8 December 2010

Gazprom Export and Fluxys explore cooperation in natural gas storage

On 8 December, Gazprom Export and the Belgian company Fluxys signed a Memorandum of Understanding for the purpose of examining the options for Gazprom Export to reserve long-term storage capacity at Fluxys' underground storage site in Loenhout.

Under the current legal framework, Fluxys must give priority allocation of storage capacity to grid users who supply distribution system operators. Since Gazprom Export is active in border-to-border transmission and does not supply natural gas to distribution system operators, the company cannot make use of storage in Belgium.

Talks will be conducted with Belgian federal regulator CREG to see how such a capacity reservation can be implemented in the framework of an open, transparent procedure.

Alexander Medvedev, Director General of Gazprom Export: “The usage of underground natural gas storage facilities in Europe is a high priority for Gazprom as a way to ensure security of Russian gas supply. Our efforts in the UGS sector are focused on fulfilling our obligations within the framework of long-term gas supply contracts with our customers to respond to peak or emergency demands.”

Walter Peeraer, chairman of the Executive Board and CEO of Fluxys: “A long-term storage agreement with a natural gas producer would significantly enhance security of supply. As system operator, Fluxys could count on certain and immediate access - for a period of 20 years - to a large strategic gas reserve in case of emergency, for instance if a natural gas source becomes temporarily unavailable to the Belgian market.”

Under a long-term contract, in case of emergency Gazprom Export will be providing its natural gas that it has in storage directly to Fluxys. In that way, the agreement would work in favour of both parties: Fluxys would have immediate emergency access to additional volumes of Gazprom Export's natural gas as a strategic reserve for the Belgian market, and Gazprom Export would have a buffer capacity for its supplies to North-Western European markets.

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