GIS in the OIL & GAS Industry - A Eruopean Perspecitive
DE-Regulation & Liberalization
The energy and utility industries within Europe are changing and have become global markets. The
EU initiated and controlled processes of liberalization and deregulation have led to widespread
restructuring and the creation of an energy and utility market that is more complex and competitive than
ever before.
The opening of Europe’s national borders, the EU’s focus on introducing and fostering
competition within traditionally non-competitive situations (most large energy and utilities were
nationalized prior), and the subsequent pursuit for greater economies of scale have created a industries
with cross-border and cross-continent ownership and operations. As expected, Europe has experienced
aggressive merger and acquisition activity, too fast and too aggressive for many European energy and
utility experts.
The EU has succeeded in opening the energy and utility industries across Europe and has
introduced competition into each nationalized market. The EU’s Electricity and Gas Directives
(96/92/EC and 98/30/EC respectively required that between 2003 and 2008, that all national electric and
gas markets be opened up to 100% competition. Today, most markets are 100% open to competition.
The directives legislated addressed dates for minimum and 100% market openings; construction
of new generation capacity, open access to electric and gas transportation systems; an unbundling of the
energy supply chain in similar fashion to what has taken place in Austral-asia and North America;
regulatory and dispute settlement mechanisms; public service obligations; and power exchanges.
The goals of the directives are for better customer service and market price reductions for
industrial consumers and households, to make adjustments for the different price levels across EU
member states, and to reduce the amounts of reserve capacity in any one country or region by being able
to transport cross-border.
Has this result been achieved? Well, to some extent yes. But, at what expense? What is known,
however, is that whole new challenges have surfaced. Can companies efficiently and effectively operate
cross-border in this environment? How does the industry and EU’s regulators ensure the availability of
adequate supply? Can the industry ensure the safety of supply in light of reducing reserves and needing
to transport energy across borders? What investments are essential to transform the infrastructure and the
way these new international companies operate?
The natural gas market in Europe
Natural gas is the fastest growing fuel source within the European Union member states, and this
despite the EU’s limited natural gas resources:
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Natural gas is currently meeting more than 23% of Europe’s primary energy needs;
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In 2000, gas flowed through more than 80 million meters, meeting the energy needs of
more than 200 million individual customers.
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Through 2020, natural gas consumption is projected to grow at an average annual rate of three
(3.0%) percent based on the IEO2002 reference case forecast.
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Nearly 60% of all gas consumed are traded across at least one or more international borders
within the EU countries and accession candidates;
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The majority of the gas supply comes from outside the EU. Although the EU accounts
for less than five (5%) percent of the world’s natural gas reserves, its consumption is
nearly 20% of the worlds total. There is little concern that the EU will be able to meet its
future growth. 70% of all known world gas reserves are within 5,000 kms of Europe.
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Over 200,000 km of transmission pipeline extend across Europe (the 15 EU member states and
accession candidates) with thousands of km of pipeline interconnectors and extension being built
or planned.
