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15.06.2017

FSR Gas is hiring! Jr. Research Assistant (Florence)

We are looking for junior profile in the area of Gas Policy and Regulation to join our team in Florence! The candidate will assist the […] read more

Gas

Milan

News

14.06.2017

FSR organises workshop on “Future of energy utilities” with Bruegel and Fondazione Enrico Mattei

Digitalisation and decarbonisation led to a profound reshaping of the energy system in recent years. Energy utilities have reacted in different ways – sometimes winning […] read more

Gas

European_Commission logo

News

6.06.2017

FSR presents draft report on Ukrainian gas market

The EU Commission has invited FSR to present the preliminary findings of our draft Report on the future of the Ukrainian gas market. Sergio Ascari, […] read more

Gas

policy workshop may 2017

Event Highlights

31.05.2017

The end of the long-term contracts era: which consequences for the EU Gas Market?

Long-term contracts (LTCs) used to be the most commonly used supply agreements in the gas sector and necessary to ensure the security of supply.  Indeed, […] read more

Gas

Ilaria Conti

Topic of the Month

28.03.2017

Infrastructure: the difficult ingredient of the recipe

Written by Ilaria Conti Being Italian – and a woman! – the world has high expectations concerning your cooking skills.  Your mother is almost certainly a good […] read more

Gas

Ilaria Conti

Topic of the Month

14.03.2017

Can a new energy Governance fill the gaps of the EU gas market?

Written by Ilaria Conti With the Clean Energy Package released last November, the EU Commission proposed a new Regulation on the Governance for the Energy Union, specifically concerning […] read more

Gas

Ilaria Conti

Topic of the Month

6.03.2017

EU Gas market design: the quiet before the storm?

Written by Ilaria Conti It’s currently time for reflection, in Brussels, on EU gas regulation and market design. With the Third Energy Package close to being fully […] read more

Gas

Sefcovic

Interview

27.02.2017

Maroš Šefčovič: Energy Union is on track and on time

Progress towards the Energy Union is on track and on time according to its vice-president Maroš Šefčovič. Mr. Šefčovič sat down for an unprecedented interview […] read more

Gas

The role of gas in the energy mix

News

7.12.2016

The FSR takes its on-demand training to Indonesia

This week the FSR is in Indonesia facilitating our tailored training on The International Gas Regulation and Tariff Design for Perusahaan Gas Negara. This on-demand […] read more

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policy workshop may 2017

The end of the long-term contracts era: which consequences for the EU Gas Market?

- Gas

Long-term contracts (LTCs) used to be the most commonly used supply agreements in the gas sector and necessary to ensure the security of supply.  Indeed, the current EU gas infrastructures often reflect the geography of existing LTCs.

But, as the EU gas market has undergone intense structural changes for the past 10 years, LTCs may no longer represent the most adequate instrument to comply with the market’s new requirements. Furthermore, according to a recent study of the European Commission, Cedigaz and ENTSOG, the existing long-term commodity contracts are expected to terminate in the course of the next 20 years.

Is this the end of LTCs era? If so, which are the consequences for the EU Gas Market? Are long-term commodity contracts the only way of guaranteeing the security of supply?

The Florence School of Regulation explored these topical issues on Friday 19th May, in its fourth and last meeting of the 2016 – 2017 FSR Regulatory Policy Workshops, directed by Alberto Pototschnig (ACER Director and FSR Senior Advisor). The workshop, titled: ‘The end of the long-term contracts era: which consequences for the EU Gas Market?’, analysed the main changes and challenges of the evolving gas sector.

Despite the variety of inputs which emerged during the discussion, two trends seem to be evident: just like utilities, TSOs will need to re-adapt their costs and business plans in the long run – but there is also a clear necessity for the regulatory framework to be updated, both at national and European level. Only by ensuring the regulatory flexibility required by the short-term trading system, will Europe remain competitive and continue to attract investments in the future.

Flexibility also appears to be an important feature when it comes to security of supply. Policy makers and regulators can contribute in this regard by clarifying  possible security of demand scenarios, as well as by providing access to demand through liquid markets, and access to the networks.

While a simple and univocal answer did – and could –  not be found, it clearly emerged that the era of LTCs is not (completely) over. The current challenges will have to be faced according to the current market design and to the latest variables, avoiding to impose any sort of artificial intervention or distortion in the market.

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