COMPANY PROFILE
2014
fluxys
32 2 282 7211 | www.fluxys.com
At the heart of European gas transmission
Editorial: Roland Douglas
Fluxys has become one of Europe’s most important gas companies and its work to develop its existing network is proof that gas has a vital role to play in the European economic zone. After winning prestigious awards, partnering with other big-name players and expanding its LNG facilities, Fluxys is looking strong as gas continues to become more and more important. In the energy industry today, when you mention the words “clean energy” people automatically think of wind turbines and solar panels. It is often forgotten that natural gas is in fact a very clean source of energy – the cleanest of all the fossil fuels and a vital contributor to economies around the world. Supplies are abundant, extraction is easier compared to deep oil or fracking, and the gas transportation and infrastructure industry is established and safe.
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The European Commission has stated “at a time when European reserves are being depleted and consumers’ appetite continues to increase, natural gas is becoming critically important to the EU.” The supply of gas, especially in Europe, is constantly a topic up for debate by politicians and with uncertainty in Ukraine and Russia, the Commission has put affordable and reliable supplies amongst its most important objectives saying:
“Member States and the European Commission (EC) consider that the creation of an efficient and well functioning internal market for gas may be the most potent response to the challenges and uncertainties of tomorrow. A reliable, transparent and interconnected market could address a variety of complex issues including security of supply and global warming.” But what actually is natural gas? Simply put, natural gas is a fossil fuel
fluxys formed when layers of buried plants, gases, and animals are exposed to intense heat and pressure over thousands of years. The energy that the plants originally obtained from the sun is stored in the form of chemical bonds in natural gas. It is a hydrocarbon gas mixture consisting of mainly methane, but it also commonly includes differing amounts of other higher alkanes and even a smaller amount of carbon dioxide, nitrogen, and hydrogen sulphide. Natural gas is found in deep underground rock formations or close to other hydrocarbon reservoirs in coal beds and as methane clathrates. Petroleum is another resource and fossil fuel
found in close proximity to natural gas. Before natural gas can be used as a fuel, it must be processed to remove impurities, including water, to meet the specifications of marketable natural gas. Estimates suggest that the world uses around 3.4 trillion cubic meters of gas every year and at that rate we’ll use it all up in the next 250 years. According to 2011 estimates, the USA is by far the world’s biggest consumer of natural gas, followed by Russia and the EU and China. And in the EU the transmission of natural gas to customers is big business, as we have discovered in previous issues, with companies like GRTgaz,
Enagás and Fluxys providing much employment and contributions to GDP. This movement of gas is vitally important and TSO’s like these need to work together to maintain secure, stable, reliable and cost effective gas supplies around the continent. Fluxys, headquartered in Belgium, aims to bridge the markets so that suppliers can move natural gas flexibly from any border to their customers and between gas trading places. The company’s strategy is focussed around three core activities; transmission, storage and LNG terminalling. And this strategy involves growing
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Engineering of linear transport by pipeline and cables From feasibility to as-built
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infrastructure, developing people and remaining competitive on price as the company explains: “Fluxys’ focus is on security of supply, well-functioning markets and tariffs that are as competitive as possible. “Fluxys wants to play an active role through profitable long-term investments, not least in the consolidation process under way in the European market.” “To implement its strategy, Fluxys values the development of its employees’ know-how and builds strong alliances with solid partners.” The company is one of Europe’s most advanced TSO’s and is always planning upgrades and improvements to its system and pipeline and, importantly, its LNG capabilities. LNG Walter Peeraer, Fluxys Managing Director said during an interview
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with the Energy Delta Institute (EDI) that Fluxys would continue to invest in LNG with the hope that the industry as a whole will develop. “Fluxys is a gas infrastructure company and as such we operate not only pipeline and storage but also the LNG terminal of Zeebrugge,” he said. “Zeebrugge terminal is well known in the LNG world. We own and operate the terminal based mainly on a long term contract which assures the coming flow of revenue for the terminal. It’s a fully regulated terminal but its flexible regulation based on a price capped and cost plus system.” Fluxys announced recently that it would expand and extend the Zeebrugge terminal, adding a second jetty for loading and unloading of LNG carriers, enabling the facility to increase capacity
and further develop into a hub for supplying LNG as fuel for ships and long-haul trucks. Once the construction works are over in mid-2015, the terminal will have an additional LNG loading/unloading capacity of 14,000 m3/hour. Expansion of the terminal will be handled by TS LNG, a joint venture between SENER and Techint E&C. TS LNG will carry out all project related activities, being also in charge for project management, procurement and construction, as well as for construction and commissioning management. The company brings a strong portfolio of completed projects including the GATE terminal in the Netherlands and the Dunkirk terminal in France. “We are a partner in the greenfield Dunkirk LNG project where we have a 25% share but also we participate in the operating
fluxys company on a fifty-fifty basis with EDF which is the majority shareholder of the Dunkirk LNG terminal,” Peeraer told the EDI. Importantly, a project to connect the Dunkirk LNG facility; being labelled the ‘new gas entry point for Europe’; to the GRTgaz grid in France and the Fluxys grid in Belgium is already being planned. The new pipeline will allow for the transportation of eight billion additional m³ of natural gas to Belgium and elsewhere in Europe from the Dunkirk LNG terminal, strengthening security of supply and diversification of sources while offering a wider basis for natural gas trading in the region. GROWING LNG Just two years ago, in 2012, LNG accounted for around 25% of the gas imported in the EU. And since then, this figure has been growing and Fluxys has been a part of this growth. “There are many small-scale LNG players promising opportunity for growing LNG in the European markets,” Peeraer told the EDI. “It can really contribute to reducing the environmental impact on the maritime side but, like any business activity, it’s a chicken and egg issue; we need infrastructure and different partners ready to invest in small scale LNG, in the vessels. As Fluxys we are ready to do everything and invest. We can facilitate the business by investing in infrastructure. “This is what we are doing and this is clear as we are well into our plan of building a second jetty at the LNG terminal in Zeebrugge in order to accommodate all types of vessel. Secondly, we are looking actively to different projects in order to promote small-scale LNG in cooperation with Gasunie. “We are ready to invest in this,
we are ready to facilitate this and bring all the partnerships; builder of small-scale vessels, LNG user, and shipper and supplier; to make this business grow.” And it’s not just investments into infrastructure where Fluxys are helping to grow the LNG industry. It’s also with the signing of new contracts which will bring LNG into Belgium through the Zeebrugge terminal. The company recently signed an agreement with Yamal LNG where the two organisations detailed parameters of cooperation on the transhipment of LNG from a plant in Russia to the Zeebrugge terminal.
Yamal LNG is building a natural gas liquefaction plant with its first train scheduled to be commissioned in 2017. The transshipment platform in Europe will be an integral part of the logistical chain enabling LNG supply from Yamal to reach the Asian-Pacific countries when winter navigation is closed at the Arctic Ocean’s Northern Sea Route, thus ensuring year-round LNG supplies to this region. “If we succeed in attracting transshipment operations to the Zeebrugge LNG terminal, this would be an important project for Fluxys and the port
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of Zeebrugge. It would bring along a considerable investment at the terminal, link the facility to an additional source of LNG and entail a significant volume of ship movements as well,” Peeraer said. In another advancement of LNG technology, Fluxys announced in February that it would partner with Eric Mattheeuws, a large European transportation company, to invest in a brand new LNG filling station for fuelling haulage trucks. Both companies see LNG as a sustainable alternative fuel for trucks in Belgium. “Transporters are holding off on switching to LNG for lack of filling stations and no filling stations are being built because there are no customers. By joining forces with transporter Eric Mattheeuws, we are breaking this vicious circle and lowering the threshold for other
transporters to make the switch to LNG as a sustainable alternative to diesel,” said Peeraer. Eric Mattheeuws, who have made their intentions on sustainability clear, recently won the Green Truck Award at the Transport and Logistics Awards 2014. The company said: “The switchover to LNG means a drastic reduction in emissions from the trucks and has considerable financial advantages as well. With Fluxys’s investment in the LNG filling station, the logistics supply chain is now complete. We have developed a unique partnership with Fluxys, Eni, Volvo Trucks and Romac Fuels to promote LNG as a valid alternative to bio-petroleum. The initial tests are very promising. If, six months after opening the filling station, you read about additional investments being made, then you can be sure that LNG has
begun its conquest!” And it wasn’t just Fluxys’ new partners who have been winning awards recently. Fluxys itself was named, in January, as the TSO of the year at the European Gas Conference in Vienna. WINNING IN EUROPE Peeraer said of the award: “This award is a tremendous thumbs up for all the men and women of Fluxys in Belgium, Germany, Switzerland, the UK and France and their commitment to develop our company as a genuine European TSO. It is also an encouragement to continue on our trail of building strong partnerships in the industry and to keep focused on connecting markets, gas trading places and gas sources.” The award is quite the coup for a company like Fluxys and celebrates dedication, triumphs
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THE ENERGY TO ACHIEVE LARGE GAS AND LNG PROJECTS For 30 years, Tractebel Engineering has ensured for major gas players, engineering and consultancy missions covering the entire life cycle of gas and LNG installations. Projects managed by Tractebel Engineering ranged from feasibility studies, FEED, Detailed Engineering, Owner’s Engineering to commissioning and startup of pipelines, compression stations, underground gas storages and LNG terminals. Tractebel Engineering is also a referenced engineering consultancy in the fields of power generation (nuclear, gas, coal and hydroelectric), renewable energies, power transmission grids and complex infrastructures.
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and excellence of TSOs TRAC 3623-006 AD Fluxys 151L x 112H - v2.indd pioneering innovation, inspiring others and achieving growth in the European gas market. And just two months after picking up this award, Fluxys announced another big deal for its European development; the signing of a Memorandum of Understanding with Sna S.p.A that further develops the Strategic Alliance of 2012 aimed at pursuing opportunities in Europe through projects enhancing the flexibility and security of supply in the European gas infrastructure. The two companies have agreed to assess and evaluate the set-up of a jointly controlled company for the integrated management of the companies’ international assets across Europe. “By joining forces Snam and Fluxys would become a reference
player in Europe, interconnecting 1 markets as envisaged in the blueprint set forth in the Third Energy Package. Combining our European activities would create value for both the market and our shareholders,” Peeraer said. All of these developments fit in line with Fluxys vision of being able to ‘build bridges between markets so that suppliers can transmit natural gas flexibly between gas trading points and from any border to their customers’. So what about the future? Peeraer is firm in his belief that gas will be the energy of the future but hopes for support for gas producers from governments in the short term. “This is a difficult time for the generation of electricity from natural gas due to the volatility of the electricity price and, as
a first step, some regulatory 3/09/14 10:01 intervention could be needed to help to facilitate the life of power producers producing electricity from gas but in the long-term I still think natural gas is the energy of the future. “As an infrastructure company, we follow the market closely. Electricity prices are volatile and gas for power plants is squeezed between volatile and subsidised renewable power and very cheap coal. This is an issue today and I think that in the short-term the government should look at a scheme to help power producers on the gas side to be part of the game because I still believe that natural gas is the real partner to renewables if we want to achieve the CO2 directorate of the European Commission,” he told the EDI.
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