BP exec grows impatient with France's slow-opening gas market

Doris Leblond
OGJ Correspondent

PARIS, Apr. 5 -- BP PLC is showing impatience at the slow opening of France's natural gas market. Newly named BP France Pres. Patrick Haas told a press conference last week that his company has taken an active part in the national debate on the opening of the gas market.

The company recently forwarded a set of "concrete" measures that will likely improve the flexibility in third-party access to the gas network as well as to other logistic infrastructures, such as LNG terminals and gas storage facilities, Haas said. These measures were sent to the network's various industry players and other concerned regulatory authorities.

In particular, BP is strongly advocating a substantial gas release program to bring more spot gas to a market limited by the long-term take-or-pay contracts which supply France through Gaz de France.

Haas is lobbying for 15-20% of these natural gas supplies to be auctioned off to other operators in the form of 2- to 3-year, medium-term contracts. He said that BP must find ways of bridging the gap to 2007, when the southern part of France becomes open to competition as GDF and Total SA bring on stream a second LNG terminal at Fos Cavaou on the Mediterranean Sea.

So far only the northern part of France can be supplied with spot gas, which ensures a competitive opening of the market for the 1,200 eligible large gas-consuming clients. BP supplies very few sites in that area, and also is constrained by the fact that spot gas, since 2003, is much more expensive than the long-term contract gas as demand rises from the US, in particular, drying up the EU market.

In addition, access to the Fos-sur-Mer LNG terminal is expensive for small deliveries, and large deliveries would require access to GDF's storage facilities, which have not yet been organized.

"We cannot even supply with natural gas our Lavéra site in southern France," Haas complained. "We must still buy our gas from Gaz de France." He indicated that BP would willingly take a stake, jointly with GDF and Total, in the new and larger nearby Fos-Cavaou LNG terminal, which is due on stream in 2007.

BP also has an eye on the new gas import facility improvements—also due on stream in 2007—which will supply southern France. Facility upgrades call for the construction of a gas pipeline from Bilbao, Spain, to Lussagnet, France as well as the bolstering of capacity through the Lacal-Calahorra gas pipeline. This line, if joined to the Fos-Cavaou terminal, could open up the possibility of a Spain-to-France delivery system that could be used to import Algerian gas through a gas pipeline though Spain.

BP is all the more impatient to have access to "liberalized" natural gas as France's market is due to open on July 1 to 530,000 professional clients representing two-thirds of France's natural gas consumption.