French energy watchdog mulls ways to reduce southern gas prices
PARIS Feb 19 (Reuters) - French energy watchdog CRE is looking at stop-gap measures to bring expensive gas prices in southern France down closer to levels in northern France until new pipelines can be built around 2018 to better link the two regions.
Prices at the southern gas hub called PEG Sud have been 10 to 15 percent higher than in the north for the past two years as the zone relies on shipments of relatively expensive liquefied natural gas (LNG) for about half of its gas supplies.
The northern gas hub called PEG Nord has access to additional gas imports via pipelines from Norway and Russia, and transport bottlenecks between the two zones have prevented prices from converging.
"The situation cannot remain as it is. Temporary measures are needed before 2018," a spokeswoman for CRE told Reuters.
Gas costs, which have risen to levels nearly as high as in Asian markets in parts of southern France, have been a threat to energy-intensive industries such as fertilizer makers in the southern half of the country, the regulator has warned.
The regional discrepancy also highlights the difficulties in reaching a European goal to unify gas prices across the region.
The CRE regulator launched a consultation this week with industrial players and presented proposals for temporary solutions.
Under one such proposal, French gas grid GRTgaz could tender for companies to ship more gas to the southern hub at an overall cost of 1 billion euros ($1.4 billion) per year, which GRTgaz would recoup by raising gas prices for consumers in both zones.
Another option would be to require companies with capacity at the gas import terminal in Fos near Marseille such as GDF Suez, Total and EDF to import higher volumes of LNG through the terminal for the southern market.
The second proposal would require the government's approval and a new law, the CRE spokeswoman said.
The energy ministry will hold a meeting on Feb. 27 to discuss the proposals with industrial firms such GDF Suez and Total and gas network business TIGF, a spokeswoman for the ministry said, adding that final decisions were not expected at the meeting.
Industry players have until March 21 to take part in the public consultation.
The spread between Peg Nord and Peg Sud day-ahead gas prices reached a record of 12.29 euros per megawatt-hour (MWh) on Dec. 3 on the French gas bourse Powernext and was last around 5 euros. <0#PNXGPSN:> ($1 = 0.7272 euros) (editing by Jane Baird)
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