activity report - Eurogas

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ACTIVITY REPORT 2 14-2 1

Eurogas is the association representing the European gas wholesale, retail and distribution sectors. Founded in 1990, its members include 43 companies and associations from 24 countries. Eurogas represents the sectors towards the EU institutions and, as such, participates in the Madrid Gas Regulatory Forum, the Gas Coordination Group, the Citizens Energy Forum and other stakeholder groups. Its members work together, analysing the impact of EU political and legislative initiatives on their business and communicating their findings and suggestions to the EU stakeholders. The association also provides statistics and forecasts on gas consumption. For this, the association can draw on national data supplied by its member companies and associations. © Eurogas, June 2015 − All rights reserved

Publisher : Eurogas, Brussels Design and production by www.generis.be Photos credits : Istockphoto (p. 16, p.22); Shutterstock (p. 11, 12, 13, 15, 17, 18, 19, 21, 22); all other photos are provided by Eurogas

CONTENT President’s Message

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Secretary General’s Message

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25 Years of Key Milestones in the Gas Industry

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Timeline of Activities 2014-2015

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EUROGAS POLICY AREAS

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Energy Union – What will it mean? 2030 – Path yet to be traced Wholesale market – Moving closer to completion Retail market – Decentralisation and customer focus DSOs – In the spotlight Energy trading – Ensuring transparency and integrity Statistics – Providing key data

GAS ADVOCACY

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GasNaturally – Speaking with one voice Communications activities – Reaching out, building trust

Eurogas Members

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E xecutive committee Secretariat staff

Organisational Structure

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Eurogas Membership

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President’s Message Gertjan Lankhorst, President

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This annual Activity Report is presented to you in a special year: in 2015 Eurogas celebrates its 25th anniversary. In the decades that lie behind us, many things have changed, but the pivotal role of gas has not. On the contrary, its share of the world’s energy markets has grown. Gas has been a success story in Europe, despite the recent decline of sales volumes. In 2014, gas accounted for 23% of Europe’s total energy demand and I don’t expect that share to change fundamentally any time soon. Eurogas was founded at the beginning of a new era, shortly after the fall of the Berlin Wall, when market liberalisation and privatisation had become the corner stones of Western economic policy. A lot has been achieved since then, both in the energy market in general and the gas market in particular. Here, the European Union has proved its worth and indispensability. The first of three energy legislation packages dates back to 1998. The first Directive (No. 98/30/EC) concerning common rules for the internal market in natural gas came into force in that same year. A year before, the European Commission had published a Communication on the energy dimension of climate change. This does not only prove the foresight of the European institutions, it also underlines how difficult these issues are. Almost twenty years later we are still struggling with important aspects of them. Since then, the European Commission, the European Parliament and the Council have agreed on a number of Directives and Regulations. The Commission has also brought out dozens of Communications and papers on these very subjects. For instance, last year saw Communications on energy efficiency and its contribution

Free markets, competition and a level playing field for all will remain the best way to tackle the energy challenges that lie ahead of us.

to energy security; on the policy framework for climate and energy in the period 2020-2030; and on a European energy security strategy. The recent concept of an Energy Union, deals with all of these themes together. So what’s new, one might think? Essentially not much. After approximately 50 years of using natural gas in ever greater quantities, we still are, and will be, largely dependent on gas to meet our energy needs and consequently to maintain our prosperity for some time to come. We are facing familiar challenges: managing energy security while curbing emissions that cause human-induced climate change and have an impact on local air quality. Although a lot has already been accomplished, we have only just begun the transition to a fully sustainable energy economy. Since its foundation, Eurogas has been closely involved in the debates surrounding energy transition, particularly, of course, when it has an impact on the (future) position of gas in the energy mix. This involvement is based on a firm belief in the benefits of gas, both in economic and ecological terms and in free energy markets to create cost-efficient security of supply. In that respect, a lot still has to be done. But the concern for energy security and climate change should not distract us from the path we have been on since 1990. Free markets, competition and a level playing field for all will remain the best way to tackle the energy challenges that lie ahead of us.

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Secretary General’s Message Beate Raabe, Secretary General

It’s confirmed. The European Council decided that the EU will continue to work towards lower greenhouse gas emissions (GHGs), more renewables and higher energy efficiency, at least until 2030 and whatever the outcome of the global climate talks in Paris in November/December 2015. The period after 2030 may be more uncertain, but the EU can be relied upon to continue to build on the two decades of hard work, including the achievement of a 40% reduction in GHGs, a 27% market share of renewables and 27-30% higher energy efficiency. Counting on the commitments of EU Member States, by 2030 the EU electricity and gas market should be fully interconnected, integrated and thus secure and competitive. This would be the ideal framework for the transition to a low-carbon energy system featuring centralised as well as decentralised energy production, and serving industrial and domestic customers who will consume, produce and help balance the system according to their preference. In power generation and heating, gas can assert a vital balancing role, backing up renewables in daily and seasonal peak periods. In this context I would like to draw your attention to the Eurogas video clip “Smart gas: smart future” which is available on the website. In transport, gas can compete easily with electricity in cars. It is unbeatable for heavy-duty trucks, coaches, river barges and ships.

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In power generation and heating, gas can assert a vital balancing role, backing up renewables in daily and seasonal peak periods.

However, this bright future cannot be taken for granted. The Ukraine crisis has cast doubt on the reliability of rising imports as indigenous production declines. Therefore, Eurogas and its members need to make an extra effort to demonstrate the full potential and desirability of using gas in power generation, heating and transport, now and in the future. Squeezed economically between subsidised renewables and cheap coal, gas is faced with this additional challenge. For this reason and to open up the horizon for long-term measures, such as carbon dioxide capture and storage, it is important that the price of carbon dioxide allowances in the EU’s emissions trading system (ETS) will make a difference in the choice of fuel and that the ETS is revised to that end. It is also important that emissions trading is not distorted by subsidies and that the European Commission’s guidelines on State aid are strictly applied as a minimum. In non-ETS sectors, too, gas must be allowed to play the role that it deserves in supporting a secure, competitive and clean energy system. Eurogas will continue to work with its members and external stakeholders on forthcoming policy and legislative proposals to achieve a fully integrated low-carbon energy market. On this occasion, I would like to thank members, stakeholders and the Eurogas team for their excellent cooperation over the past year. It has been a pleasure working with you, and I look forward to further fruitful debate.

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25 years of key milestones in the gas industry opening up the market for the benefit of the customer began back in 1998: 1998 The First Energy Package Directive 98/30/EC of 22 June 1998 concerning common rules for the internal market in natural gas 2003 The Second Energy Package Directive 2003/55/EC of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC 2009 The Third Energy Package Directive 2009/73/EC of 13 July 2009 concerning common rules for the internal market in natural gas and repealing the Directives of 1998 and 2003 ACER established Regulation (EC) No 713/2009 of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators (ACER)

2002 Jean-Marie Devos takes over as Secretary General.

Regulation (EC) No 715/2009 of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005

2010 Jean-François Cirelli, Vice-Chairman and President of GDF SUEZ becomes the new President.

2014 Gertjan Lankhorst, CEO of GasTerra, is elected President.

improving infrastructure and facilitating cross-border trade were at the heart of the following regulatory changes: 2013 Infrastructure Package Regulation (EU) No 347/2013 of 17 April 2013 on guidelines for trans-European energy infrastructure and repealing and amending earlier legislation Projects of Common Interest Regulation (EU) No 1316/2013 of 11 December 2013 establishing the Connecting Europe Facility, amending Regulation (EU) No. 913/2010 and repealing Regulations of 2007 and 2009

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1990 Eurogas is established, replacing the informal grouping COMETEC-Gas (Committee for Economic Studies of the Gas Industry), a Brussels-based union representing the European gas industry. Juan Badosa, Chairman of ENAGAS, becomes the first President of the newly formed association. 1990 Peter Claus becomes Secretary General.

other key legislation and communications also had an impact on the gas sector, these included: 2003 Emissions Trading System Directive 2003/87/EC of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC 2009 Emissions Trading System Directive 2009/29/EC of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community 2011 Energy Roadmap 2050 Communication from the Commission 2012 Energy efficiency Directive 2012/27/EU of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC 2014 Climate and energy efficiency Communication from the Commission “A policy framework for climate and energy in the period from 2020 to 2030” Transport Transport Directive 2014/94/EU of 22 October 2014 on the deployment of alternative fuels infrastructure

2005 Gas Infrastructure Europe (GIE) established following progressive “unbundling” within the Eurogas Secretariat in the lead up to the Third Energy Package.

2011 Beate Raabe joins as Secretary General. 2011 Eurogas joins six other associations to launch the GasNaturally campaign.

security of supply has always been of paramount importance for our customers. but recent events in ukraine have pushed it higher up the agenda. 2004 Security of Supply Directive 2004/67/EC of 26 April 2004 concerning measures to safeguard security of natural gas supply 2011 Regulation (EU) No 994/2010 of 20 October 2010 concerning measures to safeguard security of gas supply and repealing Council Directive 2004/67/EC

On t h to en e road ergy unio n

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timeline of activities 2014-2015 2014 JUNE

JULY

SEPTEMBER

OCTOBER

19.06 Press release on “Interruption of Russian gas supplies to Ukraine: No immediate impact on EU customers”

16.07 Eurogas provides feedback to the European Commission (EC) review of Carbon Capture and Storage Directive (2009/31/EC)

Gas: the right choice for heating in Europe published

01.10 Press release on “Mild weather reduces demand in 2014, but gas remains strong in the heating market”

19-20.06 Eurogas General Assembly in Venice, Italy

23.07 EC publishes Communication on 2030 Framework for climate and energy policy

20.06 Gertjan Lankhorst elected new President of Eurogas

31.07 Eurogas publishes response to EC Consultation on Emissions Trading System (ETS) post-2020 carbon leakage provisions

20.06 Press release on “New Eurogas President: Gas remains a sustainable fuel”

02.09 European Energy Forum Debate “Renewables and gas – the perfect partners in heating”, sponsored by Eurogas

15.09 Eurogas publishes its views on the EC Communication on European energy security

13.10 Press release on “Eurogas urges European Council to agree a clear and predictable energy and climate policy” 13.10 EC publishes Communication on “Progress towards completing the Internal Energy Market”

24.06 Eurogas workshop “The role of gas in the evolution of heating and cooling”

2015 JANUARY

FEBRUARY

16.01 Press release “Eurogas congratulates ACER on the revised Gas Target Model”

03.02 Eurogas Energy Podium Debate: What will the European Energy Union look like?

20.01 Eurogas organises joint high-level event with EURELECTRIC on Market Stability Reserve 20.01 Press release with EURELECTRIC on “Market Stability Reserve: Europe needs a strong signal on carbon price” 22.01 Eurogas publishes its views on the Energy Union and Enhancing Supply Security

06.02 Press release on “Eurogas supports an Energy Union” 23.02 Joint statement published with EPIA, EURELECTRIC and EWEA on the Energy Union 24.02 European Parliament issues press release on “Environment Committee backs ETS market reserve, advocates early start”

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25.02 EC issues Communication on “A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy” 25.02 EC publishes a press release on “Energy Union: secure, sustainable, competitive, affordable energy for every European” 25.02 Press release on “Eurogas applauds positive moves, yet remains cautious, as Energy Union takes shape” 25.02 GasNaturally press release on “Energy Union a clear step forward, concrete action now needed” 27.02 Eurogas Consultation Response on the future role of DSOs

NOVEMBER

DECEMBER

12.11 Eurogas publishes its views on the EU Emissions Trading System and the Market Stability Reserve

Eurogas Statistical Report 2014 published

18.11-26.11 GasNaturally Gas Week

Gas: the right choice for heating in Europe

11.12 Eurogas workshop “Gas – now and in the future”

25.11 Eurogas opening ceremony of GasVisually Exhibition in Strasbourg STATISTICAL REPORT 2 14

26.11 Ten European gas & electricity associations call for a comprehensive implementation of the EU anti-VAT-fraud package by all 28 Member States

MARCH

APRIL

MAY

JUNE

03.03 Eurogas Annual Conference “The consumer at the centre of the energy system”

02.04 Response to EC consultation on the review of Regulation on security of gas supply

21.05 GasNaturally Gas in Heating Workshop

02.06 Eurogas response to EC Mid-Term Review of White Paper on transport

15.04 Eurogas crossassociation roundtable on heating for the residential and commercial sectors

03.03 “Smart gas: smart future” animation released 04.03 Eurogas response on Energy Community consultation

17.04 Joint statement on MiFID II Level 2 and energy trading

23.06 GasNaturally Member States Forum 25-26.06 Eurogas General Assembly in Berlin, Germany 30.06 Eurogas Position Paper on a Heating and Cooling Strategy for Europe

28.04 Eurogas Position Paper on Unallocated Allowances in the Emissions Trading System

18.03 GasNaturally letter to Heads of State on six proposals to achieve a true Energy Union 25.03 Press release on “New Eurogas data confirms dynamic EU gas market”

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F

250 MILLION

FOCUS

Europeans enjoy a stable gas supply to heat their homes and increasingly fuel their cars.

CNG

EUROGAS POLICY AREAS The Eurogas key principles for Europe’s Energy Union: 1 Design a cost-efficient, market-based transition to a sustainable low-carbon energy mix, with gas as a vital element.

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2 Implement and improve market mechanisms to deliver security of supply.

3 Deliver a competitive energy system that benefits customers.

energy union What will it mean?

Gas can deliver affordable, flexible and efficient solutions for the benefit of Europe’s customers.

Eurogas in its policy advice places customers at the heart of the energy market

Eurogas welcomes the Commission’s increased focus on energy issues, reflected in the European Union initiative in February 2015 after an open debate. The Energy Union concept supports the objectives of a competitive, secure and sustainable energy market essential for the health of the European economy, and the well-being of millions of consumers across Europe. The interlocking dimensions of the framework strategy should reinforce policy in favour of a better functioning market and positive investment climate for companies. This will make it easier to build the cross-border connections needed to boost further market integration and regional cohesion, bedrocks of supply security. At the same time greater cooperation and coordination among EU Member States will drive the low-energy transition, in which gas should play a significant role, through effective, market-based instruments designed on a technology-neutral basis. Therefore Eurogas also welcomes the assurance that the Emissions Trading System (ETS) will play fully its role as a technology neutral cost-effective driver for low-carbon investments. The increased emphasis on innovation in energy systems supports the development of improved and new products and services for gas customers in Europe, and should underpin the development of holistic energy systems, with gas delivering affordable, flexible and efficient solutions.

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EUROGAS Policy Areas

An energy union has potential to help steer a coherent and consistent implementation of energy policy at national, regional and European level.

Trust the market. Market fundamentals are not only the most efficient force to secure supplies but also pave the way to a low-carbon society. Gertjan Lankhorst Eurogas President

It is important that citizens are at the core of the Energy Union, just as Eurogas, in its policy advice, places customers at the heart of the energy market, recognising that they should have the tools and information enabling them to make energy choices that meet their needs. The framework strategy implicitly recognises that Europe requires diverse and resilient gas supplies to optimise overall energy security. Therefore Eurogas welcomes the policy signals for a more united EU voice in global energy policy. The objective should be to use global market opportunities to keep energy affordable and secure, while developing indigenous and sustainable resources. In the coming months Eurogas will contribute to the debate on the Energy Union work programme seeking to ensure that the approaches to security of supply and sustainability remain essentially market-based, solidarity does not impair competition or commercial confidentiality, and in external policy the appropriate boundaries are observed between a diplomatic framework and business decisions.

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2030 Path yet to be traced

In the past year, the Eurogas Strategy Committee has focused its efforts on the 2030 framework on climate and energy, which has largely been embraced by the wider Energy Union package. Now it is therefore a good time to reflect on the outcome of the European Council’s decision on this package and consider where it might lead the gas industry in the future. The framework was a step in the right direction in that it sought to put the binding greenhouse gas (GHG) emissions target of at least 40% as the cornerstone of the package. Looking at the three targets forming the basis of the Council’s decision on the framework, where do we stand now?

A binding EU-wide GHG reduction target of at least 40%, broken down into national targets The European Commission (EC) has launched the review of the Emissions Trading System (ETS) Directive No. 2009/29/EC that will facilitate the achievement of this new target in the ETS sector. Previous analysis in the Eurogas Roadmap 2050, published in 2011, demonstrated that this target could be reached by greater use of gas. For non-ETS sectors, a considerable number of policy measures in detailed areas will be required to deliver the target.

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EUROGAS Policy Areas

GAS FOR A CLEANER ENERGY SUPPLY  y switching all coal power plants B to gas, the EU would reduce its carbon dioxide (CO2) emissions by over 400 Mtoe, cutting CO2 emissions by 10%.

LNG

 sing liquefied natural gas (LNG) U as a fuel for shipping reduces sulphur oxide (SOx ) emissions by 99%, nitrogen oxide (Nox ) by 60% and CO2 by as much as 25%.1

It is important to acknowledge the significant role that gas can play and to ensure that one technology is not favoured over another, resulting in a less efficient outcome. With the eyes of the world on the COP 21 negotiations in Paris this autumn, we may find Europe strengthening its obligations in the reduction of GHGs.

Gas can play a key role in helping Europe to achieve all three pillars of the 2030 framework for climate and energy by reducing GHGs, delivering energy efficiency and working together with renewables. Theo Ebels GasTerra Chair of the Strategy Committee

A binding EU-wide target for the market share of renewable energy sources of at least 27% without pre-determined national targets The upcoming review of the Renewable Energy Directive No. 2009/28/EC and electricity market design are likely to pose some challenging questions for Eurogas and others to consider, with issues such as capacity payments and priority dispatch likely to be on the table. The outcome of these elements of work could determine the success of Europe in achieving its renewables target. For Eurogas, it will be important that the effect of these pieces of work does not distort the market, particularly the ETS, inevitably leading to the need for further interventions in the future.

An indicative EU-wide target for energy efficiency of at least 27%, to be reviewed in 2020 for an increase to 30% CNG Compressed Natural Gas (CNG) vehicles reduce emissions by: 97% CO, 25% CO 2 , 60% Nox , 75% non-methane hydrocarbon.2

Energy efficiency has recently received a renewed push and one of the key challenges for Eurogas will be to articulate how highly efficient gas-based appliances have contributed and will continue to contribute to achieving the EU’s objectives on energy efficiency. Eurogas will continue to contribute actively to the debate on the 2030 framework by setting out the measures it sees for energy efficiency in the non-ETS sectors such as heating and transport. A key value that gas offers is that it can help to reduce GHG emissions, deliver on energy efficiency and partner with renewable energies. 1: GasNaturally “Fast facts cards”. 2: GasNaturally Air Quality 2013 Infographic. Source: The U.S. DoE Alternative fuels & Advanced Vehicles Data Centre: (International Gas Union: News, views and knowledge on gas – worldwide, 2010 pg. 6).

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wholesale market Moving closer to completion

Better cooperation is needed among TSOs and NRAs to improve regulatory approaches and cross-border flows.

The wholesale market in gas improved in 2014, and Eurogas continues to participate in discussions on the framework conditions, to deliver further improvements. This past year saw the adoption of further binding rules aimed at enhancing operational cooperation among transmission systems operators (TSOs), especially the efficiency of cross-border trade. The market worked efficiently in most of Europe and hub prices continued to converge. It was positive that there was negligible impact last winter on trading prices, despite concerns about the tensions between Russia and Ukraine. Therefore, although 2014 did not meet the political goal of completing the internal energy market, there is a growing confidence in its improving dynamics. Nevertheless, there remains scope for further progress, notably by further enforcing the Third Energy Package (Directive No. 2009/73/EC), and the rules in place. In addition, better cooperation among National Regulatory Authorities (NRAs) is needed in order to minimise inconsistent regulatory approaches on either side of an interconnection point as this leads to sub-optimal cross-border flows. Furthermore, capacity at some interconnection points is expensive relative to trading spreads, raising questions if more should be done in this area to boost liquidity.

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EUROGAS Policy Areas

Diversification of gas supply sources and routes can benefit the purchasing power of European customers.3

Benefits from the wholesale market need to filter down to customers in the retail market, and Eurogas is working hard to make this happen. Friedrich von Burchard Thüga Chair of the System Users Committee

Transporting gas via pipeline throughout the EU can be up to 20 times cheaper than transporting the same amount of energy in the form of electricity. It also has no visual footprint on the landscape.4

The System Users Committee therefore continues to consider longer term fundamental issues on the transportation model and capacity use, including stranded costs. The proposed Code on Harmonised Transmission Tariff Structures for Gas, currently subject to vigorous debate, may provide some answers, but more may need to be done. The System Users Committee is ready to engage in further discussions, in the first place to analyse and identify remaining problems, then to consider how to address them. Eurogas considers that the revised Gas Target Model (GTM) of ACER, which occupied the Committee’s attention since autumn 2013 proved a useful exercise and its recommendations provide a good basis for future market development. Eurogas supports in particular the GTM’s recognition of the need for tailored actions to be developed on a cost-efficient basis to bring markets closer together. Eurogas considers that the GTM, if properly followed through, will support further necessary cross-border cooperation. NRAs and TSOs should cooperate more effectively to bring added-value to the implementation of market legislation. 3: GasNaturally “Fast facts cards” − Gas for competitiveness. 4: GasNaturally “Fast facts cards” − Gas for competitiveness.

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retail market Decentralisation and customer focus

Eurogas advocates a robust competitive market as the best means to ensure customers’ interests are met, including the most vulnerable.

A number of drivers are having an impact on future retail market development, raising issues that Eurogas is also addressing.

The retail market is evolving quickly and the Supply and Markets Development Committee is addressing ways to improve customers’ experience of and trust in today’s market, as well as challenges that the future energy market will bring. There is consensus that customers should not only benefit more from a competitive market as is the case in many Member States today, but also the policy framework and commercial incentives should enable them to tailor their energy use more to their specific requirements. A range of issues needs to be addressed to deliver on these immediate and longer term objectives. A pre-requisite is that the customer should be able to choose a supplier in a competitive market. Therefore Eurogas continues to call for the progressive removal of regulated prices, especially when they are below cost, as these distort the market. In a functioning market, customers should have access to quality pre-contractual information, allowing them to compare offers and enter into well understood contracts. The Committee engages in dialogue with regulators, customer associations and other stakeholders to provide input on all related work.

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EUROGAS Policy Areas

600 BUSES CNG The city of Lille is currently running 600 buses on gas.

Eurogas members recognise that technological innovation is allowing consumers to interact with their energy in whole new ways. The liberalised, competitive market is the best way to ensure consumers benefit from these new opportunities. Thomas Lowe Energy UK Chair of the Supply and Markets Development Committee

120 MILLION

Gas is supplied to over 120 million customers across the EU-28 through a network of pipelines which is more than 2 million kilometers long.

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The Supply and Markets Development Committee will continue to contribute to the work of the European Commission that addresses the issues of customers as market actors, e.g. producers and managers of energy, and also of vulnerable customers, who are not able to pay their energy bills. Eurogas continues to advocate a robust market as the best means to ensure customers’ interests are met. In addition, Eurogas participates in more technical work on flexible supply in the energy market, mostly relevant to electricity, but with implications for gas market development. As consumers become more involved in the energy market, they may have to deal with increasingly complex commercial relationships. The framework governing these relationships should be fair, clear, and balanced. Eurogas looks forward to participating in the future work on the New Deal for Consumers, a cornerstone of the Energy Union.

DSOs In the spotlight

The gas industry is keeping pace with customer choice, notably in the heating sector with new, modern appliances to meet their needs.

It’s fair to say that the “spotlight” in the energy markets has turned downstream on the distribution systems operator (DSO) and their future role in an evolving retail market. The challenges that the Distribution System Operators Committee worked on this year can largely be captured by assessing the question – “what role can the DSO play in facilitating a competitive, innovative and affordable retail energy market?” A key element of this work was contributing towards the Eurogas brochure on “Gas: the right choice for heating in Europe”. As this publication highlighted, the gas industry is keeping pace with customer choice, notably in the heating sector with new, modern appliances to meet their needs. It was a relatively quieter period in terms of European network code development with work focusing on the Interoperability and Data Management Code. However, this provided the opportunity for Committee members to share and review each other’s experiences on implementing the recently developed Gas Balancing Network Code. This process of sharing lessons learnt and best practices among Committee members has been a strong feature of this year’s work, covering a diverse range of topics from biogas, gas quality, power to gas and many other items.

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GAS

EUROGAS Policy Areas

 as is the choice in G the EU for heating homes and businesses.

Gas emits the least amount of carbon dioxide (CO2 ) when compared with heating oil, coal or liquefied petroleum gas (LPG).

Using new gas technology in heating will save on energy, reduce greenhouse gas emissions (GHG) emissions.

The Council of European Energy Regulators (CEER) launched consultations on both data management and the future role of the DSO, providing an opportunity for the Committee to find common positions on a range of topics. In responding to the consultations, the Committee also set out its views on what a smart energy home means in a gas context.

The groundwork for many European policy developments in the downstream gas sector has now been prepared and our Committee has been actively involvedwe must continue to cooperate and collaborate to find customer focused solutions. Eva Hennig Thüga Chair of the Distribution Committee

20%

The Committee contributed to the work of the Commission’s expert group on smart grids and to the preparation of reports on both tariffs and integrating flexibility into the market. It is increasingly clear that the issues in the downstream sector of the gas industry are similar to those in the electricity sector, and for this reason, over the past year, the Committee has strengthened its ties with other DSO associations. The Committee has also entered into dialogue with many other associations such as the Natural Gas Vehicle Association, the European Biogas Association and Marcogaz, to name a few. With the upcoming Commission Communications on both the retail market, and the heating and cooling sector, the Committee will focus on setting out the advantages of gas as a fuel of choice for the consumer, while supporting these messages with clear evidence of the new and exciting technologies that are emerging, such as gas heat pumps and fuels cells. We also expect that even greater cooperation with other partners will be needed, not only with our supplier colleagues in Eurogas but also transmission system operators and the wider industry. The Committee attendance has notably increased in recent months with new members joining and additional activities to be addressed.

The latest gas-condensing boilers are over 20% more efficient than traditional boilers, while gas heat pumps are up to 90% more efficient.5

5: GasNaturally “Fast facts cards” − Gas for a cleaner energy supply.

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energy trading Ensuring transpa­rency and integrity

There was a considerable period of prepa­ ration, involving discussions with stake­ holders, following the entry into force of the Regulation on wholesale energy market integrity and transparency (No. 1227/2011), called REMIT, in November 2011, leading up to the publication of the REMIT Implementing Acts early in 2015. This secondary legislation provides the framework for monitoring wholesale markets at European level. The objective is to prevent market abuse, by providing a reporting system that should identify any problems and allow for appropriate actions to be taken.

Robust enforcement and implementation of REMIT should ensure transparency and integrity in the energy markets.

The Transparency and Market Integrity Task Force contributed comments throughout the process on the draft Implementing Acts and background documents from the Agency for the Cooperation of Energy Regulators (ACER), giving advice on a range of related legislative and practical issues with the objective of ensuring an organised and clear system for market participants. It is, however, a very complex area of activity, especially as market parties grapple with understanding the new requirements. Therefore it is important that ACER is adequately resourced to meet this new area of responsibilities, to ensure organisational credibility and support trust in the market.

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EUROGAS Policy Areas

Open, robust, liquid and transparent energy markets, realised by the integration of networks and a supportive regulatory framework, are key to providing secure, sustainable and competitive energy supplies to end customers.

Robust enforcement and implementation of REMIT should establish its widespread recognition as the primary framework for ensuring transparency and integrity in the energy markets. Therefore Eurogas has separately and in cooperation with other energy associations expressed its concerns that planned interpretation of provisions in the Markets in Financial Instruments Directive II (MiFID II) (No. 2014/65/EU) may trigger unintended and disproportionate consequences for the energy sector, especially arising from the licensing requirements of MiFID, and other financial instruments legislation.

Valeria Palmisano Edison Chair of the Transparency and Market Integrity Task Force

97 mcm

Eurogas is concerned that high costs and administrative burden could discourage market participation, reducing liquidity, and bringing adverse consequences for the development of competition.

European natural gas storage working capacity in 2013 was nearly 97 million cubic meters.

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0.4%

statistics Providing key data

STATISTICAL REPORT 2 14

Increasing diversification of supply, higher concentrations of hub trading and swift demand-side changes can be very positive signs that gas is playing its part in achieving the internal energy market. At the same time these changes pose challenges for statistical analysis in the European energy market, and offer opportunities for the Statistics Committee to continue to provide relevant information to our members and stakeholders, as well as support the Eurogas messages. In this context, the Statistics Committee is increasing its focus on demandside data, understanding and conveying the importance of emerging gas users, and uses. The Forecasting Task Force is also working full steam ahead to embody the association’s policy messaging and visionary thinking in a Eurogas Roadmap, set to be published next year. In so doing, numbers are not just left to themselves, passively. Rather, data is employed to leverage our messages with strong fact-based support, not only for historical and present accounting, but for future planning and the development of new opportunities.

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23% of Europe’s primary energy consumption in 2013, roughly the same as in 2012.

NATURAL GAS SALES BY SECTOR, 2012 AND 2013 TWh

2 102

2 160

1 540 1 551

1 269 1 130

European stakeholders are finding it increasingly difficult to obtain good data. This only increases the importance of our work on statistics here at Eurogas. Haris Aliefendic OMV Chair of the Statistics and Forecasting Committee

of our gas in 2013 was produced in the EU and Norway.

16.2 19.9 2012 2013

2012 2013

2012 2013

Units: terawatt hour (gross calorific value). Note: Statistics cover EU28. Source: Eurogas Statistics Report 2014.

+18.4%

-12.3%

Transport was the highest growth area for gas in 2013, at an increase of 18.4%, compared with 2012.

Household, commercial and industrial use saw meagre growth, while gas use in the power sector dropped by 12.3%.

Over

40%

of gas in the EU supplies the residential and the commercial sectors. The majority of which is used for heating.

There were

1.1 million natural gas vehicles in the EU in 2013.

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2012 2013

700 000 more gas customers were connected to the gas grid in 2013, compared with 2012.

Italy still leads the way with

76%

of the EU’s fleet of natural gas vehicles in 2013.

SHARE OF PRIMARY ENERGY CONSUMPTION BY FUEL IN THE EU-28, 2013 0.1 electricity net imports 0.8 others

other renewables 13.4 hydro 13.4

33.1

nuclear electricity 13.4

NATURAL GAS

30 countries provide Europe’s gas.

solid fossil fuels

17.2

23.1

oil

The flexibility of gas is becoming even more robust with new storage facilities being completed.

In 2013 +6

Our stakeholders are now reassessing the future energy system. Our efforts must therefore result in prudent, pragmatic, and fact-based calls for action to achieve our collective aim of a low-carbon society. Anne Braaksma

New storage facilities have been added to the EU portfolio.

14%

BREAKDOWN OF EU-28 SUPPLIES, 2013

trinidad tobago 0.5 libya 1 nigeria 1 5 qatar 8 algeria

russia

GasTerra Chair of the Forecasting Task Force

0.3 peru 0.1 oman 0.1 egypt 0.02 yemen 1 others 34

indigenous production

LNG In 2013, 14% of the EU’s net imports was made up of LNG.

27 21

45%

norway

55%

25

GAS ADVOCACY

GasNaturally objectives for 2015: 1 To promote the benefits of gas towards European Union policymakers by: emphasising benefits of gas across end-use sectors (power generation, heating, transport); highlighting the benefits of investment in domestic gas exploration and production and of the diversification of EU supplies; and continuing the dialogue with possible partners, such as those in the renewable energy sector, in order to find common ground.

26

2 To be a reference point for the associations’ internal and external stakeholders for the provision of factual information and data on all parts of the gas value chain, and to be a forum to exchange information between associations on their communication and advocacy activities.

The past year has brought with it a whole new set of challenges in gas advocacy. The European elections in May 2014 and new MEPs, the emphasis of the new Juncker Commission on Energy Union and events in Russia and Ukraine have meant that the gas industry has had to work even harder to reach out with clear, aligned messages to new stakeholders.

Speaking with one voice

Speaking with one clear industry voice has become even more important than ever before. Eurogas has therefore continued to cooperate with five other gas associations representing the entire gas value chain: European Gas Research Group (GERG), Gas Infrastructure Europe (GIE), the International Association of Oil and Gas Producers (IOGP), the International Gas Union (IGU) and Marcogaz. The GasNaturally initiative, now in its fourth year, was set up to complement the activities of these associations in advocating the benefits of gas in our energy mix. This year, the initiative has been particularly active in its external communications activities. November 2014, saw the return of Gas Week with the launch in Strasbourg of the new GasVisually exhibition, hosted by Ms Adina-Ioana Va˘lean, Vice-President of the European Parliament. Eurogas Secretary General, Beate Raabe, presented the keynote speech at the well-attended opening lunch.

A wise man once said ‘gas never sleeps’ – well the last year has certainly proved that. Anton Buijs GasTerra Chair of the External Communications Committee

New videos and an interactive game demonstrating the energy mix helped decision-makers in the European Parliament to understand the complexities of balancing energy supply and demand, and the need for all energies, including gas, to work together to ensure Europe meets its energy and climate objectives. A series of workshops on subjects such gas and Europe’s 2030 agenda; carbon capture and storage; and gas infrastructure and security of supply attracted a range of high-level speakers and participants. As we write, GasNaturally is currently preparing the 4th Member States’ Forum, a now well-established annual event that serves to generate debate among the representatives of Members States. This year’s Forum entitled “Gas for Europe: Building the Energy Union and Reducing Emissions” will be held in June and supported by the Latvian Presidency. This flagship event will gather industry experts, academics and policymakers in Brussels to discuss how gas can help achieve Europe’s ambitious climate and energy objectives. Aside from these key events, GasNaturally has also actively promoted the position of the gas industry through other channels including on Twitter, through press releases and by issuing a letter to the heads of Member States. With the increasing focus on downstream issues, GasNaturally turned its attention to the topics of heating, power generation and gas in transport. A series of workshops and events will continue to be rolled out throughout 2015.

27

communications activities Reaching out, building trust

With a new European Parliament and Commission in place by autumn 2014, Eurogas has placed renewed emphasis on raising awareness of the benefits of gas among policymakers.

Eurogas stepped up its external communications maintaining the visibility of gas in the debate with an even spread of activities throughout the year including: press releases; publications; events; workshops; interviews; articles; videos; and an increased presence on Twitter. Particular attention was given to highlight the benefits of using gas for power generation, domestic heating and transport. Below are some of this year’s highlights.

10 events organised in the past year

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The topic of gas in domestic heating attracted a large audience at the European Energy Forum dinner debate in the European Parliament, which was hosted by Eurogas at the beginning of September 2014. Gertjan Lankhorst highlighted that gas will remain an attractive fuel for heating because of the cost-effective efficiency gains and emissions reductions it offers, as well as its flexibility in hybrid technology and in combination with renewable sources of energy. But he also cautioned against seeking to displace gas with electric heating in view of the massive investment required to reinforce the electricity grid, its environmental impact and public acceptance issues.

Methanation

Gas: the right choice for heating in Europe

Electrolyser

Biogas & Biomethane

CO 2

H2

CNG SCHO

Electrolyser

OL

GAS

CNG

Natural Gas

BUS

47

LNG

Municipal Waste Gas Turbine

Fuel Cells

Gasification

© Eurogas, Marcogaz, GERG 2014.

Gas: The right choice for heating in Europe

Animation: Smart Gas: Smart Future http://goo.gl/YkZMQU

Eurogas used the occasion to launch its publication entitled “Gas: the right choice for heating in Europe”, which was the culmination of the combined work of Marcogaz, GERG and Eurogas and seen as a follow up to the successful workshop held earlier in the year under the European Sustainable Energy Week. In December, the workshop “Gas − now and in the future” provided the perfect opportunity to launch the annual Statistical Report 2014, as well as consider the key role that gas can play in the heating and transport sectors. Key Commission officials attended to listen to the panel of speakers. Eurogas kicked off 2015 by hosting its first Energy Podium Debate in which President Gertjan Lankhorst invited Hans ten Berge of Eurelectric, Ruud Lubbers the Former Prime Minister of the Netherlands and Markus Beyrer, Director General of Business Europe to share their views on the concept of energy union.

12

press releases since June 2014

“The Consumer at the Centre of the Energy System” was the theme of this year’s annual conference held in early March. Industry experts, academics and policymakers gathered in Brussels to listen to high-level speakers discuss effective ways of ensuring consumers feel empowered to make the right choices. Secretary General, Beate Raabe, unveiled the new Eurogas animation – “Smart gas: Smart future”, which highlights the important role that gas can play in an integrated system that benefits customers. As part of a wider strategy to reach out to new stakeholders, Eurogas held its first cross-association workshop in April 2015, which brought builders, plumbers, service providers and manufacturers together with other key players to debate the issues affecting gas use across the supply chain. With over 531 MEPs on Twitter, compared to the previous 408, this European Parliament is more active in social media. Many Commissioners now also have their own accounts and are tweeting regularly. Twitter is fast becoming a direct and effective way to communicate with our stakeholders and Eurogas wants to be part of it. To this end we have also increased our presence in social media over the last year tweeting key messages and quotes, and using every opportunity to share our views. As a result the number of people following Eurogas has increased by over 60% on last year to some 1152 followers, many of them key stakeholders and opinion influencers.

25 000 visitors to the website since June 2014. The most popular section is still Statistics.

1152

followers on Twitter

29

eurogas members Executive Committee

President Gertjan Lankhorst Chief Executive Officer, GasTerra

Marco Alverà

Leonhard Birnbaum

Martin Herrmann

Slavko Preocanin

Chief Executive Officer, Eni Trading & Shipping Chief Midstream Gas & Power Officer, Eni

Member of the Board of Management, E.ON

Vice-Chairman, Czech Gas Association

President, Shell Energy Europe

Secretariat Staff Beate Raabe

Secretary General

Tim Cayford

Policy Adviser

Tracey D’Afters

Communications Manager

Ramiro Gaete

Receptionist & Front Desk Officer, assistant to N. Regan

Kyriakos Gialoglou

EU Affairs Director

Saraine Ifill

Assistant to M. Loudon

Margot Loudon

Deputy Secretary General

Noel Regan

EU Affairs Director

Kathleen Sinnott

Assistant to T. Cayford & T. D’Afters

Philippe Trousson

Administration & Finance Manager

Katerina Zikmundova

Assistant to B. Raabe & K. Gialoglou

Marion Le Roy left Eurogas in December 2014. Kyriakos Gialoglou joined Eurogas in March 2015.

30

organisational structure Eurogas General Assembly President Executive Committee Governing Board

Finance Committee

General Secretariat

Distribution Committee Chair : Eva Hennig Thüga Ad hoc expert groups

Legal Affairs Committee Chair : Denis Schlumberger Total

Strategy Committee Chair : Theo Ebels GasTerra EU-Russia Task Force Chair : Reiner Hartmann, E.ON Global Commodities Heating Task Force Working Group on Security of Supply Working Group on Capacity Mechanisms Chair : Nina Scholz, E.ON Working Group on 2030 Framework

System Users Committee Chair : Friedrich von Burchard Thüga Infrastructure Task Force Chair : Christophe Miaux, Total Liquefied Natural Gas Task Force Chair: Victor Tuñon, Gas Natural Fenosa Ad hoc expert groups

External Communications Committee Chair: Anton Buijs GasTerra

Supply & Markets Development Committee Chair: Thomas Lowe Energy UK

Transparency & Market Integrity Task Force Chair: Valeria Palmisano Edison

Statistics & Forecasting Committee Chair: Haris Aliefendic OMV Forecasting Task Force Chair: Anne Braaksma, GasTerra

Taxation Committee Chair: Michael Längle RAG Rohöl-Aufsuchungs Aktiengesellschaft for FGW

Brussels Based Correspondents Advisory Group

31

eurogas members AFG - Association Française du Gaz 8 rue de l’Hôtel de Ville 92200 Neuilly-sur-Seine – FRANCE www.afgaz.fr Mr Jerôme Ferrier*

ANIGAS Via Giovanni da Procida 11 20149 Milano – ITALY www.anigas.it Mr Luciano Baratto

Axpo Holding Parkstrasse 23 5401 Baden – SWITZERLAND www.axpo.ch Mr Thomas Hesselbarth

BDEW - Bundesverband der Energieund Wasserwirtschaft Reinhardtstr. 32 10117 Berlin – GERMANY www.bdew.de Ms Anke Tuschek*

BULGARGAZ 47, Petar Parchevich Str. 1000 Sofia – BULGARIA www.bulgargaz.bg Mr Petyo Ivanov

DONG Energy Kraftvaerksvej 53 7000 Fredericia – DENMARK www.dongenergy.com Mr Morten Buchgreitz*

Edison Foro Buonaparte, 31 20121 Milan – ITALY www.edison.it Mr Pierre Vergerio*

EDP Gas Distribuição Rua Linhas de Torres, nº 41 4350-214 Porto – PORTUGAL www.edp.pt Mr Pedro Ávila

ENA - Energy Networks Association 6th Floor, Dean Bradley House, 52 Horseferry Road London SW1P 2AF – UNITED KINGDOM www.energynetworks.org Mr David Smith

ENEL Trade Viale Regina Margherita, 125 00198 Rome – ITALY www.enel.com Mr Claudio Machetti*

ENGIE 1 place Samuel de Champlain Faubourg de l’Arche 92930 Paris La Défense Cedex – FRANCE www.engie.com Stephane Brimont*

Eni Piazzale Enrico Mattei, 1 00144 Roma – ITALY www.eni.com Mr Marco Alverà*

ENOVOS Luxembourg 2, Domaine du Schlassgoard 4327 Esch-sur-Alzette – LUXEMBOURG www.enovos.eu Mr Jean Lucius

E.ON Global Commodities Holzstraße 6 40221 Düsseldorf – GERMANY www.eon.com Mr Leonhard Birnbaum*

FGW - Fachverband der Gas- und Wärmeversorgungsunternehmungen Schubertring 14 1015 Vienna – AUSTRIA www.gaswaerme.at Dr Peter Layr*

CPS - Czech Gas Association Cˇeský plynárenský svaz U Plynárny 223/42 140 21 Praha 4 – Michle – CZECH REPUBLIC www.cgoa.cz Mr Martin Herrmann*

Energie-Nederland Lange Houtstraat 2 2511 CW Den Haag – THE NETHERLANDS www.energie-nederland.nl Mr Hans Alders*

Gaslink 4th Floor, Gasworks Road Cork – IRELAND www.gaslink.ie Mr Aidan O’Sullivan

DEPA 92, Marinou Antypa Ave. 141 21 Heraklion Attikis – GREECE www.depa.gr Mr Spiros Paleoyannis

Energy UK Charles House – 5-11 Regent Street London SW1Y 4LR – UNITED KINGDOM www.energy-uk.org.uk Mr Lawrence Slade

Gas Natural Fenosa Pl. del Gas, 1 08003 Barcelona – SPAIN www.gasnaturalfenosa.com Mr Antonio Basolas*

32

GasTerra P.O. Box 477 9700 AL Groningen – THE NETHERLANDS www.gasterra.nl Mr Gertjan Lankhorst*

Gasum Miestentie 1 – P.O. Box 21 02151 Espoo – FINLAND www.gasum.fi Ms Johanna Lamminen

GAZBIR – Natural Gas Distribution Companies Association of Turkey Ege Plaza I˙s¸ Merkezi Konya Yolu (Mevlana Bulvarı) No: 182/B Kat: 22 No:97 06520 Balgat, Çankaya / Ankara – TURKEY www.gazbir.org.tr Mr Cem Önal

Geoplin Cesta Ljubljanske brigade 11 p.p. 3706 1000 Ljubljana – SLOVENIA www.geoplin.si Mr Alojz Stana

GERG - the European Gas Research Group Avenue Palmerston, 4 1000 Brussels – BELGIUM www.gerg.eu Mr David Salisbury*

Lietuvos Dujos Aguonu˛ g. 24 03212 Vilnius – LITHUANIA www.lietuvosdujos.lt Mr Liudas Liutkevicius

MARCOGAZ Avenue Palmerston, 4 1000 Brussels – BELGIUM www.marcogaz.org Mr Jean-Claude Weber

Naftogaz of Ukraine B. Khmelnitskiy St. 6 Kiev 01 – 01001 – UKRAINE www.naftogaz.com Mr Andriy Kobolev

OMV Gas & Power Trabrennstraße 6-8 1020 Vienna – AUSTRIA www.omv.com Mr Manfred Leitner*

PGNiG - Polish Oil and Gas Company ul. Kasprzaka 25 01-224 Warsaw – POLAND www.pgnig.pl Mr Slawomir Hinc*

Russian Gas Society 7/5, Lomonosovsky Prospect 119261 Moscow – RUSSIA www.gazo.ru Mr Pavel Zavalnyy

HMN NATURGAS Gladsaxe Ringvej 11 2860 Søborg – DENMARK www.naturgas.dk Ms Susanne Juhl

RWE Supply & Trading Altenessener Str. 27 45141 Essen – GERMANY www.rwe.com Mr Wolfgang Peters*

Latvijas Gaze Vagonu Street 20 Riga 1009 – LATVIA www.lg.lv Mr Adrians Davis

SEDIGAS - Asociación Española del Gas Plaza Lesseps 33 – Entlo. 3A 08023 Barcelona – SPAIN www.sedigas.es Mr Antoni Peris Mingot*

SHELL Energy Europe 80 Strand London WC2R 0ZA – UNITED KINGDOM www.shell.com Mr Slavko Preocanin*

Slovenský plynárenský priemysel (SPP) Mlynské nivy 44/a 825 11 Bratislava – SLOVAK REPUBLIC www.spp.sk Mr Pierre Poncik*

Swiss Association of Gas Industry Grütlistrasse 44 P.O. Box 658 8027 Zürich – SWITZERLAND www.erdgas.ch www.gaz-naturel.ch Ms Daniela Decurtins

Swissgas Grütlistrasse 44 8027 Zürich – SWITZERLAND www.swissgas.ch Mr Philippe Petitpierre*

Thüga Nymphenburger Strasse 39 80335 München – GERMANY www.thuega.de Dr Gerhard Holtmeier

TOTAL 2 Place Jean Millier La Défense 6 92400 Courbevoie – FRANCE www.total.com Mr Daniel Lauré*

VNG - Verbundnetz Gas Aktiengesellschaft Braunstrasse 7 04347 Leipzig – GERMANY www.vng.de Dr Karsten Heuchert* Eurogas General Assembly Delegates * Eurogas Governing Board Members

33

EUROGAS Avenue de Cortenbergh, 172 – B-1000 Brussels T. +32 2 894 48 48 – www.eurogas.org