) and to keep separate accounts for it. In addition, storage operators that are part of vertically integrated undertakings with transmission activities must be legally and organisationally unbundled from supply activities.

Exemptions from the unbundling rules can be granted for a defined period of time in the case of major new gas infrastructure (ie, interconnectors, liquefied natural gas (LNG) and storage facilities), or significant increases of capacity in or modifications to existing infrastructure. These exemptions are subject to review by the Commission.

Cyprus, Luxembourg and Malta are expressly exempted from the above TSO unbundling rules. Exceptions were originally also foreseen for Estonia, Finland and Latvia until any of their systems are interconnected to the systems of any member state other than Estonia, Finland, Latvia and Lithuania. However, these derogations have become obsolete, as all three states have introduced ownership unbundling rules by now. Temporary derogations from the unbundling rules are available for member states qualifying as an emergent market or having substantial problems in a geographically limited area.

Recent amendments to the Third Gas Directive now extend the unbundling rules to gas transmission lines to and from third countries. For transmission lines completed prior to 23 May 2019, member states may grant derogations from the unbundling rules.

Regulatory framework

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

Authorisations for the construction, ownership, operation and interconnection of natural gas transportation pipelines and storage are granted at the national level subject to the minimum requirements of the Third Gas Directive. Further to the unbundling requirements, the Third Gas Directive requires transmission system and storage operators to operate in a secure and reliable, transparent and non-discriminatory manner. This includes the obligation to build sufficient cross-border capacity to integrate European transmission infrastructure. Under the Security of Supply Regulation (with limited exceptions for Luxembourg, Slovenia and Sweden), member states are obliged to implement minimum standards to ensure that transportation pipelines and storage facilities (and other gas infrastructure) are able to satisfy total gas demand during periods of exceptional gas demand in the event of a disruption of the single largest infrastructure. It also requires that gas companies are obliged to officially notify national authorities about major long-term supply contracts that may be relevant for security of supply.

The Third Gas Directive also requires that refusals to grant an authorisation must be reasoned and subject to appeal before an independent judicial body. In addition, undertakings must be certified before they are approved and designated as TSOs.

Land 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?

EU law does not regulate national systems of land ownership. The transfer of land rights is subject to national law only.


How is access to the natural gas transportation system and storage facilities arranged? How are tolls and tariffs established?

The Third Gas Directive separately regulates third-party access to transmission (and distribution) systems and third-party access to storage facilities.

Third-party access to transmission (and distribution) systems must be granted to all eligible customers on the basis of objective, non-discriminatory criteria and approved published tariffs (regulated access). The Gas Regulation stipulates additional detailed requirements governing third-party access to transmission networks. To facilitate the shippers’ effective access to multiple transmission networks, Regulation (EC) No. 715/2009 (the Gas Regulation) sets out minimum requirements for:

  • access tariffs, which must be subject to approval by national regulators, transparent and reflect actual costs (but may provide for an appropriate return on investment);
  • services to be provided by TSOs, including long-term and short-term contracts, and interruptible transmission;
  • relocation of unused capacity and physical congestion;
  • transparent, non-discriminatory and effective balancing systems (as set out in the Commission’s EU-wide Regulation (EU) No. 312/2014) (Network Code on Gas Balancing);
  • secondary trading markets for capacity in transmission systems; and
  • auctions for the allocation of capacity at relevant interconnection points and cross-border (bundled) products to be offered (as set out in the Commission’s EU-wide Network Code on CAM).


Additional requirements are set out in the non-binding framework guidelines of the Agency for the Cooperation of Energy Regulators. They provide a minimum set of rules regarding:

  • capacity allocation at interconnection points;
  • gas balancing (including network-related rules on nomination procedures, rules for imbalance charges and rules for operational balancing between TSOs’ systems);
  • interoperability and data exchange for European gas networks (including minimum requirements for interconnection agreements between adjacent TSOs, the use of units such as energy, volume, pressure and gross calorific value, gas quality and odourisation); and
  • harmonised transmission tariff structures.


Third-party access to storage facilities (including linepack) must be granted either on the basis of regulated or negotiated access. Regulated access allows eligible customers to storage or linepack on the basis of published tariffs. Negotiated access involves free negotiations on access terms with the storage system operator (however, storage operators must annually publish their main commercial conditions for the use of storage).

The Third Gas Directive permits the refusal of third-party access to gas transmission and storage services where there is a lack of capacity, where access would prevent the undertaking from carrying out public service obligations, and where serious economic and financial difficulties with take-or-pay contracts would arise.

In the case of upstream transportation systems, third-party access may be refused on grounds of:

  • technical incompatibility;
  • difficulties that cannot reasonably be overcome, and that could prejudice current and planned production of hydrocarbons;
  • the need to respect reasonable needs of the network owner or operator; and
  • the interests of other users.


Exemptions from the third-party access rules can be granted for a defined period of time in the case of major new gas infrastructure or significant increases of capacity in or modification to existing infrastructure (subject to review by the Commission). Exceptions can be granted to member states (except for storage) as long as they are considered emergent markets (subject to review by the Commission). Recent amendments to the Third Gas Directive (Directive 2019/692) further allow member states to grant temporary derogations from third-party access for transmission lines to and from third countries that were completed prior to 23 May 2019.

Interconnection and expansion

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

The Third Gas Directive provides that, in the event that third-party access is refused based on lack of capacity or a lack of connection, the relevant member state may require that the system operator makes the necessary investments in capacity if it is economic to do so or if a customer is willing to pay for them. It further provides that, in circumstances where no further authorisations to build and operate distribution pipelines are granted, member states must require the system operators to invest in incremental capacity if requested. The terms under which such expansions may be required are set out in national legislation.

There have also been attempts both at the EU and national level to characterise refusal to expand transmission infrastructure (strategic underinvestment) as abusive behaviour violating article 102 of the Treaty on the Functioning of the European Union (TFEU). In a recent case against Romanian TSO Transgaz, for instance, the Commission alleged that, among other practices, Transgaz’ underinvestment or delay in the building of gas infrastructure formed part of a strategy to restrict gas exports from Romania to other member states and violated article 102 TFEU. In March 2020, the case was closed subject to commitments, which included Transgaz’ commitment to achieving infrastructure works at three interconnection points to allow for certain minimum firm capacities for third parties. In the ENI case (2010), the Commission took the view that ENI’s decision to limit investments in its international transmission pipelines, Trans Austria Gas, Trans Europa Naturgas and Transitgas, potentially constituted an abuse. Similarly, the Commission looked into GDF’s refusal to invest in additional import capacity at the Montoir de Bretagne LNG terminal in France (2009). The Commission did not formally conclude that these practices constituted an infringement in the Transgaz, the ENI and the GDF cases, as all were settled by way of commitment decisions; ENI, for instance, was required to divest its shares in the international transport pipelines to Italy. At the national level, the Italian competition authority went further in 2006 and found that ENI had abused its market position by discontinuing works on the expansion of a main import pipeline into Italy. In this case, ENI was fined and ordered to provide third-party access to expanded capacity in the pipeline.


Describe any statutory and regulatory requirements applicable to the processing of natural gas to extract liquids and to prepare it for pipeline transportation.

The extraction and processing of natural gas liquids is not regulated at the EU level.


Describe the contractual regime for transportation and storage.

The content of transportation and storage agreements is not specifically regulated at the EU level, subject to the constraints of the Third Gas Directive and generally applicable EU competition rules.