Transparency Obligations Of European LNG System Operators

Most LNG facilities in European Union are operated under a regulated TPA regime based on published tariffs approved by NRA (National Regulatory Authority), pursuant to the requirements of Article 32 of the Directive No. 73/2009. The transparency requirements for LNG facilities operating under a regulated third party access regime are provided in the Guidelines for Good Third Party Access Practice for LNG System Operators (GGPLNG) issued by ERGEG in 2008 and EU Regulation No. 715/2009.

Commercial Information

The LNG System Operators (LSOs) must publish on their website the following commercial information:

1. LNG Services Offered And Related Tariffs

GGPLNG require LSOs to offer to the terminal users both bundled and unbundled services.

A standard bundled service offered by a LSO shall consist, at least, of a right to berth an LNG ship during a certain window of time, the right to unload the LNG, a temporary LNG storage capacity and a regasification service with the corresponding send-out capacity.  
The bundled services are commonly offered by LSOs under the form of slots which give the terminal users the right to berth the approved ships and unload their cargoes, the right to store a specified LNG volume unloaded from ships during the regasification process and the right to regasify the specified LNG volume and to have the gas delivered into the gas transmission system.
LSOs could also offer to slot holders the services that constitute the slot separately as unbundled services. The unbundled services can be offered to slot holders as additional services, e.g. additional berthing right, additional storage capacity, additional send-out capacity, ship reloading, LNG transshipment by ship-to-ship transfer, LNG transshipment by berth-to-berth transfer, road tanker loading.
The services offered by LSOs shall be developed after the proper consultation with the terminal users and other market participants in order to meet, as much as feasible, the market demands.
The Article 19(1) and (5) of the EU Regulation No. 715/2009 require the LSOs to make public a detailed information regarding the services they offer and related tariffs. LSOs should also provide on their website user-friendly instruments for calculating charges for a specific service, e.g. a tariff calculator.

2. Terminal Access Code

The terminal access code shall describe
- the main standard conditions for each service outlining the rights and responsibilities of the LSO and terminal users,
- the capacity allocation rules,
- the congestion management mechanisms,
- the rules for the resale of subscribed slots on the secondary market,
- the quality specifications for LNG unloaded,
- the procedures for determination of volume and composition of LNG unloaded,
- LNG ship approval procedure,
- the connection point(s) with the gas transmission system.

Capacity Allocation Rules

The Article 17(2) of the EU Regulation No. 715/2009 stipulates the LSOs` obligation to implement and publish non-discriminatory and transparent capacity allocation rules.
Prior to each allocation window, the LSO shall publish on its website the offered LNG services, including the contract period and the date when the terminal users can start to use the subscribed capacity, and the mechanism applied for the allocation of LNG services offered. After the allocation procedure, the LSO shall confirm the results of the allocation procedure to the participants.

Congestion Management Mechanisms

The Article 2 of the EU Regulation No. 715/2009 makes a difference between the "physical congestion" and "contractual congestion".
The "physical congestion" occurs when the capacity is fully booked, it is being used but any additional demand cannot be accommodated¹.
The "contractual congestion" occurs when the capacity is fully booked, but a proportion of it remains unused (it is not nominated) while there is still demand for capacity.
In order to maximise the amount of capacity available to the market and avoid the contractual congestion, LSOs should adopt measures to facilitate the trade of capacity rights on the secondary market².
The Article 22 of the EU Regulation No. 715/2009 stipulates the obligation of LSOs to take reasonable steps to allow the capacity rights to be freely tradable and to facilitate such trade in a transparent and non-discriminatory manner. Therefore, LSOs should give the terminal users the possibility to sell or acquire LNG services on the secondary market by providing an online bulletin board, where the terminal users can post the services they wish to sell or buy on the secondary market, and a web-based trading platform where the terminal users can trade the LNG services on the secondary market.
Another measure recommended to avoid the contractual congestion is to offer the unused capacity on the primary market. Whenever a terminal user is considered no longer able to use an allocated slot, has not released the slot on the secondary market and there is contractual congestion, LSO shall offer the unused slot on the primary market as firm capacity at the regulated tariff³.
The congestion management procedures should provide the obligation of the terminal users to notify the LSO about the slots which they do not intend to use. The notice period shall be defined by NRA taking into account the opinion of the terminal users and other market participants in the public consultation.

Operational Information

For each LNG facility they operate, LSOs must publish the following operational information:

1. A map indicating the location of the LNG facility, a description of its infrastructures and the connection points of the LNG facility with the gas transmission grid.

2. LNG facility characteristics

- nominal annual regasification capacity;
- daily or hourly maximum regasification capacity;
- LNG storage capacity;
- number of berths and LNG storage tanks;
- LNG ship specifications: i.e. the maximum and minimum total cargo tank capacity, length overall, beam, allowable draught alongside the berth, maximum unloading rate, maximum loading rate, maximum transshipment rate;
- List of Approved Ships.
 
3. Contracted and available capacities

- contracted regasification capacity
- available regasification capacity

The Article 19(2) of the EU Regulation No. 715/2009 stipulates LSO`s obligation to make public this information on a regular and rolling basis.

4. Daily LNG Data

The Article 19(4) of the EU Regulation No. 715/2009 requires LSOs to provide [in web-based platforms] daily updates on the LNG stock level in each LNG facility, inflows (i.e. unloaded volumes) and outflows (i.e. send-out gas) and the available LNG facility capacities (i.e. LNG storage capacity and send-out capacity). This requirement applies to all LNG facilities, including to the LNG facilities exempted from third-party access.

5. Historical data on monthly capacity utilisation rates

- LNG stock level
- LNG storage capacity
- Send-out gas
- Send-out capacity⁴.

6. Maintenance Information

LSO should publish the planned maintenance periods over the year that might affect the terminal users` rights and the corresponding operational information with adequate advance notice. During the maintenance period, the LSO should publish regularly updated information on the details, expected duration and effect of the maintenance.
Where unplanned disruptions in access to the LNG terminal services occur, the LSOs shall ensure that the LNG terminal users are notified as soon as possible (through UMMs).

by Vlad Cioarec, International Trade Consultant

This article has been published in Commoditylaw`s Gas Trade Review Edition No. 2.

Endnotes:

1. See ERGEG study on congestion management procedures & anti-hoarding mechanisms in the European LNG terminals.
2. See the Article 17(3) of the EU Regulation No. 715/2009.
3. See the Article 17(3) of the EU Regulation No. 715/2009.
4. See ALSI/GIE Transparency Platform for LNG at www.gie.eu