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Interview

Thierry Trouve – CEO, GRTgaz – France

27.07.2015 / Energyboardroom

The CEO of France’s main natural gas transmission system operator, provides an early review of the company’s 2009-2018 investment plan. He shares his ambition to make France an undisputed gas trading hub in Europe.

The creation of GRTgaz stems from the European directives on the liberalization of electricity and gas. How does GRTgaz symbolize the EU’s commitment to further integrate the energy market?

Connected to LNG terminals on the Atlantic and Mediterranean coasts, to neighbouring European networks and underground storage facilities, the GRTgaz transmission network provides access to diverse supply sources. It thus contributes to France’s and Europe’s energy security of supply and the competitiveness of our industry.

This year, GRTgaz is celebrating 10 years of its existence. I wish to specify that we have increased significantly our investments from €200 million a year in 2004 to €663 million a year in 2014. We can say we have invested approximately one third of our turnover in infrastructure projects. In the same time the number of shippers on our market places grew up over 120 and we developed the connections to the other market places in Europe.

In 2015, GRTgaz is relentlessly pursuing the modernization, reinforcement and development of its network, with around twenty national projects and 200 regional projects. GRTgaz is an official Transmission System Operator in France but in Germany too, via its subsidiary GRTgaz Deutschland.

In France, GRTgaz has been certified as an Independent Transmission Operator (ITO) in accordance with the implementation of the third European Directive which reinforces the obligations of independence and autonomy for network operators supervised by a vertically integrated company.

I’d like to add that GRTgaz actively contributed to the elaboration of European norms and regulations through our involvement in The European Network of Transmission System Operators for Gas (ENTSOG). I think it’s a necessity for European Transmission System Operators to harmonize the technical and legal frameworks in order to simplify the operating rules for the gas market in Europe and to develop interconnected regional markets.

In your mission statement, you highlight your ambition to make France a reference in gas-trading hub in Europe. How are you planning on upholding this objective?

In terms of software, we deployed significant funds to build the mechanisms allowing for an integrated gas transmission network. GRTgaz is featured amongst the founders of Prisma, which provides opportunities to auction off transport capacities for various interconnections. We have contributed to the creation of PEGAS, the pan-European gas trading platform operated by Powernext.

This objective to make France a reference in gas-trading hub in Europe is proving to be ambitious amid the growing importance of certain European hubs. Our aspiration is to make our market more attractive.

To illustrate recent evolutions, it’s important to understand than in 2005, France still had five marketplaces. Since 2009, there were only three left: PEG North, PEG South, and PEG TIGF. On 1 April 2015, a common market area, made up of the GRTgaz South and TIGF areas, has been set up under the name Trading Region South (TRS). The CRE guidelines that were published in May 2014 envisage the setting up of a single wholesale gas market in France by 2018.

GRTgaz consults its clients whether shippers or industrial consumers and regulators before applying any decisions, thereby ensuring that our products correspond to the needs of the market.

You wish to extend and expand GRTgaz’s transmission capacity, in order to further secure supply in France and Europe. This goal requires considerable investments. In the last 10 years, you have already allocated billions to revamp and develop your network. How do you assess the outcome of these investments?

We can distinguish two investment periods. GRTgaz initially invested to upgrade our compressor stations and create a few ones. This has enabled us to strengthen our network by maximizing our pipes’ transmission capacity. These investments have produced a fully integrated network. During this investment phase, we introduced open seasons with Germany, Belgium or Spain. We have also consolidated our transmitting network in the south region, to secure the import of LNG.

Moreover, since the end of 2010, we built additional pipes. In 2015, to illustrate this development projects, we will connect pipes to the future LNG terminal in Dunkirk and we will consolidate the core network by looping the Hauts de France pipeline and creating the Arc de Dierrey (2015/2016).

As mentioned earlier, the CRE intends to pursue the simplification of the natural gas transmission market in France, while remaining consistent with the projected organization of the european gas market. The CRE’s goal is to establish a single marketplace in France by 2018 by merging the North and South Zones, and in this regard, it recommends the implementation of the Val-de-Saône and Gascogne-Midi Projects. The cost of Val-de-Saône project is valued at more than €700million.

I would also like to add that we are carefully examining each new infrastructure in order to rationally assess its long-term feasibility and profitability.

Since you were appointed CEO of GRTgaz, you have not ceased to express your commitment to restore natural gas’s image and importance as part of the energy transition. Why is the French public not as receptive as you would hope for?

The overwhelming importance of nuclear energy in France is hampering the advancement of natural gas as a genuine component of France’s energy mix. People aren’t systematically opposed to gas but are simply failing to recognize its attributes. The energy debate in France is framed as an opposition between gas and renewable energies as if they couldn’t co-exist. In France, and in Europe, unconventional energies have tarnished the image of natural gas. We respond to this misinterpretation by emphasizing the renewable applicability of gas via bio-methane notably.

The transmission of natural gas via underground pipelines is a safe, inconspicuous and economical way of transporting large quantities of energy while protecting local activities, landscape and biodiversity. It is therefore a driver of future energy solutions, which favour the development of renewable energies, including renewable gas.

According to GRTgaz, natural gas and its transmission infrastructures are ready to take on the challenge of energy transition. Today, natural gas is improving the carbon balance of heat and electricity generation by replacing fuel oil and coal, and it is helping to preserve air quality too. By working to develop promising industry sectors, GRTgaz is all set to be part of the “Third Gas Revolution”, with the advent of renewable gas. Natural gas storage has the capacity of storing impressive quantities of energy in contrast to electricity. Technologies like power to gas allow for the absorption of excess production of electricity. We have to explain and explain again that the gas transmission system is the best help for development of renewable energy.

You often refer to the evolution of the Energy industry as a mutation that is poorly supervised by policy-makers. What are public officials dismissing? What is your assessment of the current government’s environmental policies?

Policy-makers have a generalist approach on energy matters and are not always aware of certain critical technical aspects. However, I must admit, most public officials are taking our recommendations and analyses into consideration. When I discuss about the “Third Gas Revolution”, with parliamentary members, they are open to our suggestions and recognize the issues we try to raise.

GRTgaz is committed to influence French and European policies towards pragmatic targets in order to secure investments in gas industry.

In addition, we also have to support the development of renewable gas in order to increase the public acceptance of the gas industry: future is ours.

GRTgaz exports its services and expertise abroad. What are the prospects for the internationalization of GRTgaz and sharing of this savoir-faire?

Although GRTgaz is not an engineering company, our know-how revolves around project management for pipe installation but also design and conception for new markets. We also hold a regulatory expertise. Therefore, we aspire to export this expertise in countries where gas is developing exponentially. GRTgaz sometimes acts as a consulting firm on behalf of foreign transmission operators and responds to international calls for tender. We are currently cooperating with PGN in Indonesia and Pemex in Mexico on the Los Ramones Natural Gas Pipeline project.

I would like to highlight that GRTgaz is fully qualified to assist countries in developing emerging gas markets. Many countries are facing issues related to infrastructure optimization, which GRTgaz can fully solve on their behalf as a mature and experienced operator.

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