Both Gaz de France (GDF) and Total SA—France's historic operators—have set up web sites outlining their temporary natural gas release programs required by France's Energy Regulatory Commission (CRE).
The programs are intended to spark natural gas supply competition in southern France during the period before two major supply projects come on stream: a new LNG terminal to be built on the Mediterranean at Fos Cavaou in southeastern France by 2007 (OGJ Online, July 12, 2004), and a gas pipeline link with Spain in southwestern France (OGJ Online, Apr. 26, 2004). France's natural gas market has been 70% liberalized since the first of July. While gas supplies have many points of entry in the north, there are no supplies available in the south for third party operators, as the existing LNG terminal at Fos is too small to handle spare capacity.
Program features
Under the release program, GDF will auction off or sell by private contract 1.5 billion cu m/year of gas over 3 years, starting in January 2005. Total and its subsidiary, Gaz du Sud-Ouest (GSO), will auction off 100 million cu m over a 3 year period, also at the start of 2005.
Bidding will take place this year in mid-October by prequalified companies bidding through the internet. GDF is employing IBM Business Consulting Services as counselor in charge of logistics and bid implementation. Total and GSO will implement the sales through Total's UK-based subsidiary Total Gas & Power Ltd.
GDF, after consultation with CRE, will set a minimum closing price for its gas that will be tied to a predetermined gas reserve price and not communicated to the bidders.
Regarding terms of the transaction, the relevant person at one bidding company—who wished to remain anonymous—told OGJ that, at this stage he saw little flexibility in the 3 year lots put on the market. He wondered whether the final price would be market competitive and how it would be possible to deal with interruptible clients if lots could not be broken down into 1 or 2 years. But he added that he is willing to wait and see how the gas release program develops.