Is there a competitive and privatised downstream gas market or is gas supplied to end-customers by one or more incumbent/government-owned suppliers? Can customers choose their supplier?

Oil & Gas

Brazil Small Flag Brazil

The supply of natural gas to end users and consumers through pipelines is made by local gas distribution companies within their concession area. The distribution of natural gas through pipelines falls within the jurisdiction of the states of the federation, which award concession contracts to local distribution companies through public tenders. As a rule, customers located in a state of the federation shall purchase piped gas from the relevant local distribution company operating in such state.

The Gas Law and certain states´ legislations provide for a few exceptions to this rule, as in the case of the self-producer, self-imported and free consumer, when the supply of gas volumes to dedicated projects with related parties could be made without the intervention of the local distribution company (by-pass). However, in such case, the interested parties shall pay an O&M tariff to the local distribution company, as the case may be.

The supply of GLP, GNC and other by-products is regulated by the ANP. As a rule, consumers have the option to purchase such by-products from several suppliers.

Croatia Small Flag Croatia

In the past couple of years downstream gas market has been liberalised. Currently, both incumbent suppliers and a few new suppliers are present at the market. Customers may freely choose their supplier.

Notwithstanding the liberalisation, the Gas Market Act also recognizes a special category of end customers – households, that enjoy a special regime under which the gas supply is made. Pursuant to the Gas Market Act, households have the right of gas supply under regulated conditions by the public service suppliers. Those regulated conditions relate to the price under which the households have the right to purchase gas from the public service suppliers and the fact that the public service suppliers can not refuse to supply these customers.

In order to enable the provision of public service gas supply, the Gas Market Act provides for the obligation of the wholesale gas supplier to offer gas supply at the wholesale level to public service suppliers at a regulated price. According to current legal framework, the wholesale gas supplier shall continue to offer supply to public service suppliers until 31 March 2021.

Greece Small Flag Greece

By the end of 2005, DEPA SA was the sole operator, importer and supplier of gas to the Greek market. Recently, DEPA established three Gas Distribution Companies, called EDA’s are responsible for the operation of gas network at the three larger urban centers of Greece (Attiki, Thessaloniki, and Larissa-Volos) under a 30-year concession license under the provisions of Article 80 par.2 Law 4001/2011. DEPA is the majority shareholder of EDAs, holding the 51% of the total share capital while the remaining stakes belong to private investors. More specifically DEPA remains the direct gas supplier of

  • large consumers, mainly industrial units, with annual consumption of over 10 million cubic meters
  • existing Gas Distribution Companies (EDAs)
  • end-customers in areas where EDA’s are not established
  • field of gas transportation, refueling of the ETHEL - OASA buses etc.

In the current context, the supply of end-customers with natural gas requires a special license, in accordance with the provisions of the 1st Revision of the Licensing Regulation. For this purpose interested parties shall submit relevant requests before RAE which is the competent authority for the issuance of distribution licenses. Until today, RAE has issued -in favor of third private companies which have dynamically entered the gas market - plenty of distribution licenses given that as of 1.1.2018 all end customers have the right to freely choose their supplier.

Italy Small Flag Italy

The sale of natural gas is governed by articles 17 and 18 of the Letta Decree, as amended by article 30 of Legislative Decree no. 93 of 01/06/2011, as well as by the Ministerial Decree of 29/12/2011, which provides for the criteria on the basis of which undertakings are registered in the list of undertakings authorised to sell natural gas to end-customers throughout Italy, consisting of: a) the availability of natural gas and of the modulation service for customers having an annual consumption of not more than 50,000 cubic metres; b) a demonstration of the provenance of the gas and of the reliability of the transportation system; and c) the adequacy of the technical and financial capacities of the undertaking.

There is therefore an accreditation system at the MiSE for the performance of these activities.

From 01/01/2003, sales have been completely liberalised, the classification of “suitability” is extended to all customers, including domestic ones (article 22 paragraph 2 of the Letta Decree) who may freely choose their supplier.

Mexico Small Flag Mexico

No, there is not a competitive downstream gas market in Mexico.

Although (i) some private companies have been awarded with contracts to design, construct and operate gas pipelines throughout México which are either under construction or they already began operations, and (ii) private companies have constructed private gas pipelines to supply specific customers, most of the gas pipeline system is currently managed and operated by the State entity known as CENAGAS which plays a role of manager and natural gas transporter, not supplier.

CENAGAS was created on August 2014 as a government entity sectorized to SENER which began operations in 2015. As of such date, the national gas system (including all related pipelines) that were previously owned and managed by PEMEX were transferred to CENAGAS.

As of this date most of the gas is transported by CENAGAS.

Notwithstanding the above, customers may freely choose their gas suppliers which, in any case, will have to enter into a transportation contract either with CENAGAS or with the private company owning the pipeline.

Morocco Small Flag Morocco

Gas distribution is carried out by private companies mainly through the commercialization of bulk gas cylinders or gas and storage tanks.

There is no government-owned company carrying out this activity but a mandatory price-setting regime for butane gas distribution.

The draft law no. 94-17 contemplates however to amend the gas distribution legal framework in setting up an new organization of gas sector and an appropriate tariff system for the natural gas market which could result in awarding the gas transportation activities to a state-owned company and distribution activities to different concessionaries.

Mozambique Small Flag Mozambique

Please refer to the previous answer.

Nigeria Small Flag Nigeria

Downstream gas sector liberalisation and third-party access which creates, appropriate gas pricing to facilitate efficiency in gas to power whilst maintaining a balance between domestic growth and gas export revenue earnings is covered by the NGMP. The Nigerian downstream gas market is categorized by both government owned suppliers and private companies who have obtained licences as detailed in Question 15.

Bulgaria Small Flag Bulgaria

Primary supplier of natural gas to the consumers is the state owned Bulgargaz, which is the licensed public supplier. Bulgargaz supplies gas at prices regulated, updated every three months dependent on the prices under the gas supply contract with Gazprom Export. Clients of the transmission network are gas producers, gas distribution companies, and industrial clients.

The distribution and end user supply to consumers is performed by regional and local distribution companies, operating under a licensing regime and regulated prices. They are licensed for “distribution of natural gas” and “supply of natural gas as an end supplier”. They supply natural gas to clients connected to their distribution gas networks. In 2019, 24 licensed gas distribution companies operate in Bulgaria, covering 35 licensed territories, servicing 5 gas distribution regions (Danube, West, Thracia, Misia, Dobrudzha) and 80 municipalities outside these regions. Major market share is held by Overgas Mrezhi, Aresgas, Citygas Bulgaria, and others. According to public data of the distribution companies, the total number of their clients in 2016 is 87 274 (92% households and 8% industrial). The main clients to the distribution companies are households, public-administrative and commercial consumers, small and medium enterprises, and industrial consumers.

The clients may freely choose their gas supplier disregarding in which country it is based. Every gas supplier or client shall be allowed non-discriminatory access to the gas transmission and/or distribution networks n accordance with certain technical requirements.

It shall be noted that Bulgarian wholesale gas market is still entirely dependent on Russian gas supplied through a single route and from a single trader.

For Bulgaria, the development of the gas interconnectors with the neighbouring countries is of utmost importance for ensuring diversification and security of gas supplies. Currently, only the Bulgaria - Romania new interconnector has been finalised, and the one with Greece is under development. In 2019 the Balkan Stream has started construction. Its main purpose is to transit Russian gas from the Bulgarian - Turkish border to Serbia and onwards to Central Europe.

Indonesia Small Flag Indonesia

The downstream gas market follows the allocation and utilization of natural gas stipulated by the MEMR. Please see our response to Question No. 17.

United Kingdom Small Flag United Kingdom

The GB downstream gas market was privatised in the 1980s. All segments of the market are in private ownership, and the market is open to full competition, with customers able to switch their supplier.

Turkey Small Flag Turkey

Before the enactment of Natural Gas Market Law in 2001, BOTAŞ, a state-owned energy company, had been the sole dominant organisation in natural gas market activities in Turkey for decades. Main purposes behind the reforms were to establish a more liberalized and transparent natural gas market framework by terminating most of the monopoly rights of BOTAŞ, to create a competitive market and to harmonize the domestic legal framework with that of the European Union. In this context, a new licensing regime for each of the import, export, transmission, storage, wholesale and distribution activities in the natural gas market was introduced which enables the private investors to engage in natural gas market activities.

However, major dominance of BOTAŞ in natural gas activities remained as before the Natural Gas Market Law until 2003 when EMRA started to launch tenders to open the distribution segment of Turkey to local entities other than BOTAŞ. With the tenders conducted by EMRA from 2003 until 2017 the number of distribution companies increased from 6 to 72. With regards to wholesale market, liberalisation has started only in 2007 where private natural gas importing companies entered in the market. Following contract release of BOTAŞ by the government in 2011, private companies commenced engaging in import activities. Currently companies other than BOTAŞ hold 17 import and 54 wholesale licences in total (EMRA Natural Gas Market Report 2018). It should also be noted that import licensees can carry out wholesale activity without getting a wholesale license.

Despite the liberalisation and privatisation efforts and reforms in natural gas market, natural gas supply of Turkey in 2018 was realized as 50.788,75 million Sm3 and 84,12 % of this amount was met by BOTAŞ. With implementation and development of government’s liberalisation policies, the proportion of entities other than BOTAŞ in the natural gas market is believed to grow in the following years.

Within the natural gas market, consumers are free to choose their suppliers provided that they fulfil the conditions of being an eligible consumer for which the criteria is determined by EMRA each year. The number of eligible consumers has reached to 601.348 by the end of 2018 which will increase in parallel with the number of private institutions commencing natural gas activities in the following years.

A legal entity may freely engage in natural gas market activities on the condition that it fulfils the conditions set forth under the applicable legislation and obtain the relevant licence or certification from EMRA. Foreign investors can freely access the natural gas market and obtain a relevant licence and/or certification as well, provided that they establish a legal entity in Turkey. There is no restriction on the ownership of shares and a foreign investor may hold up to 100% of the shares of the licence holder. If the foreign investor will acquire the shares of a licence holder entity, the transfer of shares will be subject to prior approval of EMRA. However transfer of shares listed below will not be subject to EMRA approval in which case the licence holder is required to notify the EMRA within 60 (sixty) days after the transfer of shares:

I. Except for share transfers when a shareholder leaves the company, transfer of shares by a person or legal entity who own direct privileged shares to a person or a legal entity that own direct privileged shares within the licence holder company regardless from the share proportion; and

II. Transfer of privileged shares within the legal entity that owns direct/indirect shares within the licence holder company except for share transfers that result in

i. acquisition of 10% (5% in public companies) or more of the capital of the licence holder company directly or indirectly by a person or a legal entity

ii. acquisition of more than 10% of the capital of licence holder company

iii. lower proportion of shares owned by a shareholder compared to the proportions stated above.

Market participants at all levels of the value chain in the Turkish natural gas market can expect to be subject to an antitrust analysis by the Competition Authority in connection with their contractual arrangements and activities. To conduct such antitrust analysis in this highly regulated market, the Competition Authority relies on its Natural Gas Market Study, which was published in 2012 and which provides a thorough analysis of the market, the phases of the liberalisation process, a diagnosis of sector-specific issues and suggestions to address them.

Israel Small Flag Israel

Natural gas is transported from the offshore production platforms to an onshore receiving terminal and from there through a state-owned transmission system operated by INGL. This system is designed to feed a distribution network to deliver natural gas at low pressure (up to 16 bar) to local consumers, industrial zones and small to medium sized facilities. Customers are limited to the distribution company that operates in their region, as described above in question 15.

The Natural Gas Authority sets certain infrastructure rates relating to the purchase of gas. When a customer wants to purchase natural gas, they have two options on where to turn. They could purchase directly from the Tamar or Leviathan partnerships, however, these actors tend to sell mainly to large customers and not to smaller consumers. The second option is to turn to regional distribution companies that act as middle men between the producers and consumers. These regional distribution companies buy vast amounts of gas directly from the gas fields and then sell at negotiable prices to consumers. There is no regulation mandating specific pricing or rates for these consumers, barring the exception of electricity companies whose purchase of natural gas is regulated by the Electricity Authority and guarantees that pricing to electricity companies will not exceed the maximum price as determined by the Electricity Authority.

Once component of pricing for natural gas is an infrastructure tariff in respect of the transmission and distribution of gas, such tariff is fixed and nonnegotiable and applicable to all consumers although it varies based on locality. The tariff rate is determined generally by the Natural Gas Authority and locally by the regional municipalities.

Norway Small Flag Norway

Subject to material and procedural rules pursuant to law for obtaining and operating downstream transmission, distribution, regasification or storage facilities, there are no limitations on who may engage in the downstream natural gas market. Some natural gas wholly owned by regional authorities are vertically integrated. To all undertakings, vertical unbundling principles are enforced towards gas suppliers that operate in the market as transmission system operators providing natural gas to end customers.

United States Small Flag United States

The U.S. downstream gas market is privately owned and operates in a competitive environment with no government-owned suppliers. There are commercial arrangements available for customers in the major types of downstream operations, including supply contracts, franchise and distributorship agreements, and storage agreements.

Updated: January 8, 2020