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Energy and environment

Gas

Natural gas is one of the most used fuels in the European Union, accounting for approximately a quarter of our primary energy. In 2006 around 38% of this gas was produced within the EU, in particular in the UK, Netherlands, Germany, Italy, Denmark and Romania. 54% is imported, and this proportion is growing. Norway (16%), Algeria (10%) and especially Russia (23%) are traditionally the most important sources of gas imported to the EU, although imports of liquefied natural gas by ship are growing fast, and from a wider range of producing countries (Egypt, Nigeria, Libya, Trinidad, Qatar, Oman). As gas production in the EU declines in the coming years, the proportion imported is expected to increase substantially.

In 1998, the EU decided to liberalise the gas markets. See the overview for a short summary or the European Commission gas website for a full account.

Sector inquiry

The perceived problems with competition in the gas markets prompted the Commission to launch a sector inquiry covering the gas industry in June 2005. The objective was to identify the barriers that impede the development of a fully functioning open and competitive EU-wide gas market that would provide fairer prices for the final consumer, more efficient allocation and use of the resources and supply, more openness for renewable energies and an economically sustainable basis for security of supply. The final report of the sector inquiry, published in 2007, showed that there are serious distortions of competition in the sector, in particular:

  • At the wholesale level, markets generally maintain the high level of concentration of the pre-liberalisation period. (read about liberalisation here)
  • Lack of liquidity and limited access to infrastructure prevent new entrant suppliers from offering their services to the consumer.
  • Cross-border sales do not presently exert any significant competitive pressure.
  • There is a lack of reliable and timely information on the markets - normally the lifeblood of healthy competition.
  • More effective and transparent price formation is needed in order to deliver the full advantages of market opening to consumers.

Regulation

Given the concerns identified in the Sector inquiry, the Commission proposed further liberalisation of the gas sector on 19 September 2007.

Competition cases

On the antitrust side, in 2007 the Commission completed an investigation into long-term contracts concluded by Distrigas, the traditional gas supplier in Belgium, and their effect on alternative suppliers trying to build up a customer base. The Commission adopted a "commitments decision" under which commitments offered by Distrigas to limit the duration of its contracts with customers in Belgium were made legally binding.

The Commission carried out inspections in a number of energy companies in 2006. During these inspections a seal was broken in E.On's premises and the Commission fined the company. As a result of documents found during the inspections and following subsequent investigation the Commission has opened a number of cases in the gas sector against:

Merger and State aid cases have also been investigated and significant remedies have been necessary (see, for example, the mergers DONG/Elsam/EnergiE2 and GDF/Suez).

For a more exhaustive list of cases, see the mergers and State Aid case pages.

  
  
Related links
Proposed legislation (third energy liberalisation package and environmental package)
Energy website - European Commission
Energy and environment website - European Commission