The Belgian natural gas market

Some 17 billion cubic metres of natural gas a year are currently consumed in Belgium. Natural gas as a proportion of primary energy consumption in Belgium stands at around 23 % (in Germany it is approximately 22 %). The natural gas comes from Norway, the Netherlands and Algeria. Belgium also gains important access to Russian gas via the WINGAS infrastructure, which is connected at Eynatten/Aachen with the Belgian natural gas grid. A total of around 2.5 million customers used natural gas last year; approximately 100,000 of these customers were from business and industry. The total number of customers increased by approximately 5 % in comparison with 2001. The Belgian pipeline system is some 56,000 km long. Approximately 3,700 people are employed by the Belgian gas industry.

Liberalisation

The liberalisation process in Belgium was accelerated by a law which came into effect on July 16, 2001. The so-called eligibility criteria were reduced, thus increasing the number of customers permitted to freely choose their natural gas supplier. The rate at which the Belgian gas market is being opened up, however, varies by region: in Flanders, where some 60 % of the 2.5 million natural gas customers are based, all natural gas consumers already have a free choice of supplier. In the remaining regions the gas market has been liberalised for large and medium-sized consumers. Customers with an annual consumption of 5 million cubic metres or more are free to choose their supplier. Further liberalisation of the market for industrial and business customers in the regions of Wallonia and Brussels is set to come into effect as of January 1, 2004. The Belgian market will then be 90 % open in the non-household segment.

The legal framework thus allows European natural gas companies, one of these being WINGAS, access to the Belgian gas market, where, however, business continues to be dominated by the Belgian company Distrigaz, which has a market share of well over 90 %. Due to the still prevailing climate of uncertainty with regard to opening the gas market, the activities of other companies are extremely restrained. Even if the tariffs for use of the transportation network are known, there still remain numerous problems with regard to the practical realisation of network access. Here it is particularly relevant to mention the handling of different qualities of natural gas: competitors are rendered practically powerless to negotiate agreements on adjusting gas quality as they do in other European markets. This includes investments in so-called conditioning units, which are used in Germany, for example, to solve these kinds of problems. It is only by dissolving this so-called quality demarcation that consumers of low-caloric natural gas in Belgium will also be able to freely choose their supplier. A further obstacle is posed by the great difficulties which lie in erecting new competing natural gas pipelines. Numerous hurdles continue to impede free and fair competition and thus also effective measures to increase supply reliability.

Regulatory authorities

The "Commission de Régulation de l'électricité et du gaz" (CREG) is the central regulatory organ for the gas and electricity market in Belgium. CREG is an independent authority which was established on April 29, 1999 to control and regulate the Belgian gas and electricity market. CREG consults public institutions and monitors compliance with laws and regulations. At the regional level, this work is carried out in Flanders by VREG ("Vlaamse Reguleringsinstantie voor de Elektriciteits- en Gasmarkt") and by CWAPE ("Commission wallone pour l'Energie") in Wallonia. The "Conseil Economique et Social de la Région de Bruxelles-Capitale " is responsible for the Brussels region.

Outlook

To what extent the objectives of market liberalisation laid down by Belgian lawmakers really will lead to new freedom of choice for customers depends ultimately and quite decisively on whether the concrete market access barriers still currently in existence for new providers are removed as soon as possible. This is in the hands of the Belgian monopoly commission and regulatory authorities, but the onus is also on the EU Commission to act.

P-6a - 08/26/03

Contact
Michael Sasse
fon: +49 561 301-3301
fax: +49 561 301-1321
press@wingas.de

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