Greenfield Formal Report 328/07 Gas Distribution: Cross-country Greenfield Gas Experience Distribution: Cross-country Experience Formal Report 328/07 Energy Sector Management Assistance Program Energy Sector Management Assistance Program Purpose The Energy Sector Management Assistance Program (ESMAP) is a global technical assistance partnership administered by the World Bank since 1983 and sponsored by bilateral donors. ESMAP's mission is to promote the role of energy in poverty reduction and economic growth in an environmentally responsible manner. Its work applies to low-income, emerging, and transition economies and contributes to the achievement of internationally agreed development goals through knowledge products such as free technical assistance;specificstudies;advisoryservices;pilotprojects;knowledgegenerationanddissemination;training, workshops, and seminars; conferences and round-tables; and publications. 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FurtherInformation Please visit www.esmap.org or contact ESMAP via email (esmap@worldbank.org) or mail at: ESMAP c/o Energy, Transport and Water Department The World Bank Group 1818 H Street, NW Washington, DC 20433, USA Tel.: 202.458.2321 Fax: 202.522.3018 Formal Report 328/07 Greenfield Gas Distribution: Cross-country Experience Energy Sector Management Assistance Program Copyright © 2008 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, NW Washington, DC 20433, USA All rights reserved Produced in India First printing December 2007 ESMAP Reports are published to communicate the results of ESMAP's work to the development community with the least possible delay. The typescript of the paper therefore has not been prepared in accordance with the procedures appropriate to formal documents. Some sources cited in this paper may be informal documents that are not readily available. 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ESMAP encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. Contents Acknowledgments ............................................................................................................... vii Units of Measure .................................................................................................................. ix Acronyms and Abbreviations ................................................................................................ xi Executive Summary ..............................................................................................................xiii 1. Introduction ................................................................................................................ 1 2. Definitions, Methodology and the Importance of Gas Distribution ................................ 3 Definitions ............................................................................................................. 3 The Importance of Gas Distribution ........................................................................ 3 Methodology .......................................................................................................... 4 3. Factors Driving Greenfield Gas Distribution .................................................................. 7 Supply-side Factors ................................................................................................ 7 Demand-side Factors ............................................................................................. 8 Energy Consumption Patterns of Households ...................................................... 8 Settlement Density ........................................................................................... 10 Presence of Anchor Consumers ........................................................................ 11 Government Policies on Gas Distribution ............................................................... 11 Policies Fostering Greenfield Gas Distribution .................................................... 11 Other Major Policy Choices Affecting Gas Distribution ....................................... 14 4. Experience with Greenfield Gas Distribution: The Pioneers .......................................... 19 Supply-side Aspects .............................................................................................. 20 Manufactured Gas Networks ........................................................................... 20 Indigenous Gas Reserves ................................................................................. 21 Imports and Transit ......................................................................................... 22 Proximity to Gas Fields ..................................................................................... 22 Terrain ............................................................................................................. 23 Price and Cost ................................................................................................. 23 iii GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Demand-side Aspects ........................................................................................... 24 Space Heating ................................................................................................. 24 Per Capita Income ........................................................................................... 25 Household Size ................................................................................................ 25 Competing Fuels ............................................................................................. 26 Settlement Density ........................................................................................... 27 Other Retail Consumers ................................................................................... 29 Anchor Consumers .......................................................................................... 29 Major Policies with Implications for Gas Distribution ............................................... 30 Ownership and Gas Market Structure ................................................................... 33 5. Experience with Greenfield Gas Distribution: The Newcomers ..................................... 39 Supply-side Aspects .............................................................................................. 39 Lack of Manufactured Gas Networks ................................................................ 40 Low Overall Usage of Natural Gas ................................................................... 41 Indigenous Supplies of Natural Gas ................................................................. 41 Gas Supply Infrastructure ................................................................................. 42 Proximity of Consumption Centers to Natural Gas Fields ................................... 42 Demand-side Aspects ........................................................................................... 43 Requirement for Space Heating ........................................................................ 44 Income per Capita ........................................................................................... 45 Household Size ................................................................................................ 46 Competing Fuels ............................................................................................. 46 Settlement Density ........................................................................................... 47 Commercial and Service Consumers ................................................................ 48 Anchor Consumers .......................................................................................... 48 Environment .................................................................................................... 49 Policy Framework and Market Structure for Gas Distribution .................................. 50 Private vs. State-led Development of the Gas Market and Gas Distribution ......... 50 Concentration of Ownership in Gas Distribution ............................................... 51 The Degree of Vertical Integration ..................................................................... 52 Greenfield Distribution Amidst a Liberalized Gas Market ................................... 52 Some Strategies Promoting Greenfield Gas Distribution ..................................... 53 Policy Choices Creating Obstacles for Progress in Greenfield Gas Distribution .... 54 Annex ................................................................................................................................ 59 List of Formal Reports ......................................................................................................... 85 iv CONTENTS Figures Figure 2.1: Selected Countries with Gas Distribution .............................................................. 5 Figure 4.1: Penetration of Natural Gas in Households ......................................................... 19 Figure 4.2: Estimated Average Gas Consumption per Household ........................................ 25 Figure 4.3: Share of Natural Gas in Total Residential Energy Consumption ........................... 26 Figure 4.4: Estimated Number of Households per km of Gas Distribution Grid .................... 28 Figure 4.5: Commercial-public Services of Consumption of Gas per Every 1,000 Cubic Meters Consumed by Households ............................................. 29 Figure 5.1: Penetration of Natural Gas in Households ......................................................... 40 Figure 5.2: Estimated Average Gas Consumption per Household ........................................ 45 Figure 5.3: Share of Natural Gas in Total Residential Energy Consumption ........................... 46 Box Box3.1: The District Heating Alternative .......................................................................... 12 v GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Tables TableA1: Indicators of Overall and Residential Gas Penetration in Group I Countries .......... 59 TableA2: Supply-side Issues for Group I ............................................................................ 60 TableA3: Major Demand-side Issues for Group I .............................................................. 61 TableA4: Gas Consumption in Households in Group I ...................................................... 63 TableA5: Average Size of Households in Group I .............................................................. 64 TableA6: Role of Gas vs. Competing Fuels in Households of Group I Countries ................. 65 TableA7: Number of Households per km of Distribution Grid in Group I Countries ............ 66 TableA8: Consumption in the Commercial and Public Services Sector in Group I Countries ..... 67 TableA9: Ownership and Market Structure in Group I Countries ....................................... 68 TableA10: Indicators of Overall and Residential Gas Penetration in Group II Countries ......... 71 TableA11: Share of Gas in TPES in Group I and Group II Countries ..................................... 72 TableA12: Supply-side Issues for Group II ........................................................................... 73 TableA13: Demand-side Issues for Group II ....................................................................... 75 TableA14: Gas Consumption in Households for Selected Countries in Group II ................... 77 TableA15: Average Size of Households in Group II ............................................................. 77 TableA16: Role of Gas vs. Competing Fuels in Households in Group II Countries ................. 78 TableA17: Consumption in the Commercial and Services Sectors in Group II Countries ........ 79 TableA18: Ownership and Market Structure in Group II Countries ...................................... 80 vi Acknowledgments This study was commissioned by the World report. Ms. Selma Karaman (World Bank Office: Bank's Energy Sector Management Assistance Ankara, Turkey ­ ECCU6) and Mr. Yukari Program (ESMAP) and was prepared by Tsuchiya (ECSSD) assisted in editing and Mr. Adnan Vatansever. The task of preparing finalizing the report. and finalizing the report was managed by Mr. Sameer Shukla (Environmentally and The report benefited tremendously from Socially Sustainable Development Sector Unit, comments, advice and guidance from World Europe and Central Asia ­ ECSSD). The Bank peer reviewers, Mr. Franz Gerner (ECSSD) research, data collection and analysis, and and Mr. Bent Svensson (Oil, Gas and Mining background interviews with various Policy and Operations Unit ­ COCPO), to whom stakeholders were carried out by Mr. Adnan the task team is particularly grateful. Vatansever, Mr. Ranjit Lamech, Mr. Gurhan Ozdora and Mr. James Moose (ECSSD) The team also wishes to acknowledge the contributed significantly to the finalization of the assistance from ESMAP in preparing this report. vii Units of Measure bcm billion cubic meters CO2 carbon dioxide F fahrenheit km kilometer km2 square kilometer m3 cubic meters mn million ix Acronyms and Abbreviations APEC Asia-Pacific Economic Cooperation APERC Asia-Pacific Energy Research Center APM administered price mechanism BGC British Gas Corporation BOTAS Boru Hatlari ve Petrol Tasima AS (Turkey's petroleum pipeline corporation) CHP combined heat and power DDHA Danish District Heating Association DH district heating DNNs Distributeurs Non-nationalisés EU European Union FRG Federal Republic of Germany GAIL Gas Authority of India Limited GdF Gaz de France GdP Gas de Portugal GNI gross national income HDDs heating degree days IEA International Energy Agency INH Instituto Nacional de Hidrocarburos Kogas Korean Gas Corporation LACGEC Latin American and Caribbean Gas and Electricity Congress LNG liquefied natural gas LPG liquefied petroleum gas NELP new exploration licensing policy OECD Organisation for Economic Co-operation and Development OIL Oil India Limited xi GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE ONGC Oil and Natural Gas Corporation RoR rate of return TPA third party access TPES total primary energy supply T&D transmission and distribution ToP take-or-pay UN United Nations WB World Bank xii Executive Summary Purpose of the Study · What are the new challenges and opportunities for countries which embarked Once confined to a few countries, gas more recently on greenfield gas distribution? distribution systems have spread widely around the world in the past few decades. The discovery The study aims to present information about of new gas deposits, technological advances specific countries which have initiated gas cutting the cost of gas transportation and distribution projects rather than suggestions. environmental concerns have prompted a However, by drawing on the experience of a growing number of countries to embark on large number of countries, it also aims to projects that introduce natural gas to a wider provide practical lessons about issues which base of consumers. could potentially foster or impede gas distribution projects. Despite its growing importance, however, comparative studies on gas distribution across Methodology countries are significantly lacking, especially pertaining to areas outside the Organisation The study emphasizes how countries vary in for Economic Cooperation and Development terms of the level of development of gas (OECD). The major purpose of this study is distribution networks. Chapter 3 outlines the partly to fill this gap, and partly to contribute to major factors contributing to such a diversity. the understanding of several issues essential These factors fall into three categories which to gas distribution worldwide. These include form the basis for analyzing gas distribution in the following: the countries selected in the study: supply-side factors, demand-side factors and policy choices · What explains the uneven level of gas of governments. distribution development across countries worldwide? Why did some countries develop The report is based primarily on a desk study their gas distribution infrastructure notably of a sample of 28 countries from five earlier than others? continents. Each country has undertaken greenfield gas distribution projects at some · Why have some countries failed to achieve stage. In selecting the countries, the priority has any significant progress in establishing gas been to achieve the greatest possible variety in distribution networks despite proclaimed terms of the factors driving gas distribution. initiatives to do so? Also, what contributed Principal factors include the level of economic to delays in the accomplishment of such development, geographic size and location of greenfield projects? the country, climatic conditions, availability of xiii GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE indigenous or foreign gas supply, population Main Conclusions density, gas market structure and predominant government policies with implications for the There has been a highly uneven level of gas gas sector. distribution development worldwide. Some countries managed to develop an extensive gas Each country included in the sample has a distribution infrastructure several decades ago, unique story about developing gas while others are just starting to invest in this distribution networks, and could provide area. Based on the experience of the 28 valuable lessons. However, illustrating these countries analyzed in this study, this diversity is lessons through a separate case study for an outcome primarily of the following: each of the 28 countries would make any practical conclusions cumbersome. Thus, this · On the supply-side, possessing a study takes an alternative approach and distribution infrastructure based on brings together these countries for the manufactured gas has created cost-cutting purpose of examining the presence of certain opportunities in gas distribution investments patterns about the experience of these and provided a major headstart for several countries, as well as addressing the questions countries. As another supply-related issue, noted above. acquiring an early access to natural gas (indigenous or imported) has also helped The 28 countries are categorized into two some countries achieve a relatively faster groups: Group I ("pioneers") and Group II progress in greenfield gas distribution ("newcomers"). The distinction is based on one projects than others. Finally, the economic major criterion: countries in Group I started level of development of a country has largely significant greenfield gas distribution projects determined when it acquired access to at least three decades ago. Countries in Group natural gas, especially if coming from II started more recently, some as late as toward foreign sources; the end of the 90s. This distinction helps to emphasize that gas distribution today faces · On the demand-side, the presence of a significantly different circumstances than in the relatively colder climate which requires space past. Thus, to some extent, by examining the heating has appeared central for greenfield experience of Group I, this study provides gas distribution. It is rare that countries with insights primarily about how gas distribution low heat load develop extensive gas was done in the past, while the experience of distribution networks. The economic level of Group II highlights the more recent challenges developmentofacountryappearsasacrucial and opportunities in this sector. This demand-side factor as well, as it has categorization of the 28 countries also significantly affected the ability of households highlights the fact that reaching high levels of to switch to natural gas from other fuels; and household gasification is usually a very time-consuming process. Thus, some countries · While there is no "one-size-fits-all" policy have significantly lower rates of residential gas model which explains successful progress in penetration simply because they started the greenfield gas distribution, the study reveals process of greenfield gas distribution relatively that policy choices have been highly later. Finally, an analysis based on this significant. Accordingly, several countries categorization helps to address one of the major have managed to develop extensive gas questions in this study: why some countries distribution infrastructure despite facing started greenfield gas distribution projects much major disincentives (such as a warm climate earlier than others? or lack of indigenous gas supplies) for xiv EXECUTIVE SUMMARY greenfield projects. Similarly, some countries · Switching to natural gas is a costly process, have failed to benefit from major assets, especially for residential consumers ­ the such as the presence of sizable indigenous primary object of gas distribution networks. gas supplies, largely due to policies adopted In the case of Group I countries, the relatively by their governments. high level of per capita income facilitated the displacement of existing fuels; and Group I · The study reveals that countries in this The success of countries in Group I ("pioneers") Group have achieved high levels of gas in developing extensive gas distribution distribution development despite opting for networks has been an outcome mainly of the quite different policies. The differences are following: major in terms of the level of government involvement (such as ownership and · Most of them benefited from a legacy of regulation of gas tariffs) in distribution; the large scale distribution networks operating concentration of ownership in this segment on manufactured gas. Once natural gas of the gas market; the level of vertical was available, there was a major cost integration in the gas market overall, and incentive to convert this to more efficient fuel; the timing and scope of reform. Therefore, · Most of these countries, at least during the the experience of Group I countries illustrates initial stages of greenfield gas distribution, that there are different paths to success in possessed significant indigenous gas greenfield gas distribution. reserves. Meanwhile, their pioneering role Group II in upstream investments allowed them to tap these resources, contributing to an early A small subset of Group II countries has also development of a national gas market; managed to achieve rapid progress in greenfield gas distribution projects. Success in · Owing to their relatively higher level of these countries appears to be associated economic development (measured in terms primarily with various policy choices adopted of national income per capita), Group I by their governments. For instance, legislative countries were the first to be able to afford changes encouraging the involvement of private large-scale investments in major entrepreneurs have been highly consequential cross-border pipelines or liquefied natural in fostering investment in gas distribution. Also, gas (LNG) import terminals. Similarly, they measures aimed at gas market liberalization were the first to develop extensive transmission networks. Both of these in these countries have coincided with developments assured gas supplies for a acceleration in gas distribution projects. growing number of consumers, especially However, there is no single explanation for the those served by distribution grids; success of all of this subset of Group II countries. Interestingly, the countries most advanced in · Gas distribution in most countries in the terms of greenfield gas distribution are those Group benefited from the presence of high with no significant indigenous gas reserves heat load associated with their relatively cold (Colombia being the only exception). climate. However, in the case of a few of these countries, heat load remained a less Meanwhile, most countries in Group II have significant factor, as the residential sector achieved progress in greenfield gas distribution largely abstained from using natural gas for to a lower extent. Examining the experience of space heating purposes; these countries reveals the following: xv GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE · Many Group II countries possess sizable Challenges and Opportunities for indigenous gas reserves. However, due to Development of Greenfield shortcomings in the legal environment or Gas Distribution other problems, nearly all of them failed to mobilize investments in their upstream, and Unlike the case of Group I countries, in which production of natural gas remained distribution networks had reached an advanced constrained until the 80s or even the 90s. stage before the introduction of major reforms This has been a major source of delay for (such as privatization of the national gas market development, overall, and transmission owner and reduction in the level investment in gas distribution infrastructure, of vertical integration in the market), such in particular; reforms have coincided largely with the early stage of greenfield gas distribution in Group II · Partly due to financial constraints, but also countries. These countries thus provide valuable as an outcome of lower priority on the part examples of progress in gas distribution amidst of the governments, many of these countries major shifts in the gas market toward higher failed to establish an extensive transmission levels of competition and limited government network which could have sparked involvement. development in gas distribution; Another distinctive feature for the "newcomers" · Due to the relatively milder climate in most is the large role of power generation in the Group II countries, developing gas development of a national gas market. Unlike distribution networks for residential most countries in Group I, power plants have consumers has long remained a low priority emerged as major consumers in the early for governments. Similarly, switching to gas stages of gas market development for most has usually been a lower priority for countries in Group II. This is mainly due to the late start-up of gas market development, which households. This is due to the relatively high coincided with the new global emphasis on gas- costs associated with this process as well as fired power generation. As a result of this the availability of relatively cheap (or free) relatively late start-up, infrastructure access to combustible renewables (usually development in this group of countries appears wood) as an alternative source of energy for blessed with the presence of power plants as a significant share of the population; and anchor consumers. Power plants located in different parts of these countries have been a · The study provides multiple examples for major driver in the construction of transmission policies adopted by Group II countries which pipelines, following which cities have initiated have impeded progress in greenfield gas greenfield gas distribution projects. distribution. Some of these policy choices include: lower national priority on natural Group II countries also, on the whole, have not gas; the presence of a national oil and gas benefited from the inexpensive natural gas that company with traditional emphasis on oil; was normal when many of the Group I countries specific regulations of distribution tariffs installed their gas distribution systems. In the which reduce the incentives for investment; early days of gas distribution, natural gas was the presence of subsidies for fuels competing very cheap at the well head since it was a with natural gas; weak enforcement of clean by-product of oil production and often flared. air regulations; and delays in privatization This is no longer the case and the Group II of distributors amidst the financial problems countries are usually installing systems to deliver of incumbent gas companies. relatively more expensive natural gas. xvi EXECUTIVE SUMMARY Finally, the Group II countries are dealing with reason for the elimination of the infamous gas distribution in a period of heightened London fogs.) However, all Group II countries environmental awareness. Some Group I are aware of the reduction in air pollution countries (such as the United Kingdom) were associated with natural gas distribution, as well very much aware of the reduction in air pollution as the reduction in carbon emissions, as natural associated with the introduction of natural gas. gas replaces generally more polluting and (Gas distribution in London was the main carbon-intensive fuels. xvii 1. Introduction Natural gas has become an increasingly to be important for initiating large-scale important fuel for household, commercial and investments in gas distribution. Thus, many service consumers. This has required extensive countries with significant progress in developing investment in the construction of gas distribution gas distribution would be classified as "low networks serving these consumers. income" or "lower middle income" countries. Others possess a relatively warm climate which Historically, gas distribution networks developed does not require space heating, resulting in first in countries which were marked by a significantly lower gas consumption per comparatively higher level of economic household than in the countries which development, significant indigenous supplies pioneered in gas distribution. Moreover, a and a relatively cold climate. In the early 20s, growing number of countries with no the United States was the leader in establishing indigenous gas reserves are embarking on natural gas distribution networks. This was the developing distribution networks for gas. result of significant discoveries of natural gas, substantial heating demand as well as Several major factors have contributed to such technological progress, namely the invention of "globalization" of gas distribution. First, all-welded steel pipelines in the mid-20s. These discoveries of natural gas reserves in an enabled gas producers to connect their fields increasing number of locations have provided with major consumption centers through long- the impetus for investing in infrastructure for distance transmission pipelines. The United transporting this fuel to meet growing demand. States was followed, after World War II, by Second, technological progress has resulted in Western European countries which benefited the invention of stronger steels, high-pressure from indigenous gas supplies (especially in the pipelines, deepwater pipe-laying, larger LNG United Kingdom and the Netherlands), trains, and more efficient compressor stations. cross-border pipelines and liquefied natural gas These have contributed to significant (LNG) import facilities constructed to allow a cost-cutting in both pipeline and LNG projects. growing number of consumers access to this Also, the growing role of power plants, fired new fuel. by gas, has helped anchor development of the national transmission infrastructure, which, in Today, a growing number of countries have turn, has prompted development of gas made significant progress in establishing distribution networks. Meanwhile, increasing extensive distribution networks which provide environmental concerns have also fostered the their households with access to gas. These introduction of natural gas to households in countries vary in almost all aspects considered an increasing number of cities worldwide. 1 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE This study addresses several major questions: any significant progress in establishing gas distribution networks despite proclaimed · What explains the uneven level of gas initiatives to do so? What contributed to distribution development across countries delays in the accomplishment of such worldwide? Why did some countries develop greenfield projects? their gas distribution infrastructure notably earlier than others? · What are the new challenges and opportunities for countries which embarked · Why have some countries failed to achieve more recently on greenfield gas distribution? 2 2. Definitions, Methodology and the Importance of Gas Distribution Definitions The Importance of Gas Distribution Gas distribution is defined as the activity of The study acknowledges that gas distribution is transporting and marketing gas from the city not always the optimal choice for providing energy gate to a consumer's meter. Often, the to residential and commercial-public services borderline between distribution and consumers. However, it calls attention to the transmission is blurred, and countries adopt variety of ways that countries have benefited from different definitions for each. In general, developing greenfield gas distribution projects. however, distribution takes place in These include the following: low-pressure pipelines serving the residential and commercial-public services sectors. · Natural gas is one of the cleanest burning Occasionally, distribution networks may serve fossil fuels. Its introduction among smaller- and medium-size industrial users. households helps to reduce emissions and Rarely, in some countries, have distributors improve the quality of air, especially in areas been allowed to sell gas to larger industrial marked by significant levels of pollution; users and power plants. These types of consumers traditionally fall within the · Many attributes associated with natural gas domain of high-pressure transmission can provide additional convenience to network operators. households. Thus, gas is a versatile fuel with the possibility for numerous applications, such as space heating, water heating, Greenfield gas distribution is an activity cooking, airconditioning, pool heating and involving large-scale construction of distribution clothes drying. It provides a continuous and lines. Besides construction in areas with no reliable supply, with possible interruption distribution grid whatever, the report's being of little concern. Also, unlike many definition encompasses growth of investment other types of fuel (such as fuel oil), it does in new networks. It also includes cases of not require local storage; converting existing distribution grids, based on manufactured gas, into grids based on natural · If gas is priced below alternative fuels, it gas, if this involves large-scale investment and can significantly reduce the energy bill expansion in terms of reaching new consumers. of households; Expanding an existing distribution network is not included as part of greenfield distribution, · In countries where combustible renewables if it is limited mainly to connecting consumers (such as wood) are a major source of energy who are already in an area served by the existing for households, natural gas can help reduce distribution pipelines. deforestation; and 3 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE · Use of natural gas can improve a country's major similarities, they have ended up with energy security by reducing dependence on significantly different levels of success in gas petroleum products consumed by households distribution. By contrast, some countries have and the commercial-public services sector. reached nearly identical levels of gas penetration (in the residential sector, in particular), despite Methodology differences in the supply, demand and policy sides of greenfield gas distribution. There is great variation in the prevalence of distribution grids worldwide. Countries range In selecting the countries, priority has been from those that have achieved nearly universal given to achieving the greatest possible variation gas penetration in households and in the level of economic development, commercial-public services to those with an geographic size and location of the country, absolute lack of any gas distribution infrastructure. climatic conditions, availability of indigenous or foreign gas supply, population density, gas Chapter 3 aims to illustrate the major reasons market structure and predominant government behind this variety. Its primary point is that policies with implications for the gas sector. multiplicity of factors may potentially affect a country's decision to develop gas distribution Many countries have been excluded from the networks and its success in implementing such study for one of the following reasons. First, a decision. These factors are grouped into three some countries exhibit similar features to those categories: supply-side factors; demand-side included in the sample, and do not contribute factors; and government policies with major significantly to understanding greenfield gas implications for gas distribution. distribution. Second, the study excludes In theory, each factor could directly or indirectly countries in which there have been no initiatives determine the extent of gas penetration in for gas distribution whatever (such as Bahrain, households and commercial-public services ­ Brunei, Darussalam, Trinidad and Tobago, the primary driver for building distribution Nigeria and so on, and so forth). A separate networks. Meanwhile, the study emphasizes explanation is provided for countries that no single factor appears as a necessary emphasizing district heating (DH) instead of prerequisite for having an advanced gas greenfield gas distribution (Box 3.1: The District distribution network. By the same token, Heating Alternative), as a result of which they countries may respond differently to are also excluded from the sampled countries. circumstances which pose major disadvantages Third, the former Communist bloc is for greenfield gas distribution. represented by three countries only (Russia, Bulgaria and the Czech Republic), as distribution Chapter 4 provides a cross-country analysis of in a centrally planned economy does not pose progress in gas distribution. Countries (rather a practical example under current than individual companies), and their efforts circumstances. Fourth, some countries with related to greenfield distribution projects, substantial progress in greenfield gas constitute the core of the analysis. The section distribution are absent because of the lack of draws on a large sample from all parts of the sufficient historical data on the evolution of their world ­ 28 countries from five continents. gas distribution networks (for example, Bangladesh, Pakistan, the Arab Republic of Each country examined in the study has Egypt and the Islamic Republic of Iran). embarked on greenfield gas distribution. Many exhibit similar features in relation to the three Each country in the sample, in fact, has its own types of drivers examined here. However, despite story about gas distribution and could provide 4 DEFINITIONS, METHODOLOGY AND THE IMPORTANCE OF GAS DISTRIBUTION valuable lessons. A separate case study on each distribution relatively later. Reaching high levels of these countries could provide worthy insights in household gasification is usually a very time- about their experience with gas distribution. consuming process, and, even for the most However, illustrating these lessons through successful countries, the introduction of gas to separate case studies on each of the 28 most households has taken many decades. countries would make any practical conclusions Second, such a distinction helps to address one cumbersome. Thus, this study takes an of the major questions in this study: why did alternative approach and brings together a some countries have a much earlier start-up in large number of countries for the purpose of greenfield gas distribution projects than others? examining the presence of certain patterns and addressing the questions noted above. Group I includes countries which have reached a significant level of residential gas penetration The countries are examined in two separate (at least 30 percent). While set arbitrarily, this groups: Group I (the "pioneers" in gas figure allows the inclusion of a large number distribution), and Group II (the "newcomers" of countries (13) which had a "pioneering" role in gas distribution Figure 2.1). in gas distribution, and achieved some degree Figure 2.1: Selected Countries with Gas Distribution Group I Group II Algeria Italy Bolivia Indonesia Argentina Japan Brazil Korea Australia Netherlands Bulgaria Mexico Canada Russian Federation Chile Portugal Czech Republic United Kingdom China Spain France United States Colombia Tunisia Germany Greece Turkey India The distinction is based on one major criterion: of success in spreading gas to their households. countries in Group I started significant Group II includes countries which did take at greenfield gas distribution projects at least three least some initiative in greenfield gas decades ago. Countries in Group II started distribution projects in the past three decades. more recently, some as late as toward the end Their success, measured in terms of the share of the 90s. This distinction is important for two of households with access to natural gas, is reasons. First, it takes into account the fact that highly variable. For some countries, household some countries have significantly lower rates penetration is higher than in several countries of residential gas penetration simply because in Group I, while for others it is as low as nearly they started the process of greenfield gas "0" percent. This variation allows for the 5 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE analysis of the different level of success in distribution initiatives in each of the 28 greenfield distribution projects across countries, countries. In terms of data, it relies primarily and provides possible explanations for the on statistics available from the International reasons behind this. Energy Agency (IEA), Eurogas, International Gas Union, the United Nations (UN), Asia-Pacific The study is based primarily on desk research Economic Cooperation (APEC), as well as the relying on extensive analysis of greenfield gas World Bank's own sources. 6 3. Factors Driving Greenfield Gas Distribution Supply-side Factors possessed significant volumes of natural gas. Building a national gas industry based Supply, in this analysis, encompasses two on imported gas is the outcome of major aspects of natural gas. First, embarking on technological improvements1 and appears greenfield gas distribution projects requires as a more recent phenomenon. Meanwhile, some assurances as to the availability of natural some countries simply benefit from their gas. Whether from indigenous reserves or from geographic location and emerge as major fields located abroad, the presence of natural transit hubs, which can provide assurances gas (or the mere prospect of it) is a significant for gas supply as well as facilitate the factor which influences decision-making in construction of a national transmission building gas distribution networks. It can also network. Yet, possessing indigenous gas be a major factor explaining why some provides several advantages. It frees a countries had an earlier start-up in terms of country from the need to negotiate at length developing their national gas industry overall, on supply deals with foreign countries (or and gas distribution, in particular. Second, their companies). It eliminates the need to supply also encompasses the potential costs build cross-border pipelines, where associated with shipping natural gas from the construction can proceed only after well head to retail consumers. This aspect is negotiations which may often become important, as almost any country, in theory, could burdensome. In addition, larger indigenous have access to natural gas; however, for some gas reserves in proportion to the country's countries, it will occur only at prohibitive cost. potential demand usually help reduce concerns for supply security. Finally, the Several issues with potential implications on presence of significant gas reserves poses a greenfield gas distribution could be grouped constant reminder of the opportunity cost under each of these aspects of the supply side of not using those resources. This could of natural gas: potentially spark development of gas distribution networks, along with a national · Issues related to the availability of gas: gas industry; and Not surprisingly, the first countries to establish natural gas industries, as well as · Issues related to the costs of supplying gas distribution networks, were those that gas to final consumers: Building gas 1 Some major technological improvements include the invention of stronger steels, high-pressure pipelines, deepwater pipe-laying, larger LNG trains and more efficient compressor stations. 7 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE distribution pipelines is a costly process. The following section looks into the principal Some countries have been able to benefit drivers of gas demand in the residential sector from the presence of infrastructure for ­ the chief source of demand for gas distributing manufactured gas, which was transported through the distribution grid. Also, converted to natural gas at comparatively the analysis applies to the commercial and low cost. Also, final consumers in gas services sectors, which generally appear as a distribution (such as households, commercial major supplementary source of gas demand.2 and service consumers) bear additional The overall gas demand structure within a costs, namely those associated with country (that is, the share of power generation, transporting gas over longer distances. One industry, residential, commercial and services factor which could affect such costs is the sectors in total gas demand) is also considered proximity of gas reserves to consumption with respect to its implications in developing centers. Another factor is whether the country greenfield gas distribution networks, and in the imports gas through a pipeline or LNG provision of gas to retail consumers. tankers, with the latter usually being associated with higher costs. Similarly, Energy Consumption Patterns terrain for building long-distance pipelines of Households can also affect shipping costs significantly. Finally, quite often, construction of long- Traditionally, there have been three major areas distance (especially cross-country) gas of gas consumption by households: space pipelines has necessitated some government heating, water heating and cooking. Recently, funding. As a result, the financial capability new areas of application, such as air of the respective government has also been conditioning, clothes drying and pool heating, significant in launching such major have emerged, expanding the demand for gas infrastructure projects. in many households. Demand-side Factors Space heating has a prominent place among the various areas of residential gas application. A rough comparison across countries reveals Where significant space heating requirements that potential demand for natural gas by exist, households usually consume the bulk of retail consumers is one of the chief natural gas for meeting their space heating determinants for the development of gas needs, with the rest of gas delivered to them distribution grids. Also, from the perspective used for cooking, water heating, and (if any) of distribution companies, the expected size other purposes.3 Countries in which space of gas demand is the principal variable heating is widespread usually consume determining their profits. In most countries, larger volumes of natural gas (or any other including those in which utility providers are energy) per household than those where space not driven by profit, elaborate studies heating is limited. estimating natural gas demand are necessary to determine the capacity and investment The potential for using gas in space heating requirements of the distribution grid. has at least two implications. Distribution 2It is possible to build distribution networks based primarily on the commercial and service sectors and, to a lesser degree, on the residential sector. In practice, however, this has remained more as an exception, as examined in Chapter 4. 3Some exceptions exist, such as Japan (as examined in Chapter 4). 8 FACTORS DRIVING GREENFIELD GAS DISTRIBUTION companies serving consumers using gas for costs. A partial remedy for this comes from space heating are likely to sell relatively higher the growing use of air conditioning fired by volumes of gas per consumer, which will natural gas. It contributes to a higher potentially affect their profits. Consumers, on volume of gas consumption during warmer the other hand, faced with the option of using seasons, which are traditionally marked by gas for heating, are more likely to be sensitive lower residential consumption; to the relative cost of competing fuels. This is because larger volumes of energy consumption · Competing fuels and their relative will imply larger shares of energy expenditures prices: Estimating how consumers react to in their overall monthly (or annual) budgets. relative fuel prices requires studies on the elasticity of demand for various income The potential volume of gas consumption by groups. However, consumers in general are households is determined largely by the expected to prefer fuels that are delivered to following factors: them at consistently lower costs than others. · Climate: This determines the need for space Thus, in countries (or regions) where heating, as well as the average residential natural gas is priced below competing heat load. A measure of climate is the fuels, consumers are more likely to switch number of heating degree days (HDDs). to gas once it is available. Similarly, A HDD is considered to be equal to zero, if availability of relatively inexpensive the temperature exceeds a certain base electricity (possibly because of abundant value, usually 65°F.4 In countries (or regions) hydro resources or a priority on nuclear with relatively warm climates, the need for energy), biomass, or petroleum products space heating is minimal. Under these pose significant challenges to the circumstances, the viability of building a penetration of gas in households; distribution network is not as clear and this can discourage investment. This is especially · Average per capita income: When the case if residential customers (who households switch to natural gas their choice consume gas for needs other than space is determined mainly by three types of costs: heating) are the only consumers allowed to the price of gas; the connection fees which be served by a distribution company are usually required for access to gas; and working for profit. the cost of appliances which use gas. In countries with higher per capita (such as most Nevertheless, whereas colder climates lead industrial countries), none of these usually to high residential heat loads on an constitutes an excessive cost for an average average, they also contribute to a higher household. Moreover, consideration of the level of seasonality in residential gas superior convenience of gas (versus that of demand. This requires designing many other fuels) and its environmental distribution pipelines based on peak load impacts could often be strong enough to capacity, which is associated with additional prompt households to switch to gas.5 In low- 4If the temperature is below the base value, HDD is calculated as the difference between the base value and the average of the high and low temperatures of the day. The sum of daily values provides the annual HDD value. Herbert, John. Clean Cheap Heat, The Development of Residential Markets for Natural Gas in the United States (New York: Praeger, 1992), 141. 5With regard to the lack of a significant price advantage for competing fuels, households in higher income countries have tended to prefer natural gas because of its inherent higher level of convenience: there is no need to store the fuel (in contrast to coal and fuel oil in particular), and supply interruptions (in comparison with electricity) are less likely. 9 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE income countries, on the other hand, the cost · Population density and its distribution: of switching to natural gas is often prohibitive, Higher density of population usually means which impedes progress of the overall lower investment costs per consumer. This penetration level. Nevertheless, unless may be the case for both country and households have access to relatively cheaper regional levels of gas distribution. Thus, energy(especiallybiomass,whichisoftenfree), distribution companies operating in there is a strong incentive to switch to gas to countries with sparse population density lower burdensome monthly energy bills; and may experience fewer opportunities for benefiting from economies of scale. · Household formation patterns: The However, this problem may be largely average size of a country's household6 also disregarded in the case of significant has implications for developing gas concentrations of population in large distribution projects. Smaller household size, cities and agglomerations. For this reason, in general, relates to higher average greenfield gas distribution projects consumption of gas (and other fuels) per are often initiated in the largest cities person, but may potentially imply lower of a country, subsequently spreading to levels of consumption per consumer other regions; (household). Meanwhile, decreasing household size implies growth in the · Level of urbanization: Urbanization potential number of consumers, even if level is significant due to its implications the overall population growth rate for population density. Generally, higher is stagnating.7 levels of urbanization provide more favorable conditions for benefiting from Settlement Density economies of scale. In a predominantly rural country, spreading gas distribution Building gas distribution networks involves beyond a few large cities is highly substantial economies of scale. A principal challenging, as it implies building mains measure for benefiting from economies of over longer distances to serve fewer scale is the average volume of gas demand consumers (compared with countries with per kilometer (km) of the distribution grid. higher urbanization levels); and This, in turn, depends greatly on a country's (or region's) settlement density. · Type of dwelling: The type of dwelling is another aspect of settlement density with There are several aspects of settlement density, potential implications for the scope and none of which, in themselves, is a precondition speed of residential gasification. The for getting involved in greenfield gas distribution. predominance of multifamily dwellings However, each of them may appear as a (apartments) versus detached houses significant cause of success or failure in the significantly enhances the economies of penetration of natural gas in the residential, scale of a distribution project. It also commercial and service sectors of a country (or lowers the average cost of accessing gas its particular regions): for households. 6 Household is defined as a person or a group of persons who occupy a common dwelling. 7 The average size of households, in turn, is determined mainly by the fertility rate, changes in the age structure of the population and marriage behavior. 10 FACTORS DRIVING GREENFIELD GAS DISTRIBUTION Presence of Anchor Consumers This section evaluates two sets of policies. The first set includes several policies whose positive Industrial users and power plants could potentially role in fostering gas distribution projects has have a large impact on total gas volumes been generally proven worldwide. These include supplied within a country. Therefore, their policies aimed at: contribution to the development of gas distribution networks is likely to occur in one of · Reducing risks involved in securing gas two ways. First, adding either of these types of supplies for final consumers; consumers to the distribution system ensures significant economies of scale for local distribution · Creating larger economies of scale for distribution companies; companies. Even the provisional right to act as the exclusive provider of gas services to a power · Expanding gas demand by residential plant or larger industrial consumer could affect consumers; and the fortunes of a distribution company to a significant extent. Whether a distribution · Coordinating gas demand and supply in company is allowed to benefit from this depends the market. on the regulatory framework for gas distribution projects. The second set includes the policy choices which governments are often required to Second, large consumers can indirectly make in the process of developing a national contribute to greenfield gas distribution. gas market. These pertain primarily to issues Industrial users and power plants may serve involving ownership of the gas chain, and the as anchors for the development of a country's level of vertical and horizontal integration in transmission infrastructure, which is often the the market structure. Since worldwide sine qua non element in initiating any experience indicates that countries have distribution projects. Overall, their large succeeded in establishing comprehensive concentrated demand, especially if associated distribution networks despite pursuing with long-term supply contracts, provides significantly diverse policy choices on these predictable stream of revenues. This is essential matters, the emphasis is on major pros and for financing investments in transmission cons of these potential choices. infrastructure, which can then reach cities waiting for distribution projects. Policies Fostering Greenfield Gas Distribution Government Policies on Gas Distribution The following policies, although not part of an exhaustive list, may significantly promote greenfield There are several policy choices through which governments can foster or impede development gas distribution: of gas distribution networks. A policy · Comprehensive energy strategy with recommendation for a specific country needs priority on gas: Usually, as an outcome of to be based on studies of its energy market and the potential and desired role for gas in this energy security and environmental concerns, market. For this reason the following discussion many countries have elaborated of policies is not meant to provide a rigid comprehensive energy strategies with priority guideline for government involvement in the on expanding the share of gas in their gas distribution business. Rather it is a overall energy mix. Such a strategy facilitates discussion of how different policies may affect a government's ability to bring natural gas gas distribution. consumption to a projected level. In addition, 11 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Box 3.1: The District Heating Alternative DH has emerged as a viable alternative to gas had the leading role in DH projects. Larger DH distribution in a number of countries. DH systems networks have similar features to the electricity distribute steam or hot water to multiple buildings. market.Therearenoexamplesoffull-fledgedThird The heat can be provided from a variety of Party Access (TPA) on the transmission grid of a DH sources, including geothermal, natural gas, coal project, although unbundling between competing or even wood. At present, Europe has more than heat producers has been common. Usually, there 100 million DH consumers, nearly half of which are a great number of heat producers, a are in Russia.8 Eastern European and Nordic transmission monopoly and several local countries also use DH extensively. distributioncompanies. As the decision to introduce DH in former A greenfield DH project is subject to substantial Communist countries occurred in an economic risks and is no less complicated than a greenfield environment based on central planning, a brief gas distribution project. Its viability usually requires reviewoftwoNordiccountriesprovidesmoreuseful even greater population density (as well as a insightsaboutDH. greater predominance of multifamily dwellings) than does a gas distribution pipeline.14 Denmark provides probably the best example of a developed DH system as an alternative to Yet, two inherent advantages of DH have helped natural gas distribution. As of 2004, there were it appear as an attractive alternative to only 331,000 consumers who consumed natural gas distribution: gas directly from a distribution network.9 By · Increased use of cogeneration for DH: contrast, half of the population (1.2 million combined heat and power (CHP) production dwellings) is served by DH.10 The share of DH has become increasingly common in DH has expanded in the past three decades and projects. This has not only improved the continues to grow, although there have been no competitiveness of DH, but has also secured plans to expand the existing gas distribution grid.11 a higher overall efficiency in fuel consumption. Similarly, in Finland, the share of DH in space It is estimated that CHP increases the efficiency heating was 49 percent in 2004,12 whereas only of primary fuels' use by 35-40 percent in 34,300 consumers were directly connected to the comparison to heat-only boilers and gas distribution network. Gas distributed to condensing power production;15 and households through local distribution companies accounted for less than 5 percent of the gas · Widerfuelchoice:DHcompaniesareableto consumption in Finland. In fact, DH consumed use a large range of fuel-types in their plants ­ nearly 36 percent of the nation's gas.13 natural gas, coal, oil, refuse-driven fuels, geothermal energy, peat and biomass. This The penetration of DH is a process which has taken raises the possibility for market entry of decades in most countries. Almost always, local independent heat producers, enhancing governments with interests in electricity supply have competition in the DH market. 8Gochenour, Carolyn. 2001. District Energy Trends, Issues and Opportunities ­ The Role of the World Bank, (2001), World Bank Technical Paper 493: 43. 9Eurogas, 2003­04 report: 35. 10www.dff.dk (Danish District Heating Association). 11Griffin, op. cit., 19. 12www.energia.fi. 13Ibid. 14Grohnheit, Poul and Bent Mortensen. 2003. "Competition in the market for space heating: district heating as the infrastructure for competition among fuels and technologies." Energy Policy: 818. 15Gochenour, op. cit., p. x -xvi 12 FACTORS DRIVING GREENFIELD GAS DISTRIBUTION it is an effective means for assuring investors of government involvement in setting the price about a country's long-term objectives of competing fuels for final consumers. The regarding natural gas penetration; level of involvement may range from a government directly setting the price of most · Legislation on gas. This may establish clear types of competing fuels to a situation where rules for operation in the gas market, and government retains only tax measures as a codify the roles, rights and responsibilities means of control. In all cases, governments of different players so that they can operate do have the ability to get involved in a way on a level playing field. Overall, legislation which will provide natural gas some is often essential in establishing a stable competitive advantage over the other fuels. investment environment and reducing Yet, any involvement confronts two major uncertainty and investment risks. This, in challenges. First, it may cause distortions in turn, helps lower the cost of capital along fuel consumption in the longer run. Second, the gas chain, including greenfield gas if government intervention takes the form of distribution projects; capping the price of gas for final consumers, the effect may be to discourage investment in · Policies promoting supply and greenfield distribution projects. Overall, it is infrastructure development: As quite rare that government interventions development of gas distribution projects often aimed at promoting gas against other fuels requires clear assurances about sufficient gas will proceed without any unintended supply, some government intervention may be implications. An effective approach, as a helpful (and, sometimes, necessary) in the possible alternative to directly promoting gas, upper segments of the gas chain. Thus, if a is eliminating obstacles for its penetration. This country has significant gas reserves, enacting may involve, for instance, removal of any legislation favorable to upstream development existing subsidies related to the consumption may appear instrumental in attracting of fuels competing with gas (such as investors. In case of insufficient domestic underpriced electricity, DH, or coal); reserves, it might be necessary for a government to get actively involved in · Targeted subsidies for households: An negotiations with foreign governments (or alternative policy aimed at promoting companies operating abroad) for imports of penetration of gas in households is gas. Although not always required, the use subsidizing the cost of gas or the connection of government guarantees in the form of charges for potential consumers, or both. Take-or-pay (ToP) agreements has been an Subsidies may be provided either directly by effective means for securing gas imports to the government or through cross- countries with a developing gas market. subsidization. Cross-subsidization may Government involvement may also be involve larger consumers such as industrial substantial at the level of transmission, as users and power plants. However, a possible government may play an active role (through means for cross-subsidization without equity or guarantee provisions) in the leading to significant distortions is the construction of cross-border pipelines and establishment of consumer "blocks," national transmission infrastructure; whereby high-income groups partly subsidize low-income households. An · Policies regarding the price of competing inherent advantage of natural gas as a fuel fuels for consumers: Countries vary in terms is the enhanced possibility for establishing 13 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE targeted subsidies; this stems from the fact national priority on gas-fired power plants that it is transported through pipelines can often ensure the financial viability of reaching designated consumers; the whole gas chain. It promotes the construction of transmission pipelines and, · Public campaigns addressing potentially, the distribution grid as well. misperceptions on natural gas: In many Conversely, a national priority on nuclear developing countries where gas is being or hydropower generation may slow the introduced to residential consumers, there penetration of natural gas among all has been a widespread misperception types of consumers. Second, whether the concerning its safety. It has often been electricity market is controlled by a considered by households as a potentially vertically integrated monopoly, or is open explosive and dangerous fuel. Government to competition, also has implications. entities, as well as private companies Competitive electricity markets are more involved in gas distribution, can address this likely to foster development of gas-fired problem to a large extent through public power plants, which may indirectly campaigns which can also emphasize the contribute to the development of environmental (as well as other) benefits of gas distribution. natural gas; Other Major Policy Choices Affecting · Environmental policies and emission Gas Distribution standards: The competitiveness of gas could also be improved through The following set of policies is also significant in legislating and enforcing stricter emission terms of its implications for greenfield gas standards. Some countries have distribution. As distinct from the policies described established limits on or fully banned the above, however, the application of most of these use of "dirty" fuels (such as coal) in policies depends much more on the level of maturity residential space heating in larger cities. of a country's gas market. Some policies, in fact, Others have imposed limits on the use of originated in mature markets, and their applicability competing fuels with higher emissions in to countries newly developing their gas markets is power generation or industry. This has hardly proven yet. A few countries with recent had implications on the whole gas chain, experience in gas distribution (as examined below promoting the spread of natural gas in Chapter 5) have adopted some of the policies among various types of consumers; originating in mature countries, and have had significant success in gasification. But, for many · Requirements on new dwellings: A others, it is still too early to judge. For some other number of countries have issued nationwide policy choices (as in the case of ownership of regulations requiring new multifamily distribution), the policies do not seem to be dwellings to incorporate piping for natural correlated with a successful development of gas gas. While this leaves households with an distribution. Thus, for instance, various countries open choice for consuming gas, it is another have achieved similar levels of gas penetration means for encouraging gas penetration in in the household, commercial and services the residential sector; and sectors despite opting for different policy choices. Hence, their overall impact on a country's · Design of the electricity market: Design success in greenfield gas distribution projects is of the electricity market can affect subject to debate, and should be analyzed merely development of the gas market, as well through focusing on their advantages and as gas distribution projects. First, a disadvantages: 14 FACTORS DRIVING GREENFIELD GAS DISTRIBUTION · Private versus public ownership of transmission and distribution, has several distribution: Public and private companies impacts. It raises the possibility of act with largely different incentives which can cross-subsidization between the various affect the cost and efficiency of the project, segments of the gas market. On the positive as well as the price of gas delivered to side, however, vertical integration helps to consumers. Public distribution companies synchronize investment along the gas chain, have been usually more inclined to lower the create more predictable revenue streams price of gas for end users, which can foster and minimizes transaction costs. While not the speed and the level of gas penetration. required, some level of integration could be However, a major concern about public highly valuable in countries newly developing companies, especially if they are part of a their transmission and distribution (T&D) vertically integrated structure, is their infrastructure, as it may facilitate access to tendency to use profits for cross-subsidizing capital. Meanwhile, in countries with other public services they provide. Employing problems about enforcement of contracts, excessively large numbers of personnel and vertical integration may help companies the lack of incentives to reduce labor costs minimize risks. Finally, establishing limits on have been other issues prevalent among vertical integration in a new market could public gas distributors. slow down its development and curb incentives for investment; Private companies, on the other hand, are guided primarily by the goal of maximizing · Introduction of TPA in transmission: their profits. As this is achieved through Establishing third party access (TPA)17 to minimizing costs while keeping gas prices the transmission pipelines is highly high, penetration of gas could be slowed beneficial for distribution companies, as if this results in prices uncompetitive they are provided with potential access to with other fuels. Thus, the allocation of gas suppliers different from their rents appears as a major concern for traditional transmission company (such as countries with predominantly private producers and trading companies). This ownership of distribution, and requires results in transferring cost reductions elaborate regulation; achieved in other parts of the gas chain (upstream and transmission) to the · The level of vertical integration in the distribution companies, although not gas market: Governments or regulatory necessarily to their consumers. However, entities may have significant impact on the in countries with a significant lack of level of vertical integration16 in the gas transmission infrastructure and a weak market. The implications of this choice, regulatory framework, introducing TPA however, largely depend on the context of may often discourage investment in each country's gas market. Overall, a high transmission pipelines. This is particularly level of vertical integration, such as the the case if transmission is undertaken by presence of a company uniting upstream, private companies, and a weak regulatory 16Vertical integration can be defined as the ownership links between four different functions performed within a gas chain: production, transport through a high-pressure network (transmission), transport through a low-pressure network (distribution) and trading of gas. 17TPA is defined as the obligation for pipeline owners (or operators) to provide open access to third parties wanting to use their transport services for a given charge. 15 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE framework has resulted in excessively low · The choice of unbundling: The major transmission fees; benefit of unbundling18 is that it ensures effective implementation of TPA. This occurs · Introduction of TPA in distribution: A TPA because, if a transport (transmission) regime on the distribution network is a further company has stakes in production and gas step toward in market liberalization, which sales, it has the incentive to restrict extends to allowing any type of consumer competition in both market segments by direct access to producers and traders. This discriminating against other companies ensures that gas distributors will, in large part, willing to use its transmission grid; by raising transfer the cost reductions they achieve over the price of its service; or by lowering the time to their consumers. Moreover, they will quality of service for "third" companies. be prompted to seek out the lowest price gas Thus, separating the merchant function of supplier, which will help to intensify wholesale a transmission company from its transport competition as well. Several countries (such operations largely removes this problem. The as the United States and the United Kingdom) same remedy could be applied to the that have experimented with this type of TPA transport and merchant functions of have achieved significant reduction in end distribution companies, already subject to a user prices, including the price of gas in the TPA regime on their own networks. Another residential, commercial and public major benefit of unbundling includes services sectors. increased efficiency in allocating costs among various functions of a company, Nevertheless, the suitability of TPA for which limits the possibility for cross- greenfield gas distribution projects is subsidization. This, in fact, facilitates the debatable. For a distribution company, it tasks of regulating T&D overall. Unbundling implies the possibility of losing some of enhances regulators' access to information the larger consumers, and even the about underlying costs, including the assets smallest clients (households). This raises which appear as a part of the "rate base." investment risks and could drive away In addition, unbundling could help in potential investors from a distribution addressing the problems of transfer pricing project. The problem could be partly and insider transactions occurring alleviated by adopting a phased approach between different segments of a vertically regarding the "eligibility" of consumers for integrated company. TPA to the distribution network. Thus, while the ultimate goal is to provide every A major problem with unbundling the consumer with the right of TPA, a clear transport and merchant functions of a guideline regarding the gradual expansion transmission or distribution company is that of "eligibility" could help to reduce it may discourage investors willing to investment risks. In addition, it is possible undertake both functions. This could to establish separate transport and retail particularly pose a problem in greenfield tariffs on the distribution network, projects in which the rate of return for ensuring a certain rate of return (RoR) for transportation is perceived as low by the investor; potential investors. Similarly, countries with 18Unbundling is closely linked to the concepts of vertical integration and TPA. It is about breaking a vertically integrated company into its components or separating the merchant and transport functions of a transmission or distribution company. 16 FACTORS DRIVING GREENFIELD GAS DISTRIBUTION smaller potential gas markets may be involved in a country's distribution business deterred from opting for unbundling as a may range from a single company to means to attract large investors; thousands. The choice of ownership concentration19 in this segment of the gas · The level of horizontal integration: A market not only depends largely on the size common practice among distribution of the market itself, but also on policy companies is providing services in areas makers. Governments and regulators have other than natural gas. This mostly involves various means by which to affect the level of the provision of electricity as well as water. concentration. They can decide on the A government may opt for this type of individual size (in terms of potential demand) horizontal integration and, thereby, secure of the country's regions designated for several benefits. It will create some greenfield gas distribution. Also, they can economies of scale in reading meters, billing establish limits on the number of designated and collection, and can also assist a distribution areas for which a single government in executing its energy policy. distribution company is eligible. Opting for However, the policy has several drawbacks. a higher degree of ownership concentration It may potentially lead to cross-subsidization allows for larger economies of scale. It also between energy sources, create bureaucratic alleviates the need for involvement in barriers to optimal resource allocation and tendering arrangements for a great number result in unclear performance evaluation of of distribution regions, which could be the distribution company; and cumbersome and could lead to delays in gasification. However, such a choice is likely · Concentration of ownership in to deter smaller investors willing to become distribution: The number of companies involved in smaller distribution projects. 19Ownership concentration in distribution is defined as the percentage market share of the major distribution company in terms of a country's natural gas demand (met by distribution companies). In this report, it is considered to be "high" if a single company is in charge of distribution in the whole country, or if the major company holds a share higher than 80 percent of the market; "medium" if a single company holds higher than a 20 percent of the distribution market but below 80 percent; and "low" if no company has a share higher than 20 percent. 17 4. Experience with Greenfield Gas Distribution: The Pioneers Based on the methodology described in Chapter 2, one from Africa (Algeria), although there are other 13 countries from five continents have been countries in these continents which have experience included in Group I. All these countries started in gas distribution.20 significant investment in greenfield gas distribution projects more than three decades ago (Annex ­ Possibly, the best indicator of the rate of gas Table A1). The United States and Canada are penetration in a country's residential sector is the included since this is where natural gas distribution percentage of households with a connection to the natural gas grid. According to this indicator, the began on a large scale. However, more than half Netherlands is the world's leader in gas distribution, of the countries in this Group are from Europe. having the highest percentage of gasified Several other European countries (such as Austria, households. It achieved nearly universal access to Belgium, Hungary, Poland, the Slovak Republic and gas as early as the beginning of the 70s. The United several former Soviet republics) could have been Kingdom is another country where gas has reached included in this Group as they also managed to a very high penetration rate, with nearly 86 percent achieve high residential gas penetration after a of households connected (as of the end of 2004). relatively early start-up in greenfield gas distribution All other countries have impressive, but significantly projects. There is only one country from South lower share of households benefiting from access America (Argentina), one from Asia (Japan) and to natural gas (Figure 4.1). Figure 4.1: Penetration of Natural Gas in Households Algeria 30 Argentina 56 Australia 44 Canada 33 Czech Republic 59 France 44 Germany 49 Italy 67 Japan 44 Netherlands 93 Russian Federation 60 United Kingdom 86 United States 57 0 10 20 30 40 50 60 70 80 90 100 Percent Note: Data for 2000-04; details related to the Figure are in Annex ­ Table A1. 20Several countries, such as Egypt, Iran, Bangladesh and Pakistan, have also had significant achievements in spreading natural gas in the residential sector. However, due to the lack of sufficient information about the historical evolution of their gas distribution networks, they are excluded from the study. 19 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Additionalmeasuresmayprovideusefulinsightabout natural gas, as well as the presence of substantial thesignificanceofnaturalgasinacountry'sresidential indigenous gas reserves in most of these countries. sector or in its overall economy. Such measures include the share of gas consumption in the total Manufactured Gas Networks energy consumption of the residential sector, as well as the overall share of natural gas in a country's Total In most countries in Group I, greenfield gas Primary Energy Supply (TPES). A comparison distribution benefited from the presence of between these measures is provided in Annex ­ Table distribution networks based on manufactured gas. A1.Thedisparityamongthethreeindicatorshighlights In many of them, residential users had already been thepresenceofdifferentpatternsofgasconsumption acquainted with manufactured gas in the 19th across countries in the residential sector, as well as century. While it still required quite significant overall in their economies. investment, mainly in the conversion of distribution networks, there was a clear tendency in favor of Accordingly, the ranking of the 13 countries in switching to this more efficient fuel. Group I looks slightly different when based on each of the three indicators. Thus, in terms of the share of In the United Kingdom, manufactured gas (from gas in the total energy consumption of the residential coal) had reached one of the highest levels of sector, the Netherlands is still the world leader, and penetration, with the consumer base standing at ArgentinaappearsonaparwiththeUnitedKingdom, 11.3 million in 1949.21 By the early 60s, when with natural gas constituting 66.1 percent of the vast natural gas deposits were discovered in the residential energy demand. This is despite the fact British section of the North Sea, the price of coal that a much lower percent of Argentina's households was rising, creating pressure to seek alternative (56 percent) are connected to natural gas in fuels which could be used to manufacture gas. The comparisontotheUnitedKingdom(86percent).This discovery of natural gas resulted in a massive highlights the relatively high share of gas in the total campaign to convert to natural gas which was energy consumption of households in Argentina. initiated in 1967. The campaign was successfully Meanwhile, Russia, the Netherlands, and Argentina completed within 10 years, while, in the meantime, are the countries in the Group with the highest share new distribution pipelines were built with the aim of gas in their respective TPES. This, in turn, reflects of enhancing the level of gas penetration among the relatively strong presence of natural gas in these British households. countries' overall energy consumption. In the Netherlands, the use of manufactured gas Supply-side Aspects had also reached significant levels before inauguration of the Groningen natural gas field. In There is striking similarity of supply-side drivers for 1962, the year before vast volumes of gas started greenfield gas distribution in Group I countries. to flow from the Groningen field, total distribution These may explain, to a large extent, the reason of all types of gas (only a quarter of which was for the relatively early start-up of this group of natural gas) stood at about 1 billion cubic meters countries in developing their gas distribution (bcm) of natural gas equivalent. The total number infrastructure. Such factors include the presence of of consumers having gas connections had reached distribution networks based on manufactured gas 2.5=million (mn), of which only 400,000 had in most countries in Group I prior to the spread of converted to natural gas.22 With the development 21Davis, Jerome. Blue Gold: The Political Economy of Natural Gas (London: George Allen & Unwin, Publishers, 1984), 97. 22Peebles, Malcolm. Evolution of the Gas Industry (New York: New York University Press, 1980), 119. 20 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE PIONEERS of the Groningen natural gas reserves, massive of substantial indigenous gas reserves in most of conversion of existing manufactured grids was the countries in Group I. For many countries in initiated, along with investment in greenfield gas this Group, this made a significant contribution distribution pipelines. Conversion to natural gas was to their relatively early start of greenfield gas completed by the early 70s, when, with the addition distribution. Natural gas, combined with the of new distribution grids, natural gas achieved financial capability of these countries in investing nearly near-universal penetration in the in gas-related infrastructure (such as long- household market. distance pipelines in particular), helped to spread natural gas to residential and other In the United States, when natural gas began to consumers earlier than in the case of most other massively displace manufactured gas by the late countries in the world (such as those examined 40s, the number of manufactured gas consumers in Group II). had increased to 8.7 mn.23 Yet, unlike Europe, natural gas and manufactured gas had already The United States provides one of the clearest penetrated commercial buildings and households examples of early discovery and exploitation of simultaneously, along separate lines, for several natural gas resources, which eventually led to decades. Especially after the 20s, natural gas began substantial development of a national gas industry to gain the upper hand in its competition with as well as sizable gas distribution networks. Starting manufactured gas. This was largely the result of in the mid-20s, natural gas had begun to emerge significant natural gas discoveries, as well as the as a common source of energy for households and invention of all-welded steel pipelines in the the commercial and services sectors, accompanied mid-20s, which made it possible to connect by large-scale investments in distribution pipelines. gas-producing regions with areas of significant Until as late as the mid-50s, natural gas production potential demand through transmission pipelines.24 and consumption were overwhelmingly In Japan, another country with extensive concentrated in this country alone. manufactured gas networks, there were already Similarly, before large-scale natural gas 8.2 mn consumers consuming gas manufactured discoveries elsewhere in the European continent, from more than a dozen types of sources (such as Italy, France and Germany benefited from some coal, crude oil, kerosene and naphtha) in 1968 ­ domestic sources, which fostered the early but right before LNG imports began. The gradual limited spread of gas consumption in the 40s and displacement of manufactured gas by LNG 50s. However, the rapid spread of natural gas followed. Other countries, such as France, consumption outside the United States was mainly Germany, Italy and Argentina, also experienced the outcome of large-scale discoveries after the significant development of distribution grids based late 50s. Thus, the discovery of the Groningen on manufactured gas. However, such development remained largely below the levels field in the Netherlands in 1959 and major gas of the United Kingdom, the Netherlands, the deposits in the British section of the North Sea in United States and Japan. the 60s paved the way for these two countries to emerge as leaders in gas distribution. Algeria, Indigenous Gas Reserves Russia, Canada, Australia and Argentina also benefited from discoveries of gas deposits Another major area of similarity is the presence sufficient to meet their needs for several decades. 23Ibid., 55. 24Davis, Jerome. Blue Gold: The Political Economy of Natural Gas (London: George Allen & Unwin Publishers, 1984), 6.3. 21 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Imports and Transit The Federal Republic of Germany (FRG), and, subsequently, France, benefited from the discovery Yet, Japan and the Czech Republic (and the former of the Dutch Groningen field by constructing major Czechoslovakia overall) also had an early start-up pipelines connecting to the Netherlands as early in gas distribution based on imports. As a result, as 1963. By the 70s, two new gas sources (USSR their success in greenfield gas distribution indicates and Norway) became available for West European that other factors may offset the lack of indigenous consumers, whereas Czechoslovakia gained access resources. While Japan's success may be explained to Soviet gas in 1967. Algerian gas, initially primarily through particular choices made by its exported in the form of LNG, reached Italy in 1983 successive governments and some demand-side through the Transmed pipeline. In North America, factors (examined in the next Section), the case with the Czech Republic highlights the potential the United States benefited from increasing volumes contribution of a country's geographic location. of imports through multiple pipelines from Canada supplementing its indigenous supply. In South Czechoslovakia was fortunate to have access to America, Argentina was the first country in the abundant natural gas resources owing to its transit continent to inaugurate a cross-border pipeline, status. It was the main route for Soviet (and allowing imports from neighboring Bolivia after subsequently Russian) gas exports to western 1972. Imported volumes, however, served mainly Europe. Several other countries in this Group also as a supplementary source to Argentina's expanding benefited from a similar status. In the case of domestic gas output. Germany, the need to construct major transit pipelines (mainly for Russian gas) contributed to the LNG imports served as an alternative to constructing emergence of sizable transmission companies. pipelines. However, none of the countries in Group France benefited from transiting Norwegian gas to I, except Japan, favored LNG over pipelines mainly Spain and Italy, while Italy transited limited volumes because of its comparatively higher costs. Japan, to Slovakia. In both of the latter cases, however, the on the other hand, largely because of its geographic contribution of their transit role to the construction location, found LNG imports its only realistic option. of transmission pipelines reaching domestic LNG imports commenced in 1968, and very soon consumers was minimal. Japan emerged as the undisputed leader in LNG imports in the world. While indigenous gas reserves did provide the initial spark for the development of a national gas industry Proximity to Gas Fields for many countries in Group I, several of them were soon faced with a significant problem due to Several countries in Group I benefited from the the lack of sufficient gas resources to meet their proximity of major consumption centers to natural growing demand. These countries managed to gas fields. Countries with substantial indigenous successfully address this challenge by building long- supplies and relatively smaller size have been the distance cross-country pipelines, as a result of which most advantaged in terms of the relative costs of their own supplies were supplemented through constructing their transmission grids.25 This includes imported gas. Establishing groundbreaking mainly the Netherlands and the United Kingdom, LNG chains was an additional alternative tested by which gained access to their indigenous supplies these countries. through relatively shorter (less than 1,000 km) 25Greater length of transmission pipelines is assumed to increase natural gas prices for residential and commercial-public consumers. This study has not delved into a cross-country comparison of natural gas prices based on the length of transmission pipelines. However, an overview of gas prices to final consumers reveals an enormous variety, part of which stems from taxation and price regulation rather than distances in transmission. 22 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE PIONEERS transmission pipelines. Italy, Germany and France the demand-side analysis following) provided also benefited from their relatively smaller size, powerful incentives for large-scale investments. which accorded a degree of proximity to major consumption centers to their limited indigenous In South America, Argentina faced the same supply sources. They also benefited from proximity drawback, as a large part of its natural gas resources to Dutch and Norwegian gas. Algerian gas reaching were located in the far south. One outcome was a Italy also passed through a relatively short major transmission pipeline stretching 3,420 km (1,070 km from the source to Sicily) pipeline. fromsouthernArgentinatoBuenosAires.InAustralia, a fragmented transmission infrastructure emerged, Soviet gas, on the other hand, emerged as the most originally built to transport gas from centrally located remote supply source for European consumers. fields to coastal urban areas. In Japan, numerous However, a pipeline connection between Soviet gas LNGterminalswereconstructedinproximitytomajor fields and West European markets was successfully consumption centers. The highest concentration of accomplished, largely as a result of the political and terminals occurred in the highly populated, industrial economic interests of the USSR, as well as the Tokyo, Osaka and Nagoya regions. This, however, financial capability of the relatively higher income resulted in the emergence of several isolated countries of Western Europe. In the case of transmission networks, which led to significant price Czechoslovakia, its access to Soviet gas was mainly differences between regional markets. This has an outcome of its membership in Comecon and been a significant obstacle to further penetration of the Warsaw Pact. Meanwhile, the large size of USSR gas in regions where it is quite expensive. and the growing concentration of its natural gas reserves in western Siberia precluded its major cities Terrain (located west of the Urals mountains) from benefiting It is worth noting that the nature of the terrain for from short-distance pipelines. However, this did not transmission pipelines has had only a minor impact appear as an obstacle to gasification of its major on the development of greenfield gas distribution consumption centers. projects in Group I countries. However, there is some evidencethatthisfactorwasinfluentialindetermining In North America, both the United States and shipping costs. For instance, Japan faced severely Canada have faced a major disadvantage because unfavorable terrain for building transmission of their relatively large territories. In the United pipelines. They had to be constructed in very States, most of the gas fields are located in Texas, mountainous and seismically active areas, which Louisiana and Oklahoma, far from major raised the cost of construction substantially and consumption centers such as New York, contributed to Japan's having the highest natural Pennsylvania and Ohio. In Canada, significant levels gas prices for all types of consumers among the of gas consumption in its most populated provinces, Organisation for Economic Co-operation and Ontario and Quebec, could not begin until Development (OECD) countries.26 inauguration of the TransCanada pipeline in 1957. This major long-distance pipeline provided access Price and Cost to the rich natural gas fields in Alberta. In both countries, a comprehensive transmission network In several Group I countries, gas was initially priced was successfully completed despite the challenges at very low levels because it was often a by-product of building pipelines across relatively long distances. of oil production with a limited market. This was the In both cases, the size of the potential market (see casewhentheU.S.naturalgasindustrywasdeveloped 26Japan's natural gas prices have been significantly higher than Korea's, which also relies on LNG. 23 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE and, to some extent, though less so, when the U.K. space heating is a significant source of residential gas industry was developed in the 60s. This pricing demand for natural gas in these countries. of natural gas made it very inexpensive ­ which is no longer the case in most countries. As recent surveys on the consumption patterns of households in each country in Group I are absent, Demand-side Aspects estimating the precise role of natural gas in meeting theirspaceheatingdemandischallenging.However, Countries in Group I share several features on the there is evidence that substantial space heating is demand-side of gas distribution. First is the presence prevalent in all countries, except Algeria. Also, of a climate which requires space heating. Also, natural gas is widely used for meeting space heating nearly all countries in the Group possess requirements in most of the Group I countries.27 comparatively high levels of per capita income. A Yet, it is worth noting that households in several of less significant feature shared among "pioneers" is the countries with a cold climate have met their the relatively small size of households resulting in space heating requirements with alternative fuels. higher gas consumption per person. However, Thus, for different reasons, the residential sector in countries also vary markedly with respect to major Japan, the Czech Republic and Russia has opted in fuels competing with gas and their relative prices, favor of fuels other than natural gas for their space the way they benefited from settlement density and heating purposes. In effect, in these countries and the role of anchor consumers in the development in Algeria, the availability of substantial heat load of the national gas market and distribution has not been as instrumental for building a (Annex ­ Table A3). distribution network as in the case of the remaining Space Heating countries of Group I. A striking similarity among countries in Group I Climatic conditions, moreover, appear as the central is the presence of a climate requiring significant elementinexplainingthediversityofgasconsumption space heating. The only exception is Algeria, per household in Group I (Figure 4.2). Annual where this requirement is quite limited. Algeria volumesofgasconsumedonaveragebyhouseholds is a major example of a country with a successful appears to be highest in Canada (3,761 cubic meter experience in gas distribution despite the general [m3]), largely reflecting its colder climate. In Europe, lack of cold climatic conditions. Its experience Germany, the Netherlands, and the United Kingdom provides evidence that an extensive gas have higher volumes of gas consumption per distribution infrastructure can be completed in householdthanFranceandItaly,whichhaverelatively warmer climates as well. However, under such milder climates. By the same token, households in circumstances, success is associated with other Argentina and Australia consume nearly three times drivers, among which government's choice to less gas than a Canadian household on average. finance distribution infrastructure appears highly The United States, on the other hand, is marked by significant. It is also worth noting that there are some a significantly higher level of gas consumption per regional climatic differences within the United States, household than European countries, primarily as a Argentina and Australia, as a result of which some reflection of the larger size of living space, as well regions do not require space heating. But, overall, as climatic differences. 27The evidence derives mostly from the annual reports of International Energy Agency (IEA) on individual countries, which specify that space heating is a significant source of gas demand. An additional source, with surveys on residential energy (and gas) consumption in European Union (EU) countries for the late 90s, may be found on the Website of the University of Oxford Environmental Change Institute: http://www.eci.ox.ac.uk: Fawcett, T., K. Lane and B. Boardman, Lower Carbon Futures (University of Oxford: Environmental Change Institute, 2000). 24 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE PIONEERS Figure 4.2: Estimated Average Gas Consumption per Household 4,000 3,761 3,500 3,000 2,500 2,270 Meters 2,000 1,777 1,818 1,554 1,593 Cubic 1,500 1,263 1,201 1,051 1,008 1,000 951 500 420 0 Italy Japan States Argentina Australia Canada France Republic Germany Kingdom Netherlands Federation United Czech United Russian Again,Russia,theCzechRepublicandJapanappear into the lower middle-income category.28 There is more as the exceptions. They have relatively low nocountryinthisGroupthatfallsintothelow-income gas consumption levels per household, ranking even category (Annex ­ Table A3). below Italy, despite having colder climates. The explanation in the case of Russia and the Czech In this respect, it is possible to conclude that nearly Republic is the prevalence of DH. Many households all Group I countries benefited from relatively high connected to natural gas use this fuel mainly for levels of per capita income, which facilitated cooking and water heating. Similarly, households penetration of gas in households. The relatively high in Japan, even if connected to gas, rarely use it for level of gas penetration in Russia and Algeria could space heating (mainly because of its inability to possibly be explained, mainly by their endowment compete with petroleum products). of indigenous gas supplies, as well as government policies promoting the spread of gas. Such drivers Per Capita Income have been particularly important, given that Algeria lacks climatic conditions leading to significant heat Another common feature among Group I countries, load, while Russian households have been largely with implications for their energy consumption served by DH for their space heating requirements. patterns, is the level of per capita income. Based on the World Bank classification, nine of the Household Size countries belong to the high-income category. The rest, Argentina, Russia and the Czech Republic, are Countries in Group I have also exhibited upper middle-income countries, only Algeria falls considerable similarity in terms of household size. 28According to the World Bank classification (Atlas method), countries are divided based on 2005 Gross National Income (GNI) per capita as follows: US$875 or less ­ low-income; US$876-3,465 ­ lower middle-income; US$3,466-10,725 ­ upper middle- income; US$10,726 or more ­ high-income. 25 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Thedeclineinthesizeofhouseholds,andtheparallel per household (although the reverse may be true rise in single person households, has been a regarding per capita consumption). worldwide trend. In this context, the high-income countries have been marked by their significantly Competing Fuels smaller size of households (with Algeria being a There is considerable variety among countries in partial exception) (Annex ­ Table A5). Group I in terms of the role of fuels competing with The declining size of households has increased the natural gas. Gas distribution projects proceeded by potential number of residential gas consumers, as replacing distinct types of fuels used in the it has been associated with the rise in housing stock. households in each of these countries. In Europe's context, this has been particularly Annex ­ Table A6 indicates the recent (2004) status significant, given the considerably low rates of of the various types of fuels used in the residential population growth. This, in fact, has been a principal sector in Group I countries. Apparently, natural gas reason for the continuous addition of new has emerged as the preferred fuel of households consumers in the Netherlands, where a near- in all countries, except Japan, Russia and Australia. universal penetration of gas had already been Furthermore, gas has a significant share of the total achieved in the early 70s. residential energy consumption in these three countries (Figure 4.3). Yet the overall impact of household formation patterns on gas distribution requires detailed analysis The price of competing fuels, along with perceptions in a number of areas, such as trends in average as to their convenience and safety, are the principal consumption per household, and the size of living determinant of household consumption patterns. space per inhabitant. It is probable that although a Whereas there has been great variety in terms of decline in household size may help expand the competing fuel prices across countries as well as number of potential residential consumers, this may across the time span of several decades, a few occur at the expense of volumes of gas consumed conclusions are possible: Figure 4.3: Share of Natural Gas in Total Residential Energy Consumption Algeria 38.6 Argentina 64.3 Australia 29 Canada 44.4 Czech Republic 40.2 France 36.1 Germany 37.2 Italy 56.7 Japan 18.4 Netherlands 75.7 Russian Federation 31.7 United Kingdom 68.4 United States 42.9 0 10 20 30 40 50 60 70 80 Percent Note: Data for 2004. In the case of France and Algeria, figures refer to consumption in both residential and commercial- public services sectors. Details related to the Figure are in Annex ­ Table A6. 26 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE PIONEERS · Petroleum products and coal have been the of gas penetration. In the case of France, major fuels replaced by natural gas among this has occurred largely as the result of the residential consumers in the past three priority given to nuclear power generation, decades. Despite periodic fluctuations, the whereas in Canada natural gas has price of petroleum products (mainly light fuel competed with electricity in regions with oil) has commonly been higher than the price abundant hydro resources;30 and for natural gas, prompting households to switch to the latter fuel. It has preserved its · DH appears as an important competitor to significant role in several countries, but natural gas in Russia and the Czech nowhere (within Group I) does it appear as Republic. In both cases, however, gas the preferred fuel of households (excluding penetration started during the period when the area of transport). (In the earliest days of a centrally planned economy prevailed. gas penetration, the difference between light Within that context, DH did not significantly fuel oil prices [home heating oil] and gas was impede the increase in the number of greater than during the most recent decades); households connected to gas. However, it did result in comparatively lower volumes of · The trend toward shifting away from coal natural gas consumed per household. has been augmented by environmental policies, even though its price has not always Settlement Density been higher than the price of natural gas. Another area where countries in Group I differ All countries in Group I have made massive significantly is their settlement density. This has had strides in eliminating coal from (direct) major implications for the number of residential residential consumption. As a result, in none consumers per km of the distribution grid, and of the 13 countries does coal appear among consequently for the ability of distribution companies the three most preferred fuels of households. to benefit from economies of scale. This progress has been particularly notable in the case of the United Kingdom, France Figure 4.4 indicates the significant differences and the Czech Republic, where in 1973 across countries in terms of the number of coal occupied the first place in residential households per km of the distribution network. energy consumption;29 Japan and the United Kingdom have the highest number of residential consumers per km of the · Electricity has remained the primary national distribution grid, implying higher competitor to natural gas in all countries in opportunities for economies of scale for their Group I. Its consumption by households has distribution companies. On the other hand, Canada increased throughout the ongoing process and the Czech Republic have the lowest number of residential gas penetration. Meanwhile, of residential consumers per given length of their in several cases, it has posed significant distribution networks. challenges for gas penetration. The most notable examples are France and Canada, The variation stems from differences in the settlement where the abundance of relatively cheap density of countries in Group I. Moreover, there electricity has periodically slowed the process are considerable differences in all of the three major 29IEA Statistics ­ Natural Gas Information 2004, International Energy Agency: 249, 279, 479. 30Finon, Dominique. "French Gas Industry in Transition: Breach in the Public Service Model" (Institute D'economie et Politique De L'energie, 2001). 27 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Figure 4.4: Estimated Number of Households per Km of Gas Distribution Grid 100 91 90 80 78 75 74 70 59 60 56 52 53 Households 50 of 44 42 40 37 Number 30 20 12 10 0 Italy Japan States Argentina Australia Canada France Republic Germany Kingdom Netherlands Federation United Czech United Russian Note: Data for 2001-04; details related to the Figure are in Annex ­ Table A7. Data for Algeria not available. aspects of settlement density: population density and low (53). This is largely due to the relative lack its distribution; level of urbanization; and the of large cities and the low urbanization rate. predominant type of dwelling. However, distribution In the case of Germany, the absence of large companies in each country have been able to cities is also a significant element in explaining benefit from economies of scale owing to different the relatively low number of residential aspects of settlement density: consumers per km of distribution pipeline; · In Japan, economies of scale have derived · Australia, despite having the lowest mainly from high population density (persons population density in Group I, exhibits a per square kilometer [km2]), and the presence slightly higher (than a few others in of several large cities (with Tokyo being the Group I) number of households per km of largest city in the world), where most the distribution grid, owing mainly to its high distribution investment has concentrated; level of urbanization and the concentration of population in only a few large cities. · The United Kingdom has benefited from all Argentina offers another example of a low three aspects of settlement density, as it population density but a high level of has one of the highest population urbanization, and concentration of the densities in Europe, with a significant population in a few large cities; concentration in large cities, a high level of urbanization and widespread occupancy of · Distribution in Italy and France has benefited multifamily dwellings; from high levels of urbanization and the predominance of multifamily dwellings, · Surprisingly, in the Netherlands, which has one whereas the major drawbacks in the case of of the highest population densities in Europe, the United States are its low population density the number of residential consumers per km and the major share of households residing of the distribution network is comparatively in detached houses in city suburbs; 28 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE PIONEERS · The concentration of population in large cities As gas consumption per consumer in the has also been a major advantage for gas commercial and public services sector is generally distribution in Russia, while it has posed a higher than in an average household, this augments significant drawback in the Czech Republic. the potential for economies of scale. In both countries, the prevalence of apartment buildings dating back to the period of central Countries in Group I have benefited differently planning has also enhanced opportunities for from connecting commercial and public services economies of scale; and consumers to the distribution network. Thus, in Canada and the United States, this sector has · In Canada, the bulk of distribution activity consumed 634 and 790 m3 of gas respectively (in has been concentrated in Ontario and 2004) for every 1,000 m3 of gas consumed by Quebec, where the population is households. This figure appears as low as 64 m3 concentrated in a few large cities. Canada's in Russia, and only 219 m3 in the United Kingdom, overall low population density, however, has implying comparatively lower opportunities for been a major obstacle to penetration of gas economies of scale (Figure 4.5). in the other parts of the country (with the partial exception of Alberta, which supplies Anchor Consumers most of the gas). Industrial users and power plants may also Other Retail Consumers significantlyenhancetheopportunitiesforeconomies of scale in a country's gas distribution business. Nevertheless, households are not the only They may serve as anchor consumers for consumers served by the distribution network. development of both distribution and transmission Commercial and public services consumers provide networks. However, unlike the commercial and additional demand on the same distribution grid. public services sector, they are predominantly Figure 4.5: Commercial-public Services Consumption of Gas per Every 1,000 Cubic Meters Consumed by Households 900 800 790 757 700 634 600 540 559 500 Meters 400 351 Cubic 337 300 266 265 219 200 100 64 0 Italy Japan States Argentina Australia Canada Republic Germany Kingdom Netherlands Federation United Czech United Russian Note: Data for 2004. Disaggregated data for France and Algeria is not available. Details related to the Figure are in Annex ­ Table A8. 29 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE served through high-pressure pipelines which are regard, there are considerable differences across part of the transmission grid rather than the countries in terms of their anchor consumers. Thus, distribution network. industrial users have been a major factor in driving the development of gas markets around the world The direct contribution of power generation and for more than half a century. Annex ­ Table A3 the industrial sector to development of distribution indicates industry's substantial role in the evolution networks varies across countries. It depends on of the gas market of Group I countries, in which national legislation to determine the division of Japan and Algeria appear as partial exceptions. consumers between T&D companies. Specifically, this is determined by an eligibility criterion according The major impact, however, has come from the role to which consumers above a particular annual level of power plants in the development of national gas of demand are allowed direct access to transmission markets. For many countries ­ Italy and the United companies. The precise division of industrial users Kingdom,inparticular­powerplantsfiredbynatural (as well as some power plants) between T&D gas have gained a prominent role only since the late companies is not clear because of the lack of 80s.32 For others, such as Algeria and Japan, the historical data on the evolution of the eligibility power sector has been the principal driver in the criterion in each country. However, a study development of their gas markets and infrastructure conducted by the IEA in six European countries (the sincetheearlyentryofnaturalgas.Finally,foranother Netherlands, the United Kingdom, Italy, Germany, group of countries ­ France and, to some extent, France and Belgium) indicates the presence of Canada ­ utilization of gas in the power sector has substantial diversity across countries. Judging by been a low priority. However, the large-scale use of 1995 figures, distribution companies in the gas in industry in these countries has helped to Netherlands benefited most from serving larger compensate for the minimal role of power plants in consumers. Whereas Dutch distributors had the gas market and infrastructure development. lowest number of households per km of the total distribution network (56 in 1995), they had the Major Policies with Implications for highest volumes of total sales per km of the grid. Gas Distribution This was partly the result of relatively higher volumes of gas consumed per household. However, the Governments of Group I countries have adopted a contribution of large consumers had a major role. variety of strategies to foster development of their France, on the other hand, had the lowest volumes gas markets and gas distribution, in particular. The of gas consumption per km of its distribution grid, United States was the first country to develop a precisely because of the relatively peripheral role large-scale gas industry, and the State was primarily for large consumers in the development of the absent in terms of owning major stakes in the sector. distribution grid.31 However, the United States government created a highly regulated environment for every segment of The indirect contribution of industrial users and the gas chain. Thus, through the Natural Gas Act power plants to greenfield gas distribution occurs of 1938, the RoR for transmission companies came mainly through their anchor role in the construction under government control; this was subsequently of extensive transmission networks within and across extended to well head gas prices after 1956. countries ­ networks which are eventually necessary When gas market liberalization was initiated with to reach the city gates of distribution areas. In this the Natural Gas Policy Act of 1978, the country 31Natural Gas Distribution ­ Focus on Western Europe (Paris: IEA, 1998), 33. 32Hierl, Jochen. Regulatory Reform: European Gas (Paris: OECD, 2000). 30 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE PIONEERS had already completed an extensive gas in the development of national transmission distribution network. networks. The gas sector in the USSR and Czechoslovakia, in the meantime, was always a part Strong government involvement also became the of a centrally planned energy strategy and dominant policy once natural gas started to spread economic development plan. in Europe. However, unlike in the United States, this participation involved a direct government role Natural gas became especially prominent in the in establishing national gas companies. Thus, in Italy, national energy strategies of several countries in which in the late 40s became one of the first Group I after the oil crisis of 1973. Enhancing European countries to embark on substantial energy security became a priority, with natural gas domestic production of natural gas, the government perceived as a major means of reducing national established ENI as a company which would oversee dependence on oil imports. A primary example was the country's whole hydrocarbon sector, controlling Italy, where with government encouragement, both AGIP, the national oil and gas producer, and natural gas spread massively into the residential, SNAM, the national transmission company.33 industrial and power generation sectors. Government involvement through State-owned The response to energy security concerns, however, bodies, with a dominant role in the gas market, has not always helped the spread of natural gas. prevailed in the United Kingdom and France as well, French governments, for instance, chose to promote where British Gas Corporation (BGC) and Gas de nuclear power as a major source of energy and as France (Gaz de France ­ GdF) were created as an alternative to imported oil. The spread of nuclear principal instruments of the State for developing the power not only inhibited the potential growth of national gas market and its infrastructure. gas-fired power generation, but turned electricity Meanwhile, in the Netherlands, the State preferred into a tough competitor for natural gas in the a partnership with companies representing its residential sector. interests in the upstream and transmission rather An additional reason for assigning a growing priority than a dominant role. In Germany, on the other to natural gas in national energy strategies were hand, the government abstained from a major role rising environmental concerns after the 70s, and in the upper segments of the gas chain, and retained especially in the 80s, 90s and today. Growing mainly financial interests in upstream and concerns about pollution created by coal and heavy transmission companies. petroleum products, prompted governments to elaborate policies which helped promote the spread Strategies to promote gas sector development of natural gas as an alternative. Also, over the past through State ownership differed in the other parts decade, growing concern about global warming has of the world. Thus, Japan was another country in prompted an increased emphasis on natural gas which the State abstained from significant which produces less carbon which coal or petroleum involvement in the ownership of major infrastructure, products per unit of heat produce when burned. such as LNG terminals and transmission pipelines. In Argentina and Algeria, however, State companies The following policies, some of them adopted as dominated the gas market in the initial stages of part of a national energy strategy, could be cited development and, in fact, in Algeria's case, this role as particular examples which helped spread has been retained to date. Australia and Canada residential gas consumption and, consequently, the were marked by significant government involvement development of gas distribution networks: 33http://www.snamretegas.it/english/chi_siamo/storia.html. 31 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE · In all western European countries in · As another example of a policy promoting Group I (except Germany), the government gas distribution, Canada (until 1985) and took responsibility for determining and Australia (until 1994) resorted to approving gas tariffs for residential cross-subsidization of residential consumers consumers for several decades in the process by industrial consumers. Such a measure of gas market development. Besides the goal was aimed at helping natural gas compete of promoting residential gas consumption, against other fuels used by households; tariff policies were applied as a means of countering inflation and reducing costs for · In the Netherlands, uniform residential industries to foster their international tariffs were established which served as an competitiveness. German governments, on effective means for reaching near-universal the other hand, abstained from any control gas penetration among households. Partly over prices throughout the gas chain from aided by their country's relatively smaller the well head to sales to final consumers;34 geographic size, the Dutch authorities were successful in spreading natural gas to all · Government control over tariffs has not parts of the country; always been effective in spreading the use · Experiences in five countries in Group I of natural gas, as the policies of French illustrate that lifting State control over tariffs, governments in the 70s and 80s showed. as well as instituting additional measures for Governments in France subsidized market liberalization, can improve the residential consumers by preserving relatively relative price of natural gas. This occurred low tariffs. However, a concurrent policy of in the United States after the Natural Gas controlling electricity tariffs contributed Policy Act of 1978, and, particularly after the largely to the slow penetration of natural gas introduction of regulated TPA on the in the residential and commercial-public transmission network in 1985. Similar trends services sectors. This was one of the principal occurred in Canada, which largely phased reasons for France's lagging behind Italy in out cross-subsidization and introducing terms of household penetration and gas regulated TPA on the transmission grid in consumption during this period. Accordingly, the mid-80s. In the United Kingdom, in 1973, France and Italy's gas consumption following liberalization measures initiated in in the residential and commercial-public the early 80s, residential gas prices dropped services sectors was 6.1 bcm and 4.4 bcm, 24 percent from 1986 to 1995.36 This trend respectively. By 1990, Italy was consuming was repeated in Argentina after the decision far more natural gas than France in these to privatize Gas del Estado and liberalize the sectors, as well as other sectors. Italy's gas market in 1992. Finally, Australia joined consumption in the residential and the pioneers of gas market liberalization commercial, and services sectors reached through the Council of Australian 18.9 bcm, whereas France's consumption Governments Agreement in 1994. The reached only 14.7 bcm;35 agreement introduced negotiated TPA to 34Natural Gas Prospects (Paris: International Energy Agency, 1986), 26. 35Data from IEA Statistics ­ Natural Gas Information 2004 (International Energy Agency), p. 280, and p. 330. 36Andrej, Juris. March 1998. "Market Development in the U.K. Natural Gas Market," Policy Research Working Paper 1890, The World Bank, Washington, DC. 32 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE PIONEERS both T&D networks, and required functional Gas Council was able to acquire gas at prices unbundling of transportation and merchant considerably lower than in other parts of the functions of T&D companies. Significant western world. Part of this implicit subsidy drops in gas prices for all types of users were was used to finance conversion projects and recorded in the years following these construction of new distribution pipelines. measures;37 The rest went to consumers in the form of lower prices and direct subsidies;40 · Government tax policies have provided another effective measure in spreading · In Algeria, direct subsidies to households to consumption of natural gas. Although cover part of their connection costs, largely complete annual data for taxes on natural explain the spread of natural gas distribution gas and its competing fuels is missing, for in this lower middle-income country. Such most countries in Group I gas has been taxed subsidies have been particularly important as at lower rates than has electricity, and at households usually do not need space much lower rates than light fuel oil (gas oil). heating, and use gas solely for cooking or Italy, for instance, has been notorious for heatingwater.Thisparticularpolicychoicehas having some of the highest taxes on gas oil, been instrumental in Algeria's success with which contributed to the rapid expansion of greenfield gas distribution despite its lack of a its natural gas market;38 climate requiring a larger heat load; and · Direct subsidies covering part of the · The Czech Republic is a major example of connection costs, and sometimes the cost how a country's gas distribution can benefit of gas-compatible appliances, have also from its transit status. Its experience after helped to promote gas effectively. Primary the end of central planning is particularly examples are the Netherlands and the notable. In the 90s, the Czech national United Kingdom, following discoveries of transmission company, Transgas, used part major gas deposits in the early 60s. In the of its transit fees to maintain the price of Netherlands, public distribution companies gas delivered to residential consumers at bore much of the cost of households' comparatively low levels against competing conversion from manufactured gas to fuels. Thus, the country witnessed a rapid natural gas in the 60s and 70s. In addition, expansion in the number of new households they provided new natural gas-compatible connected to gas in the past decade.41 appliances to households at significant discounts.39 In the United Kingdom, a Ownership and Gas Market Structure massive campaign for spreading natural gas was initiated in 1967. This involved The structure of the gas market, including issues converting existing manufactured gas about ownership in its distribution segment, is an networks to natural gas and connecting new area where governments in Group I followed highly households to the distribution network. As diverse policies. This diversity is a major indicator a monopsony buyer, the United Kingdom's thatthereisno"one-size-fits-all"policywhichwould 37 Natural Gas Reform in the Asia Pacific Economic Cooperation (APEC) Region Asia Pacific Energy Research Center (APERC, 2003), 57. 38Based on Eurogas annual reports in the 90s and 2000. 39Peebles, Malcolm. Evolution of the Gas Industry (New York: New York University Press, 1980), 132. 40Ibid., 38. 41There were 1,421,000 households connected to natural gas in 1990. By the end of 2004, the number reached 2,592,400. 33 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE secure success in greenfield gas distribution. This Private ownership in gas distribution has been much Section highlights this diversity, while examining the more common in other parts of the world. In the approach used in the 13 countries included in the United States, gas distribution was historically Group on the following policies: undertaken by private companies, with cities gasified by municipally-owned companies being · Private versus State ownership in largely exceptions. Gasification of households in gas distribution; Canada was also driven primarily by private companies. However, some major exceptions exist. · Concentration of ownership in gas For instance, gas distribution in the province of distribution; Saskatchewan was developed mainly by · Gas market structure ­ presence of vertical SaskEnergy, owned by the provincial government. integration during the period of major Several utilities in Alberta were also owned by the investment in a country's greenfield gas state (municipalities); however, they had minor distribution; and market shares. In Japan, greenfield gas distribution also remained mainly in private company hands. · Major liberalization efforts affecting the gas In Australia, on the other hand, there were major market structure since the 80s. variations across States. Publicly-owned utilities conducted distribution in major gas-consuming Ownership of gas distribution is one area where States, such as Victoria and West Australia. countries in Group I adopted diverse policies. Yet, However, in New South Wales and the Australian at least in the early stages of greenfield gas capital territory (States with significant residential distribution, a certain pattern was observable in most gas consumption), distribution was conducted by countries in the Group. This involved a predominant private companies. Distribution was driven primarily role undertaken by the State in gas distribution. by private companies in the remaining parts of This was particularly the case in Europe. Thus, in Australia as well. all European countries (in Group I) until the 80s, when the United Kingdom initiated privatization of Concentration of ownership in gas distribution is its gas sector, distribution was largely a task an area in which countries in Group I exhibit the performed through State-owned companies. In the largest differences. It varies from countries where Netherlands and Germany, these were mainly distribution is in the control of a single company in companies in which majority ownership belonged charge of gas distribution nationwide, to those where to municipalities. In the United Kingdom, distribution the number of utilities distributing gas to private was conducted by a single State-owned company, companies is in the range of several hundreds and (BGC). In France, State-owned GdF held a even more than a thousand, with a significantly dominant role in the country's distribution business small market share for its largest participant. The after nationalization of the gas sector in 1946. The level of ownership concentration is significant, as it only exception was the presence of about a dozen enhances the ability of distribution companies to "nonnationalized" distribution companies benefit from economies of scale. (Distributeurs Non nationalisés ­ DNNs). These were municipal companies with the status of a mixed This diversity is largely an outcome of the initial company with a public shareholding majority. In approach taken by governments with existing the USSR and Czechoslovakia, distribution was distribution infrastructure based on manufactured naturally a business conducted by the State. Italy gas. Thus, in Europe, the major contrast is between provided a partial exception in Europe, where France and the United Kingdom on the one hand, privately- owned distribution companies were able and Germany, the Netherlands and Italy, on the to secure the largest market share overall, although other. The governments of both France and the public involvement remained significant. United Kingdom chose to nationalize their 34 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE PIONEERS manufactured, gas-based distribution networks in networks. The outcome was a highly fragmented the aftermath of World War II. In France, this ownership structure. The number of distribution occurred in 1946, when the fragmented industry companies remained in the range of several based on manufactured gas was nationalized and hundreds in the other three countries from Western put under the control of a single State-owned Europe (Germany, the Netherlands and Italy). Italy company ­ GdF. The nonnationalized distributors had the highest number of distributors (more than played only peripheral roles in total gas sales to 700), while the Netherlands had the lowest ­ nearly residential and commercial-public consumers. 200. In all of them, however, a degree of Nearly all greenfield gas distribution projects were concentration of ownership developed over time. undertaken by GdF, as a result of which even in Thus, in the Netherlands, the number of distribution the early 2000s, when gas liberalization trends companies gradually dropped (reaching about 30 reached France, more than 90 percent of the by 2002). The major changes in Italy and Germany distributed gas passed through GdF's network. were in terms of the emergence of companies with Moreover, GdF obtained stakes in some of these a sizable market share. Italy's ENI held a sizable nonnationalized distribution companies. market share through its major subsidiary Italgas, whereas Germany's Ruhrgas acquired controlling In a similar fashion, in 1949, the Government of stakes in multiple distribution companies around the United Kingdom decided to eliminate the the country. fragmented structure in the country's gas distribution business. In that period, more than a Single entities monopolized gas distribution in thousand local companies were involved in the Czechoslovakia and the USSR. They experienced production and marketing of manufactured gas. a reverse trend in the 90s and 2000s when their The Gas Bill of 1949 established 12 autonomous utilities were privatized. In Russia a large number area boards, each responsible for its own gas of distributors emerged following privatization in supplies. They replaced the previously fragmented the late 90s. However, its major gas company, gas structure based on private and municipal Gazprom, managed to acquire control over part companies. To facilitate coordination between them of these utilities because of the financial difficulties and the establishment of a larger strategy for the they experienced as a result of a government- market, the 12 boards were united under a Gas imposed limits on tariffs. In the Czech Republic, Council.42 The discoveries of major gas deposits eight distribution companies (and one transmission in the 60s, and the subsequent growing volumes company) emerged after reorganization involving of natural gas flowing into the mainland, led to the national monopolist Czech Gas Company in another reorganization within the gas industry. 1994. In 2002, a single strategic investor (RWE) Thus, in 1972, the structure based on a Gas Council acquired majority control over six of the distribution and the 12 area boards was replaced by a single companies, leading to a high level of ownership company ­ the BGC. It was given the task of further concentration in the country's distribution business. developing the nation's T&D networks, having a monopoly role in both. The gas distribution sector in the United States emerged highly fragmented. This was partly due Unlike France and the United Kingdom, other to the fact that natural gas had been spreading western European governments (in Group I) massively, along with manufactured gas, since the abstained from nationalizing their distribution 20s. As a result, thousands of companies were 42Peebles, op. cit., 27. 35 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE involved in producing both types of gas, their hand, in Algeria, a single company, Sonelgaz, has transportation, and marketing. This fragmentation remained in charge of distribution. was reinforced in the late 40s, as the United States government, unlike the governments of France and Concentration of ownership in a country's gas the United Kingdom, abstained from nationalizing distribution business tends to create larger the gas industry. Yet, some consolidation occurred distribution companies which can benefit from as most companies distributing manufactured gas economies of scale. However, in practice, this has converted to natural gas, went out of business, or not automatically translated into lower distribution were taken over by natural gas distributors. By the costs (per m3) and higher efficiency. A statistical early 50s, the gas distribution sector consolidated study conducted by IEA43 has emerged with to around a thousand natural gas distribution instructive findings. Focusing on company size in companies, most of which were originally Germany, the Netherlands and Italy, the study found no support for the assumption that larger companies manufactured gas distributors. The overall level of should be able to benefit from economies of scale ownership concentration remained low on the and, consequently, enjoy lower distribution unit costs. national level. In fact, in the case of the Netherlands, larger distribution companies tended to have higher unit In Canada, the level of ownership concentration costs than smaller ones. has also remained low on the national level, although distribution companies have been able to This anomaly, however, does not indicate that acquire dominant market shares at the provincial economies of scale are irrelevant in distribution. In level. In Australia, significant cross-ownership fact, their presence is significant, but most countries between distribution companies has allowed some have simply failed to fully benefit from them. This companies (such as Envestra) to have a leading has partly stemmed from governments' risk-averse market share in multiple locations (across states). policies about cutting costs in distribution, as that In Japan, the prevalence of manufactured gas left has often been perceived as detrimental to local a legacy of more than 100 companies involved in employment. However, the major explanation is gas production and distribution. With the advent of that in an environment lacking competitive LNG in 1969, the fragmented nature of the gas measures, the stakeholders (municipalities or distribution sector remained. However, the sector private company managers) have little incentive to consolidated around four major companies with cut costs. This was largely the case in the European dominant shares in the gas distribution market. countries in the IEA study before initiation of gas market reforms.44 In Argentina, gas distribution was under the control of a single company (Gas del Estado) until 1992. The level of vertical integration is another area in Following its privatization, eight distribution which countries in Group I made different choices. companies were created (and another one joined The variation was particularly striking before most subsequently). Metrogas, the largest company countries started initiating measures aimed at serving Buenos Aires, serves nearly a third of the reducing the overall level of vertical integration in consumers in the country. Also, several companies the market. serve more than one distribution region, leading to significant ownership concentration in the The countries in Group I differ both in terms of the distribution segment of the market. On the other level of vertical integration and the way in which it 43Natural Gas Distribution ­ Focus on Western Europe (Paris: International Energy Agency, 1998), 61. 44Ibid., 62. 36 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE PIONEERS was achieved. Annex ­ Table A9 summarizes the variety of liberalization measures introduced in status of vertical integration in 13 countries before these countries. major liberalization measures were undertaken. In some countries (such as Italy and Japan), one or Whereas gas market reform in each country more companies operated as fully integrated entities could be the subject matter for an elaborate study with major roles in all segments of the gas chain in itself, Group I countries indicate that it did not (upstream, imports, transmission, distribution). In have a significant impact on the development of others (such as the Netherlands, Argentina and most greenfield gas distribution. Nearly all the others in Group I), vertical integration remained countries in Group I had already established limited to about two segments of the gas chain, as a extensive gas distribution networks and had rule. Overall, some type of vertical integration has reached a substantial level of gas penetration in existed in all countries in Group I. However, its level their residential and services sectors before the or the method by which it was achieved do not introduction of major reform measures began. appear significant in explaining the rate of residential Most gasification activity following the introduction gas penetration across countries. of reforms has pertained to the refurbishment of existing networks and/or their expansion with the Finally, countries in Group I have differed goal of reaching new consumers. It has rarely significantly in terms of the measures aimed at involved greenfield projects. liberalizing their gas markets. The variation has been in terms of the type of measures introduced, as Judging by the increasing number of households well as their timing (Annex ­ Table A9). The United connected to natural gas in Group I countries in the States, Canada and the United Kingdom have 90s and beyond, it is possible to conclude that played a pioneering role in introducing TPA (initially gasification has continued to progress following on the transmission grid and, subsequently, to the market reforms. However, for the implications of distribution grid), as well as the unbundling of the gas market reforms on greenfield gas distribution, transport and merchant functions of the companies countries other than those in Group I need to be involved in T&D. The difference in their starting examined. The next Chapter focuses on countries points (in terms of the preexisting level of vertical with relatively recent experience in greenfield integration, for instance) has contributed to the gas distribution. 37 5. Experience with Greenfield Gas Distribution: The Newcomers The 15 countries selected for Group II vary countries. For example, despite starting investment significantly in geographical location as well as level in gas distribution projects significantly later, Korea of economic development. What is common to all (with household penetration of 49 percent) is of them is that they can be considered as relative significantly ahead of several countries in Group I "newcomers" in gas distribution. In all of these ­ namely France, Australia, Japan, Canada and countries, significant investment in greenfield gas Algeria. Also, Spain and Colombia (with a distribution projects began less than three decades penetration rate of 41 percent and 35 percent, ago. Isolated distribution networks serving a few respectively) are ahead of Canada and Algeria from towns did exist in some of them (such as in Spain, Group I. On the other hand, in nearly half of the Chile and Mexico) before the 70s, but no selected countries in Group II, largely because gas large-scaleattemptsatresidentialgasificationexisted was introduced very recently, the rate of penetration until the 70s or the 80s. In fact, in many of these is less than 3 percent. countries (such as Portugal, Chile, Brazil and Greece), gasification of households in major The focus of this Chapter is on the variety of factors consumption centers did not start until as late as the which have affected the level of gas penetration in end of the 90s. the residential, commercial and services sectors in this group of countries. It explores the major The countries in this Group have been deliberately similarities and differences across countries in Group selected to vary considerably in terms of the rates II, and compares them to Group I countries, where of gas penetration in households. Based on this applicable. It also examines the challenges and diversity, the study examines the various reasons opportunities they have faced as the result of having for success for those that achieved comparatively a later start-up (compared to Group I countries) in higher penetration rates, and focuses on the major gas distribution. challenges which explain the lower penetration rates in the others. Meanwhile, the study acknowledges Supply-side Aspects that some countries started gas distribution projects much more recently than others. As a result, low Based on a comparison between the countries in gas penetration rates for households are not Group I and Group II, as well as cross-country always an indication of slow progress in comparisons within Group II, it is possible to draw greenfield gas distribution. the following conclusions: It is noteworthy that some of the "newcomers" have · The legacy of distribution networks based been able to accomplish greenfield gas distribution on manufactured gas has been very small projects which generated residential penetration among "newcomers," as opposed to most rates exceeding those found in several "pioneer" "pioneer" countries; 39 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Figure 5.1: Penetration of Natural Gas in Households Bolivia 2 Brazil 2 Bulgaria 0.06 Chile 10 China 3 Colombia 35 Greece 0.8 India 0.2 Indonesia 0.1 Korea 49 Mexico 9 Portugal 18 Spain 41 Tunisia 6 Turkey 19 0 10 20 30 40 50 Percent Note: Data for 2001-04; details related to the Figure are in Annex ­ Table A10. · For various reasons, gas usage in most of multiple regions of the country) required for the Group II countries (as measured by its initiating greenfield gas distribution; and share of TPES) is much lower than in Group I countries. In the case of countries with · Finally, in Group II countries, the main abundant gas, this was mainly due to late centers of gas demand tended to be further start-up in major upstream investments. In from the gas supplies than was the case with the case of countries lacking indigenous gas a number of the Group I countries, especially supplies, this was largely as a result of the the European Group I countries. comparatively late completion of infrastructure for gas imports (such as cross-border Lack of Manufactured Gas Networks pipelines and/or LNG terminals); Unlike most countries in Group I, very few · There is a paradoxical situation in terms of "newcomers" were able to benefit from an extensive the availability of indigenous gas supplies. gasdistributionnetworkbasedonmanufacturedgas. Many countries in Group II possess In case they benefited from such a legacy, it was significant indigenous reserves of natural limited only to one or a few major cities. Chile, for gas, but it is these countries which have example,possessedadistributionnetworkdatingback achieved the smallest progress in greenfield to the mid-19th century. This network has been gas distribution so far; undergoing conversion to natural gas since the commencement of imports from Argentina in 1997. · Many countries in this Group were In Portugal, a distribution network existed in Lisbon, challenged significantly by their serving around 230,000 consumers, before the comparatively lower level of economic introduction of gas in 1997. In Korea, manufactured development, which resulted in slower gas was introduced in 1972 and spread to several progress in major infrastructure investment major cities. Its network has also been undergoing (such as transmission networks reaching conversion since the first LNG terminal was launched 40 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE NEWCOMERS in 1986. In the case of the other countries in the no significant indigenous gas reserves. Thus, on the Group,theextentofnetworksbasedonmanufactured one hand, Korea, Spain, Turkey, Portugal and Chile gas was even more limited. In several countries (such lacked any significant indigenous supplies, but were as Mexico, Tunisia, China, Indonesia, Brazil and able to achieve residential gas penetration above Greece), some cities have had a gas distribution 10 percent.46 Colombia appears the only exception, infrastructure based on coal or naphtha. However, as gas distribution projects proceeded rapidly in the their contribution to spreading natural gas among past decade amidst abundant domestic supplies. On households has been small. In the case of China and the other hand, all the remaining countries, with Brazil, conversion of existing distribution networks the exception of Bulgaria and Greece, have to natural gas has been going on, even though in benefited from sizable indigenous gas reserves China the number of households using (Annex ­ Table A12). However, their residential gas manufactured gas has also been growing.45 penetration rates have remained markedly lower. Low Overall Usage of Natural Gas The slow rate of upstream development in the gas-abundant countries of this Group lies at the core A comparison between the two groups of of this paradox. This is in contrast with most countries countries in terms of the share of natural gas in Group I, which were involved in large-scale in total primary energy supply (TPES) highlights upstream investments as early as the 60s and 70s the relatively late entry of natural gas in meeting (some even before that), which helped to expand the energy needs of Group II countries. The their reserve base as well as the volumes of share of natural gas in TPES stood at 10.7 indigenous supply. Most countries in Group II failed percent and 1.4 percent on an average for to mobilize investments in their upstream, and Group I and Group II countries in 1973, production of natural gas remained at considerably respectively. Quite notably, in all countries in lower volumes until as late as the 80s and even the Group II (except Mexico), the share of gas was 90s.Mexico,wheresignificantgasproductionalready less than 1.5 percent. By 1990, gas' share occurred in the 70s, is a partial exception, but the increased in the TPES of both groups of large growth in output experienced in the 90s countries. Yet, the sizable gap between the two illustratestheunexploitedpotentialinpreviousperiods. groups remained: gas' share in TPES went up to 16.3 percent in Group I and only 4 percent Anothercommoncausefortheslowrateofupstream in Group II (Annex ­ Table A11). development has been the lack of incentives for producing natural gas. Thus, operators of fields Indigenous Supplies of Natural Gas usually lacked the necessary incentives to sell associated or nonassociated gas to the domestic A major paradox is apparent with respect to the market. As a result, they quite often opted in favor availability of indigenous supplies of natural gas in of leaving the gas in the ground, focusing on export Group II countries. The countries most advanced in markets, and flaring or venting the gas (in the case terms of greenfield gas distribution are those with of associated gas). 45In 2000, 25,809,000 persons residing in urban areas had access to natural gas, and 39,444,000 persons in urban areas had access to manufactured gas. In 2003, 43,200,000 persons residing in urban areas had access to natural gas and, in addition, 47,921,000 persons in urban areas had access to manufactured gas. China Statistical Yearbook 2003 ­ National Bureau of Statistics of China. 46The major discovery in Spain was the Gaviota field near the Basque region in the 80s. However, it was depleted by 1994. At present, there is active production only in a small offshore field in the Gulf of Cadiz ­ 30 km from Huelva. Chile's major discovery occurred in the Magellan basin in the far south of the country, thereby satisfying only regional demand. In Korea and Portugal, natural gas production has never occurred at a commercial level, whereas in Turkey it has remained very limited. 41 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Gas Supply Infrastructure one for Azeri Gas ­ provided Turkey with the necessary supply for developing its gas market The countries facing shortage of indigenous supplies overall and expanding the number of cities with were able to compensate for this through distribution systems. constructing cross-border pipelines or LNG terminals. Nevertheless, such projects were After prolonged negotiations, several private completed significantly later than in the case of companies embarked simultaneously on the Group I countries, which partly explains their later construction of multiple pipelines linking Chile with start-up in gas distribution as well. The earliest Argentina. The first one commenced in 1997 and examples of such infrastructure in Group II appear the others followed, linking several gas basins (La to be from the 70s and are limited to only two Mora, Neuquen and Noroeste) in Argentina with countries ­ Spain and Bulgaria. In the case of Spain, consumption centers scattered around Chile. the first step was taken in the 70s with the In the meantime, Portugal was linked to the inauguration of the country's first LNG terminal. Maghreb-Europe pipeline through two separate Its foreign supplies, however, remained limited for connections in Spain. As a result, both countries quite a long time. Thus, in 1980, its total imports have experienced fast growth in gas market were still only 1.7 bcm. By 1990, LNG imports development and, in particular, fast residential reached 4.5 bcm, but residential consumption penetration, since the late 90s. remained below 0.5 bcm. The main impetus for gas market growth came after the completion of Mexico benefited from multiple connections with two cross-border pipelines. The first, which provided the United States for both imports and exports. Norwegian gas through France, was launched in Growing demand in the country in the 90s has 1993, whereas the country gained its greatest transformed it into a major importer of United States access to foreign supplies in 1996, following the gas. Similar trends have occurred in India and inauguration of the Maghreb-Europe gas pipeline China, which, until recently, were self-sufficient. linking Algeria's giant Hassi R'Mel field with However, in both countries, the growth in demand Cordoba in Spain. In the case of Bulgaria, a has surpassed the growth in indigenous supplies, pipeline securing Soviet gas was completed in the thereby requiring the commencement of import 70s, but natural gas was designated for areas other projects. India received its first LNG imports in 2004 than households. and China is expected to complete several LNG terminals consecutively. In both India and China, While several of the other countries in the Group distribution projects have commenced in multiple also eventually acquired access to imported gas, locations but their viability depends largely on their for some of them it occurred significantly later. ability to secure gas supplies. Brazil is another Tunisia benefited from the ability to import Algerian country benefited from imports following the gas following completion of the Transmed pipeline construction of pipelines connecting it with Argentina linking Algeria with Italy in 1983. The next country and Bolivia. Finally, Greece, owning a small LNG in the Group gaining access to imported gas was terminal for Algerian gas, finalized a major pipeline Korea. Its first LNG imports began in 1986, paving for importing Russian gas through Bulgaria in the the way for speedy gas market development. Turkey late 90s, and has imported gas in increasing followed in 1987 through inauguration of a pipeline volumes ever since. for Soviet gas built through Romania and Bulgaria. Proximity of Consumption Centers to The country recorded its first residences connected Natural Gas Fields to natural gas in 1988. Expansion of this pipeline's capacity, as well as the construction of additional Several countries in this Group have been pipelines ­ one for Russian gas under the Black significantly affected by issues related to the Sea another for Iranian gas and most recently proximity of major consumption centers to natural 42 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE NEWCOMERS gas fields. Largely due to the lower level of economic A major example is Bulgaria, which, following the development in these countries (in comparison to inauguration of Soviet gas imports in the mid-70s, those in Group I), the need to construct long-distance established a transmission network stretching to transport infrastructure (either for indigenous or nearly all industrial regions and major cities of the foreign supplies) has emerged as a major country. This network supplied industries and DH challenge. This has been particularly the case in systems. However, it was not accompanied by the geographically larger countries of this Group, developmentofgasdistributionnetworksinthecities, such as India, China, Indonesia, Brazil and Mexico. and the process still remains in a highly preliminary stage. As examined in the following discussion, A pronounced feature in these countries is that major policy choices by successive governments development of transmission pipelines nationwide have resulted in very limited residential gas has remained largely incomplete (with Mexico penetration despite the presence of this national beingapartialexception,althoughithasanongoing transmission network. need for investment in new transmission networks). As a result, isolated transmission networks serving Demand-side Aspects only certain localities close to the gas field have been common. For example, until recently, China's A comparison between the "pioneers" and fast-growing cities, located on or near its east coast, "newcomers" in gas distribution leads to the were not able to benefit from natural gas supplies following conclusions: owing to their remote location. Thus, reserves in the Sichuan province served mainly regional · Most countries in Group II have a climate demand and made no contribution to supplying gas for which space heating requirements are in cities such as Beijing and Shanghai. Largely with minimal. This results in potentially lower gas the objective of allowing other regions to benefit consumption per residential consumer. from gas, China undertook massive investment in Countries with relatively colder climates in the 4,200 km-long West-East pipeline, which Group II appear to be those with the biggest commenced in 2004. progress in greenfield gas distribution; Indonesia's case illustrates further how problems · Most countries in Group II are characterized related to lack of a transmission network could slow by a comparatively lower level of economic the penetration of natural gas in different regions. development in terms of their national per Most of the country's transmission infrastructure has capita income. This affects residential been developed to connect gas fields with several consumption patterns and the ability of bulk users (such as power plants) found in relative households to afford the cost of gas proximity. Meanwhile, its major consumption centers connections. It puts "newcomers" in stark in Java have been largely lacking in terms of access contrast to "pioneers," which have some of togassupplies,mostofwhicharefoundintheremote the highest Gross National Income (GNI)/ locations of Kalimantan and Sumatra islands. This capita levels in the world; has hindered further penetration of natural gas. · In terms of fuels competing with natural gas, However, the ability to build a well-established combustible renewables (wood and other transmission network alone also does not assure biomass) and wastes47 play a larger role in development of a gas distribution infrastructure. the residential consumption of Group II 47Combustible renewables and wastes, as defined by IEA, include wood, charcoal, biogas and wastes. 43 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE countries, whereas their role in Group I This is in stark contrast with the countries in countries has been largely peripheral. This is Group I, where households in all countries, except probably the result of the lower income levels Algeria, required significant energy for space of Group II countries, where many households heating.AsexaminedinthecaseofGroupIcountries, tend to have access to combustible the presence of a relatively cold climate does not renewables at low cost or for free; alwaystranslateintotheusageofnaturalgasforspace heating purposes. However, the use of natural gas · As gas became increasingly important in for space heating considerably raises the average power generation in the past two decades, gas consumption per households. Accordingly, for the latter has appeared as a significant most countries in Group II, the average gas "anchor consumer" for developing a consumption per household is usually low, which is national gas industry and, consequently, afactorthatmayoftenraisedoubtsabouttheviability greenfield gas distribution projects. Due to of a greenfield gas distribution project. the relatively later start-up in gas distribution, the countries in Group II have been able to An accurate estimate of average residential gas benefit from this trend better than in the case consumption is difficult to make for each country in of Group I; Group II48 because of the very low numbers of households connected to natural gas. As a result, · Many countries in Group II exhibit Figure 5.2 outlines the approximate gas considerably low urbanization rates, which consumption of households only in the six countries appears as another reason for why with residential gas penetration rates above 10 greenfield projects in some of these percent. Turkey appears to have the highest countries have remained limited to a few consumption per household, followed by Chile and larger cities; and Korea. Meanwhile, Portugal and Colombia appear to have the lowest. The countries with highest · Group II countries are developing gas penetration of gas in households appear to be those distribution systems during a period of with relatively colder climates than the rest of the heightened environmental awareness with countries in Group II. governments well aware of the low air pollution associated with burning gas and Nevertheless, Colombia's relative success in reduced carbon dioxide (CO2) emissions. spreading gas distribution networks illustrates that climatic conditions do not necessarily prohibit Requirement for Space Heating greenfield gas distribution. The country's climate requires no space heating. Reportedly, nearly all Many countries in Group II have climates requiring households use gas only for cooking ­ even water minimal space heating. This includes particularly heating is not a major area of residential gas Colombia, Tunisia, India, Indonesia, Bolivia, Brazil, application. As a result, gas consumption per and many parts of most of the remaining countries. household is low.49 48As the number of households connected to gas grows, the average gas consumption per household has changed rapidly across the years for most of the countries in the group. This is caused partly by the lack of simultaneous data on residential connections and residential gas consumption. However, it is also because average consumption in the first localities connected to natural gas does not necessarily represent the households connected subsequently. 49According to one source, the average monthly consumption per households varies between 22 and 28 m3. This is small compared with Canada, where the average monthly consumption is around 300 m3. See Guillermo Diaz, "Experiences with the Development of New Residential Markets for Natural Gas ­ A Colombian Case Study," Technical Paper presented in the sessions and published in the proceedings of the Third LACGEC (Latin American and Caribbean Gas and Electricity Congress) in Santa Cruz de La Sierra, Bolivia, on April 23, 2002, http://www.technogas.ca/lacgec3.html. 44 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE NEWCOMERS Figure 5.2: Estimated Average Gas Consumption per Household 1,400 1,208 1,200 1,125 1,006 1,000 800 Meters 600 584 Cubic 400 387 269 200 0 Chile Korea Spain urkeyT Portugal Colombia Note: Data for 2001-04; details related to the Figure are in Annex ­ Table A14. Yet, distribution companies in Colombia have in meeting sizable investment requirements which managed to spread gas among households as the has contributed to delays in establishing a national result of various strategies. These included gas infrastructure, including import facilities, optimization of investment costs in distribution transmission pipelines and distribution grids. Several through employing pipelines, service regulators and governments have managed to successfully address metering equipment of reduced capacity. Another this challenge by handing over greenfield gas strategy commonly employed has involved reducing distribution projects to private companies. the connection charges for households and providinggas-compatibleequipmentatadiscount.50 It is probably not a coincidence that in the case of Group II countries, which have already achieved Income per Capita relatively higher residential gas penetration rates, gasification began after a distinct period of rapid All countries in Group II rank significantly below economic growth. Gas market development, and, those in Group I in terms of the level of income per particularly, greenfield gas distribution, therefore capita. Seven countries in the Group belong to the accelerated significantly after Spain's accession to lower middle-income category and one to low- the European Union (EU) Community in 1986. income category. Spain has the highest per capita Portugal also benefited from joining the Community income in the Group; however, it ranks below nine before the introduction of gas in 1997. In fact, EU of 13 countries in Group I. funds have been significant in Portugal's gasification projects. Korea and Chile have the distinction of This could partly explain the relatively late start-up being two of the fastest growing countries in their of gasification of Group II countries. Low per capita respective continents. In Turkey, the 80s was marked income acts as a potential impediment for by market reforms and rapid growth before the households switching to natural gas because of costs introduction of gas in 1987. Similarly, in China, that often appear unaffordable. Governments of greenfield gas distribution projects have such countries have experienced major challenges accompanied rapid economic growth. 50Ibid. 45 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE However, the selected examples in the report connection between size of household and indicate that high national income per capita does propensity to switch to natural gas. not appear to be a precondition for gas distribution. This is illustrated by the slow pace of residential Regarding the type of dwellings in which households gasification in countries with relatively advanced reside and their implications for gas consumption, economies (such as Greece, a high-income Spain and Turkey provide a useful example. In both country), as well as the successful development countries, there is a large role for multifamily of greenfield gas projects achieved in countries dwellings, which usually have a common boiler. This with significantly low income (Colombia, Turkey has created the potential for distributors to benefit and Algeria). from economies of scale. Household Size Competing Fuels In terms of the average size of households, most As of 2004, the status of natural gas versus countriesinGroupIIrankhigherthanthoseinGroup competing fuels in Group II countries appears I (Annex ­ Table A15). This implies potentially lower different from countries in Group I. Natural gas per capita gas consumption. However, it also implies has reached the status of being the preferred higher consumption per household. In the context residential fuel in only one country in Group II so of low-income countries, this may contribute to far (Korea). In all other countries in the Group, gas households' switching to natural gas as energy ranks behind at least two alternative fuels. For many consumption tends to grow in larger families, of them (seven out of 15), gas is still the least thereby increasing their annual expenditures. preferred fuel in the households. This outcome is Switching to gas is particularly attractive if gas is largely due to the comparatively lower rate of subsidized or appears as the cheapest competing households connected to natural gas in these fuel. However, no study is available on the countries (Annex ­ Table A16 and Figure 5.3). Figure 5.3: Share of Natural Gas in Total Residential Energy Consumption Bolivia1.1 Brazil 0.8 Bulgaria 0.03 Chile 6.9 China 2.8 Colombia 16.9 Greece 0.55 India 0.24 Indonesia 0.04 Korea 44.6 Mexico 4.8 Portugal 5.6 Spain 20.6 Tunisia 9.2 Turkey 20.3 0 5 10 15 20 25 30 35 40 45 Percent Note: Data for 2004; details related to the Figure are in Annex ­ Table A16. 46 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE NEWCOMERS A common pattern in Group II countries, observed as a fuel has been the lower cost of an LPG bottle in Group I countries as well, is that coal has been compared with the connection fees for natural gas. the principal fuel supplanted by natural gas. This reflects the environmental policies of governments, Occasionally, natural gas has appeared particularly those aimed at improving air quality in competitively priced against electricity. A partial large cities. Major examples are Turkey, Korea, contribution to this has come from market reforms Spain and Chile. Meanwhile, some other countries, in the power sector, resulting in the abolition or namely India and Bulgaria, have also witnessed an reduction of price subsidies for electricity overall decline in residential consumption of coal, consumption by households. In other cases, but this is hardly associated with gasification of regional disparities in electricity prices (caused households as its rate has remained very low. mainly by regional electricity supply disparities) have inhibited gas penetration. This has largely The substitution of petroleum products has been been the case in northern Portugal, where much less pronounced in Group II than in Group I. residential users have had access to relatively In only two countries (Turkey and Bulgaria) has the cheap electricity. overall residential consumption of petroleum products declined in both absolute and relative However, the most distinctive feature of Group II terms. In several countries, namely Bolivia, Mexico countriesismostlikelytheprevalenceofcombustible and Indonesia, the presence of significant oil renewablesandwasteasalternativefuel-typesamong productionhasresultedinalargeshareofpetroleum residential consumers. As Annex ­ Table A16 productsinresidentialenergyconsumption.Thishas illustrates, this category appears to be the preferred created significant challenges for natural gas fuel in households' energy consumption in nine of penetration, especially because of subsidized the 15 Group II countries. This is partly because of petroleum product prices for end users. the lower income per capita in these countries which decreasedtherateoffuelswitching.Also,forseveral Amongpetroleumproducts,liquefiedpetroleumgas of them, it reflects comparatively lower urbanization (LPG)hasbeenwidelyusedbyhouseholdsinGroup rates,asruralinhabitantsaremostlikelytohaveaccess II. This fuel has served as a significant alternative to to fuels such as firewood for free or at comparatively natural gas and has usually been introduced earlier. lowcosts. LPG has particularly inhibited the penetration of natural gas in countries where governments have Settlement Density chosen to subsidize its price for households. However, where subsidies have been absent or As one of the most common means for benefiting negligible, following the entry of natural gas in a from scale economies, gas distribution activities in city or a region, LPG traders have often been nearlyallGroupIIcountrieshavebeenconcentrated obliged to reduce their prices, implying on one or few of the largest cities of the country. competitiveness with natural gas. This was the case, Such cities have been the first, and often the only for instance, in Chile's capital of Santiago following ones to be connected to natural gas. This has been the introduction of natural gas in 1997.51 Under particularly the case in countries with low such circumstances, the two fuels have continued urbanization rates, such as China, India and penetrating households simultaneously but with an Indonesia, where most of the population resides in increasing number of households preferring natural ruralareasandopportunitiesforeconomiesofscale gas. In this process, the major advantage for LPG nationwide have been limited. 51 Asia Pacific Energy Research Center (Natural Gas Reform in the APEC Region, APERC, 2003), 78. 47 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE A major example is China, where both natural gas Commercial and Service Consumers and manufactured gas have been spreading rapidly in several major urban areas over the past decade. The role of commercial and service consumers in The result, based on China's national statistics for creating opportunities for scale economies has 2003, is that 76.7 percent of the urban population differed substantially across countries in Group II. has been identified as having access to "tap gas" This reflects different choices by governments or (up from 17.8 percent in 1989). This is in stark distribution companies. Thus, in 2004, while contrast to China's rural regions, as nearly all commercial-public consumers in Spain consumed gasification has taken place in its cities. 105 m3 of gas per every 1,000 m3 of gas consumed in the households, in Indonesia, they consumed Other major examples are Brazil and Greece. Thus, 1,609 m3 per 1,000 m3 in households.52 nearly all gasification activity in Brazil has remained limited to its two largest cities ­ Sao Paula and Rio In several countries in this Group (Indonesia, de Janeiro. Similarly, in Greece, since the late 90s Bulgaria, Greece, Bolivia and Brazil), natural gas the households connected to natural gas have been consumption in the commercial and services sectors mainly in Athens, with ongoing greenfield has significantly outweighed residential consumption distribution projects focused on other large cities. (Annex ­ Table A17). It has been a common strategy In India, as well, most activity has focused on a few for many distribution companies to have the larger cities (New Delhi and Mumbai, in particular). commercial and services sectors as their first consumers. This is a means of reducing the risks Turkey, in the meantime, provides an example of a associated with building distribution networks. country with more advanced experience in Indonesia provides a unique example of developing greenfield gas distribution. As elsewhere in a distribution infrastructure based almost solely on Group II, the initial focus of gas distribution was on serving consumers such as hotels, hospitals and the country's two largest cities, Ankara and Istanbul. public buildings, as well as other consumers from They were the first to access natural gas in 1988 the commercial and services sectors and 1992, respectively. After nearly a decade of Anchor Consumers slow progress in terms of spreading gas to other cities, there was a major boost in terms of greenfield A distinctive feature of Group II is the large role of gas distribution following the enactment of a new power generation in development of a national gas legislation on the natural gas market in 2001. This market. Unlike most countries in Group I, power legislation established a regulator for natural gas plants emerged as major consumers in the early as well as an accelerated process whereby stages of gas market development for most distribution licenses would be awarded to private countries in Group II. This is mainly due to the later firms. As a result, by the end of 2005, households start-up of gas market development, which in 24 distribution regions (several of them including coincided with the new global emphasis on more than one city) were acquiring access to natural gas-fired power generation in these countries. As gas. This, as examined next, illustrates the need to a result of this relatively late start-up, infrastructure focus on policies adopted by the government, which development in this group of countries appears can provide further explanations about what drives blessed with the presence of power plants as anchor success in greenfield projects. consumers. Power plants located in different parts 52 Part of the difference in the ratio of gas consumption in the commercial and services sectors versus households across Group II countries is associated with the differing ratios for overall energy consumption in the two sectors. 48 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE NEWCOMERS of these countries have been a major driver in the driver in gas market development since the early construction of transmission pipelines, following introduction of gas in the 70s. In a similar fashion, which cities have initiated greenfield gas Chile's indigenous supplies in the late 80s and 90s distribution projects. were mainly consumed by large industrial plants. In other countries as well (such as Mexico, China, Power plants appeared as anchor consumers for India, Indonesia, Brazil and Greece), the shift the introduction of LNG in Korea in 1986. Similarly, toward natural gas in power plants has occurred gas-fired power plants were the principal after a significant expansion of gas consumption in purchasers of natural gas once cross-border industry. Thus, there have been different paths in pipelines were completed, and provided access to terms of the "sequencing" of anchor consumers in imported gas to Turkey, Portugal and Chile. In the process of developing a national gas industry. Colombia,whichhasbeenproducinggasforseveral decades, power generation was an integral part of Environment gas market development. In Spain, which started limited gas consumption in the 70s, gas-fired power The environmental advantages of natural gas are plants have gained importance only in the last well known and are a significant factor in decade. An agreement signed in 1994 between encouraging countries to introduce gas distribution. the country's State-owned gas company, Enagas, For example, in Turkey, the main alternative to and Unidad Electrica, an association of the electricity natural gas for home heating was, for a long time, enterprises, was instrumental in proceeding with a lignite. This resulted in severe air pollution in the major cross-border pipeline project for importing winter in the larger cities, especially the colder ones gas from Algeria. Rapid expansion of greenfield such as Ankara. With the introduction of natural gas distribution projects followed. gas, air pollution declined rapidly. As a result, air pollution is now much lower in cities where gas In several Group II countries, the penetration of distribution systems have been in place for some gas in power generation has been delayed because time such as Ankara, Istanbul, Eskisehir, Bursa and of the presence of alternative fuels. Thus, for Izmit. Now, with the commencement of development example, abundant coal reserves in China, India of gas distribution systems in nearly 50 other cities, andIndonesiahavehelpedpostponethepenetration air pollution is likely to decline there also, once gas of gas in power generation.53 Brazil offers a similar usage increases. example with its abundant hydro resources, which also helped delay gas penetration in the power The Group II countries may also benefit in the longer sector. In all four countries, the relatively run by using natural gas instead of more carbon- underdeveloped transmission infrastructure, and the intensive fuels for heating. This would reduce their presence of a large number of cities with no access carbon emissions and it is possible that if the projects to natural gas, are partly the result of historically are designed correctly carbon credits might be lower priority given to gas in power generation. available which could be sold. However, not all gas distribution projects will reduce carbon emissions In a number of Group II countries, it has been the since they may replace LPG or hydropower and industrial users who have served as the primary also some Group II countries, such as Turkey, have anchor consumers for gas market development. In not signed the Kyoto Protocol and are, therefore, Spain, for instance, industry has been the main not eligible to sell carbon credits. 53India and Indonesia have attached a higher priority to gas-fired power generation since the 90s. 49 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Policy Framework and Market · In Korea, in 1982, legislation created the Structure for Gas Distribution state-owned Korean Gas Corporation (Kogas), with a monopoly role in LNG As illustrated in the case of Group I countries, there imports, operation of LNG facilities, is no "one-size-fits-all" policy which could secure transmission and sales to large consumers; success in gas distribution projects. Neither have countries so far developed their gas distribution · In Spain, a State-owned company (Enagas) networks on the basis of identical gas market was created in the early 70s to take charge structures. As a result, while aiming to identify of imports, LNG facilities, development of certain patterns encompassing all or most of the the national transmission network, sales to countries in Group II, this Section provides multiple large consumers and a role of some kind in examples from these countries which emphasize gas distribution; the diversity of policy across the countries. For this purpose, it examines the following: · In Turkey, State-owned Boru Hatlari ve Petrol Tasima AS (Turkey's Petroleum Pipeline · The role of State vs. private ownership in Corporation ­ BOTAS) was given a gas distribution; monopoly role in imports, wholesale, transmission and a role in distribution · Concentration of ownership in gas development following the introduction of distribution; gas in 1987; · The degree of vertical integration in the initial · In Portugal, the government established Gas period for greenfield gas distribution de Portugal (GdP) to develop gas distribution networks; grids and establish a major stake in another major player, Transgas ­ the national · Implications of gas market liberalization monopoly in imports and transmission; efforts on gas distribution; · In Colombia, State-owned Ecopetrol was · Examples of specific strategies adopted by accorded a leading role in the country's governments that have successfully upstream development as well as in promoted gas distribution; and transmission projects; and · Major policy choices creating obstacles for · In Chile, State-owned ENAP was also greenfield gas distribution projects and accorded a dominant role in upstream delays in their implementation. development and transmission.54 Private vs. State-led Development of The dominant role of the public sector was the Gas Market and Gas Distribution observable during the initial stage of greenfield gas distribution projects as well. In this respect, most The following are examples of the leading role of countries in Group II are quite similar to those in State-owned companies in the initial years of gas Group I. Thus, only in a very few countries (such market development in several Group II countries as Korea and Bulgaria) did private entrepreneurs which have achieved the highest level of residential take the leading role in establishing gas gas penetration: distribution networks. 54The dominant role for the State was applicable for most of the remaining countries in Group II as well. 50 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE NEWCOMERS Yet, there has been a major shift toward private In Brazil, private distributors have gained an participation in gas distribution in the past decade. increasingly important role after a constitutional In all countries, except in Tunisia, privately-owned amendment which allows private participation. Thus, companies have played increasingly important roles since the mid-90s, private companies have been in greenfield gas distribution projects in contrast to involved in large-scale conversion of distribution countries in Group I, most of which had advanced networks based on manufactured gas to natural gas. significantly in terms of gas distribution networks However, natural gas has still failed to spread to before allowing a dominant role for private actors. localities beyond a few of Brazil's major metropolitan For instance, legislative changes encouraging centers, despite the availability of gas in multiple private involvement in utilities in the mid-90s locations. Likewise, in China, investment in gas largely accounted for Colombia's rapid rate of distribution has also accelerated since the mid-90s, household gasification. The cash-strapped when a growing number of private companies government of Colombia has had limited funds for joined greenfield projects as minority partners. distribution projects, which accounted for the delay in their realization. Similarly, in Spain, privatization Nevertheless, there are also some examples for of its major gas distributor (Gas Natural) has countries where growing private participation has contributed to the fast pace of residential gasification not sparked significant progress in gas distribution since the late 90s. In Portugal, the rise of privately- networks. For instance, in Bolivia, India, Indonesia owned distribution companies contributed to its and Greece, the increase in the number of reaching household penetration rates which households with access to natural gas has remained appeared far ahead of the initial optimistic scenarios very slow even after legislative changes allowed of the government. In Chile, when gas started for a growing role for private entrepreneurs. In flowing from Argentina, private companies had the case of Bulgaria, private companies have been already been allowed to occupy a growing role in active from the early start of distribution concessions distribution based on manufactured gas. Once at the beginning of the 90s. However, after more growing amounts of gas began to flow from than a decade of involvement, the total number of Argentina, these private companies took the residential consumers with access to natural gas opportunitytoinvestinnaturalgasdistributionprojects has remained extremely low (reaching only 2,000 and rapidly expand the number of gasified residential consumers in 2004). households.InTurkey,largeinvestmentsingreenfield Yet, the slow progress in gas distribution projects in gasdistributionprojectsareoccurringsimultaneously these particular countries can hardly be attributed inmultipledistributionareasofthecountry,coinciding to the growing role for private entrepreneurs. withgasmarketreformswhichprovidedalargerplace Instead, other policy choices have obstructed private forprivateplayers.Inpart,thisisowingtothepresence companies from fully realizing their potential. It is of a newly expanded transmission grid reaching noteworthy that in all these countries (except regions that formerly had no access to natural gas. Bulgaria), the incumbent State-owned distributor has However, it also reflects the presence of a number of retained its dominant role in gas distribution. The private companies willing to invest in the gas involvement of private companies has remained distribution business of the country. limited to minority ownership in some distribution Similarly, in Mexico, private company participation companies, or to leadership in relatively smaller has coincided with acceleration of investment in distribution projects. greenfield gas distribution projects. Thus, the Concentration of Ownership in number of residential (and commercial-public Gas Distribution services) consumers increased nearly fourfold from 1997 to 2002, reaching 2,300,000 (up from Concentration of ownership in distribution has 604,000 in 1997). remained relatively high in most countries in 51 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Group II. Tunisia provides an example of the most had a high degree of vertical integration before extreme case in which a single State-owned the introduction of gas market reforms. As company (STEG) has been charged with conducting summarized in Annex ­ Table A18, in several of natural gas distribution. In several other countries, the countries, a single company dominated all a single company has maintained a dominant imports, the construction of the national transmission (though not exclusive) role in gas distribution. This grid and sales to large consumers. This was the has principally been the case in Spain (through the case in Korea, Spain, Turkey and Portugal, except dominant market share of Gas Natural); Portugal in Korea, these companies had a significant role in (through GdP's major stakes in the country's gas distribution as well. In Colombia, the national distribution companies, as well as its dominant role gas and oil company, Ecopetrol, dominated both in the country's largest distributor serving Lisbon); gas production and transmission. In Chile, the gas Chile (with a single company, Gasco, owning major market was largely underdeveloped until imports stakes in most of the country's distributors). began in 1997. Following the inauguration of gas import pipelines in 1997, a major characteristic of The high level of concentration has been adopted the Chilean gas market has been the significant largely as a strategy to secure economies of scale degree of integration between T&D companies. for the major participants, as well as a means of attracting large (especially international) investors. At varying degrees, vertical integration was Thus, for instance, numerous distribution companies prevalent in the remaining countries of Group II as emerged in Colombia in the 90s with the goal of well. In Mexico, India, Indonesia, Brazil, Bolivia and serving various regions of the country. However, Greece, a single company dominated all segments the Colombian government specified that market of the gas chain before reforms. In the remaining concentration in distribution will be permitted by countries, distribution was undertaken by separate 2015, when gasification of households is expected entities (Bulgaria and China), or was integrated only to be nearly completed. Thus, current distribution with transmission (as has been the case in Tunisia, companies have significant cross-ownership, where STEG's role in upstream has been minimal). resulting in a higher level of market concentration. Greenfield Distribution Amidst a In several other countries (Bolivia, India and Liberalized Gas Market Greece), the incumbent national gas distributor still undertakes most of the distribution activity directly, In most countries in Group I, development of gas or owns major stakes in local distribution distribution networks had reached an advanced companies, resulting in a high degree of market stage before the introduction of major reforms, such concentration. In other Group II countries (Turkey, as privatization of national transmission owners, TPA Mexico, Brazil, China and Bulgaria), market in the transmission grid and reducing the existing concentration has been impacted by allowing level of vertical integration in the market. In Group (private) distribution companies to conduct II, however, such major reforms have coincided distribution projects in multiple locations and gain largely with the early stage of greenfield gas significant market share (Annex ­ Table A18). distribution. Many Group II countries began to Korea, on the other hand, has maintained a liberalize their gas markets, following the example significantly low degree of market concentration in established by "pioneers" ­ the United States and gas distribution. the United Kingdom, in particular. The Degree of Vertical Integration While the principal reform measures in the market structure of each country are outlined in Annex ­ Typically, for many countries with a newly Table A18, three measures have appeared central developing gas market, countries in Group II have for most countries in Group II: encouragement of 52 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE NEWCOMERS privateparticipationingasinfrastructuredevelopment, Portugal had undertaken major initiatives for establishment of certain limits on vertical integration meeting the requirements in the EU Gas and introduction of TPA in the transmission networks. Directive. Meanwhile, private companies obtained a large role in distribution by the late As the degree of residential gas penetration is 90s, proceeding rapidly with gas distribution. comparatively low in some countries in the Group, As a result, the number of residential gas the implication of market reforms is hard to estimate connections reached 683,000 by 2003 (up at this point. However, based on data for the from 74,000 in 1998); countrieswiththebiggestprogressingasdistribution, it is possible to conclude gas market reforms have · Turkey: Major reforms were undertaken with coincided with fast progress in greenfield projects: the Natural Gas Law in 2001. In the span of two years (from June 2003 until June 2005) · Spain: Major reform measures were the energy regulatory authority finalized introduced in the mid-90s. Residential gas tenders for distribution licenses for 24 new consumers experienced a rapid increase after regions, attracting considerable attention this period, with their number rising from among private companies. Following this, 2,720,000 in 1995 to 5,203,000 in 2003; there has been a massive increase in the · Colombia: Major gas reforms were also number of cities undergoing construction of introduced in the mid-90s. Residential gas greenfield gas distribution networks;55 and customers increased sharply from 931,000 · Korea: The principal measure aimed at in 1995 to 3,300,000 in 2004; reducing government involvement was adopted in 1999, when 39 percent of the · Chile: In 1995, the country had only 37,175 national gas company, Kogas, was residential gas consumers. By 2004, the number of residential consumers reached privatized. However, by 1999, Korea had 397,000. This rapid growth has occurred in progressed far ahead of the other countries an environment marked by minimal in Group II in gas distribution projects under government intervention. Thus, multiple its original State-led gas market structure. import pipelines (from Argentina) were Some Strategies Promoting Greenfield completed with the involvement of Gas Distribution government limited to negotiation of international treaties establishing a clear Countries in Group II have adopted various framework for investors. Following the flow strategies for promoting gas distribution of imported gas in 1997, gas distribution development. Without going into detail about each developed rapidly without any particular country's strategies, the examples below offer some financial incentives on the part of the insight into major policy choices: government. The government's involvement in this period concentrated on monitoring · Governments in this group of countries have anticompetitive behavior in the market; generally set tax rates for residential natural gas consumption below the rates for · Portugal: When gas imports were introduced electricity, and occasionally below petroleum in 1997, State companies retained a dominant products, such as gas oil. As major role for the first several years. By 2003, examples, Spain and Turkey have adopted this 55 Source: www.epdk.org.tr. 53 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE type of tax policy which contributed significantly reflect income. This policy has proven to the penetration of natural gas;56 effective in terms of the fast spread of residential gas penetration since the · At least in the first years of gas penetration, mid-90s; governments have exercised control over residential gas tariffs, taking into account · Cross-subsidization of households by the price of competing fuels. Thus, for industrial consumers has been another example, the tariff policy of the Korean policy adopted with the objective of government has reflected its objective of promoting gas penetration. This policy was spreading natural gas among households. widely used in Colombia in the 90s, when Similarly, Turkey's residential gas tariffs in residential tariffs were generally kept below the 90s remained among the lowest in industrial gas tariffs; Europe, with gas priced not only below · Cross-subsidization between regions has electricity, but also lower than light fuel oil;57 been another strategy aimed at helping · Establishing standards for new dwellings development of greenfield gas distribution. has also contributed to residential gas For instance, Spain adopted the same tariff penetration. Thus, in Portugal, the rate for all consumers in the same consumer government ruled that all new dwellings category (households, industry and power constructed after 1989 should have internal generation), irrespective of location. This was piping infrastructure suitable for natural gas. pursued as a means to spread natural gas However, many city councils have failed to to remote regions; and enforce this legislation;58 · Direct subsidies partly or fully covering the · Cross-subsidization between households cost of household connections, and has been another measure aimed at occasionally the cost of conversion to new promoting development of gas distribution appliances, has been an effective measure. networks. Thus, in Colombia, legislation in Thus, for example, several public distribution 1994 (Law 142) required local authorities companies in Portugal (such as Portgas) to establish six categories of residential adopted this policy following natural gas consumers, each to be charged a different imports in 1997. However, rather than a rate for gas consumption. Consumers in the policy established by governments, this has highest two Categories (5 and 6) faced rates been mainly a strategy of individual publicly- higher than long-term marginal costs of or privately-owned distribution companies. distribution, whereas those in Categories 1 Policy Choices Creating Obstacles for through 3 faced rates lower than the long- Progress in Greenfield Gas Distribution term marginal cost. A consumer category was defined based on its neighborhood, The focus in this section is on some policy choices rather than its precise level of income. adopted in those Group II countries which have However, neighborhoods were assumed to achieved the lowest penetration rates of natural gas 56Annual reports of Eurogas; IEA Statistics. 57IEA Statistics ­ Natural Gas Information 2004, International Energy Agency: 131-133. 58http://www.eci.ox.ac.uk: Fawcett, T., K. Lane, B. Boardman, Country Pictures (Oxford: University of Oxford, Environmental Change Institute, 2000). Supporting material for Fawcett, T., K. Lane, B. Boardman, Lower Carbon Futures (Oxford: University of Oxford, Environmental Change Institute, 2000). 54 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE NEWCOMERS in households. The section provides examples of Such horizontal integration has been several major policies that have had negative common in many countries around the implicationsondevelopinggreenfieldgasdistribution world, including many of the Group I networks. Each policy choice needs to be considered countries (Germany, the Netherlands, United in the context of the country examined, and should States, Japan and Australia being major not be construed as constituting an obstacle to examples). However, horizontal integration distribution in other countries. Also, the examples do in the context of Tunisia has had negative not form part of an exhaustive list of the problems implications on gas ­ STEG emerged largely experienced in each country. as an "electricity utility with a gas activity."60 The strong electricity culture In Mexico: within the company prevented a balanced approach toward gas versus electricity. The · Until the mid-90s, natural gas development major implication was that STEG focused was a low priority for the Mexican government, mainly on consumers from the power as well as the national oil and gas company, generation and industrial sectors, Pemex. (In fact, historically, the natural gas whereas residential gas penetration industry developed largely as the result of a remained a low priority. need to solve the problem of associated gas in oil production.) This significantly weakened In China: the role of gas in meeting Mexico's energy needs, as well as incentives for building T&D · Until the early 90s, natural gas traditionally infrastructure; and received a lower priority. The presence of abundant coal reserves and emphasis on · Before the reforms of the mid-90s, Pemex their development, along with the priority on was given the responsibility for setting end coal-fired power generation, inhibited user tariffs and, to a large extent, the profit development of the national gas market and margins of distribution companies. As a rule, transmission infrastructure, which remained the tariffs were set too low to secure profits concentrated in the gas-producing regions. sufficient for progress in investment in Consequently, throughout the 90s, distribution networks. Moreover, until 1992, companies involved in gas distribution were residential gas prices were set to be equal frequently confronted by concerns about to or below industrial prices, which in most sufficient supplies of gas if they wanted to instances barely covered the cost of gas proceed with gas distribution investments. provided by distribution companies.59 Given the fast growth in industrial consumption, these concerns have existed In Tunisia: in the 2000s too; · The structure and organization of the · In addition, government regulation, national gas distributor (STEG) impeded resulting in artificially low well head and development of gas distribution networks: transport prices for gas, has obstructed STEG was assigned responsibility for growth in gas supply and investment in distributing not only gas, but also electricity. transport infrastructure; and 59Regulatory Reform in Mexico's Natural Gas Sector (International Energy Agency, Paris, 1996), 55. 60Increasing the Efficiency of Gas Distribution ­ Phase 1: Case Studies and Thematic Data Sheets (ESMAP Report 218/99, July 1999), 19. 55 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE · A major study of China, conducted by IEA consumer. This has been a continuous in 2002, concluded that lack of a obstacle to residential gas penetration; and comprehensive energy strategy in the Chinese leadership is hindering development · Delays in pipeline construction caused by of the gas market, including gas distribution. administrative procedures have been a The national policy on developing China's common obstacle in several greenfield gas gas market was based on a project-by- distribution projects, including the largest project approach, which created concerns ones in Mumbai, New Delhi and Gujarat. among investors regarding imbalances Slow growth in the consumers base between the country's supply and reduced cash flows, weakening the demand.61 By contrast, in many countries distributors financially and eventually their with advanced distribution networks, ability to invest. the early penetration of gas was accompanied by a comprehensive strategy In Indonesia: covering gas upstream, imports, transmission infrastructure, distribution, · For nearly two decades until the early 90s, pricing and marketing. the priority of successive governments was on exporting natural gas rather than In India: expansion of its use in the domestic market. This was particularly the case in the power · Various policy choices have inhibited gas sector, which was designed to work on coal supply and the growth of a potential gas and petroleum products. Reflecting this market. This includes the limited role priority, Indonesia's major investments in allowed to independent companies in gas gas infrastructure focused on LNG export development until the introduction of the terminals, rather than T&D pipelines within new exploration licensing policy (NELP) in the country; 1997. Also, the government has fixed well head tariffs for State-owned companies Oil · Kerosene and LPG have remained the and Natural Gas Corporation (ONGC) and principal fuels consumed by households, Oil India Limited (OIL) at low levels, which largely as a result of substantial subsidies. has limited their ability to supply increasing Major attempts to phase out the subsidies volumes of gas to the market; did not occur until as late as 2001. This has also inhibited the growth of natural gas as · The price of petroleum products remained a residential fuel. Fuel subsidies provided within the scope of the "administered price to other sectors had similar implications;62 mechanism" (APM) until 2002. This included heavy subsidies for LPG and kerosene ­ the · Until new legislation on the oil and gas sector dominant fuels in the residential sector. in 2001, distribution was in the domain of a Furthermore, when APM was dismantled in single State-owned company ­ PGN. The 2002, LPG and kerosene were excluded in company was allowed to sell to medium- the short term to protect the interest of size and smaller-size industrial consumers, 61 Developing China's Natural Gas Market ­ The Energy Policy Challenges (International Energy Agency, Paris, 2002). 62 According to data from Indonesia's Department of Finance, fuel subsidies constituted 9.1 percent of domestic revenues in the fiscal year 1998. This share increased to 17.3 percent, 19.1 percent and 23.8 percent in 1999, 2000 and 2001, respectively. In 2002, it dropped to 10 percent. 56 EXPERIENCE WITH GREENFIELD GAS DISTRIBUTION: THE NEWCOMERS which emerged as its primary consumers. of localities in Bolivia. However, its limited Sales to the commercial and services sector financial capabilities have reduced its level were also significant. However, the company of investment. Furthermore, its policy of largely neglected the residential sector, waiving the connection charges for most widely preferring to sell LPG instead of residential consumers has helped to attract natural gas to households; and residential consumers, but weakened it financially in its investments in gas · Clean air rules, prevalent in most industrial distribution. Meanwhile, YPFB has countries, have been either nonexistent or complained about the lack of specialized weakly enforced in Indonesia. This has labor for realizing its distribution investment reduced incentives to shift to natural gas programs;63 and except for a price advantage. · A policy favoring continuous subsidies to In Bolivia: residential consumers for LPG, a common fuel among households, has reduced the · Private participation in distribution was attractiveness of shifting to natural gas.64 allowed after the late 80s; however, private companies functioned mainly as agents of In Brazil: YPFB and received a commission in exchange. Their role remained limited · Heavy involvement of state governments in mainly to the construction of distribution distribution has also contributed to slower pipelines, which weakened their incentive for growth in greenfield investment. As of 2005, full-scale involvement in distribution; state governments control 18 of the 24 distribution companies. Because of lack of · The distribution companies in the late 80s financial resources and limitations on and part of the 90s were created in an ad borrowing imposed by Brazil's Central Bank, hoc manner, without proper tendering most of them have postponed investment procedures or prequalification. As a result, in distribution projects;65 most of them lacked sufficient technical and financial capabilities to be involved in · The national company, Petrobras, has been greenfield distribution networks; active in gas sales in several states. Although potentially a large investor in distribution, · The delay in privatization of YPFB's its strategy has been based on selling gas distribution network has also impeded the mainly to large consumers (such as power growth of gas distribution. Reducing YPFB's plants and industrial users), instead of role in distribution has been on the agenda developing distribution networks for serving for many years, but has not been realized. residential consumers;66 and In the meantime, governments have consecutively given YPFB the responsibility · The focus on larger consumers has not been to implement major programs for spreading limited to Petrobras. As a major example, gas distribution networks to a large number Comgas, one of the main distribution 63"YPFB Delays Natural Gas Connections," South American Business Information, May 7, 2003. 64"Bolivia Energy Provision," EIU Business ­ Industry Overview, July 6, 2004. 65"Brazil: BNDES to Finance Natural Gas Distribution Expansion," South American Business Information, April 12, 2005. 66"Rio Regulator Wants to Break Petrobras Natgas Monopoly," Business News Americas, May 28, 2004. 57 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE companies of Brazil serving Sao Paulo, has The company has been unwilling to sink large concentrated its marketing activities in the amounts of money into projects which would industrial sector rather than the residential be taken over by private companies.68 and commercial and services sectors. Thus, it has benefited from legislation allowing In Bulgaria: distribution companies to sell gas to larger · The government did not approve consumers, but it has chosen to neglect the differentiated prices for residential and residential and commercial and services industrial consumers until 2002. As a result, consumers.67 residential gas tariffs remained substantially In Greece: low, which deterred large-scale investment in distribution networks; · Governmental priority on natural gas was not present until as late as the 90s. · Some major residential energy sources, such The limited volumes imported as LNG as electricity and DH (where available), were allocated to several large industrial remained subsidized throughout the 90s. consumers and power plants. Pipeline Such energy sources were able to maintain imports were initiated in 1997, but the their competitiveness against natural gas; country lacked the transmission · Bulgargaz, the owner of the transmission infrastructure to supply most of its network in Bulgaria, has often declined to consumption centers; invest in pipelines connecting its network with the distribution grids established by · The legal framework for gas distribution was private distributors. This is the result of the established in 1995 when DEPA, the national financial difficulties it experienced during the gas company, was given the responsibility sharp decline in Bulgaria's overall gas sector to establish three distribution companies in in the 90s. Occasionally, private distribution Greece's three major consumption centers companies have been able to negotiate to (Athens, Thessaloniki and Thessaly). invest in such connections in exchange for However, the company progressed slowly in gas priced below its market value. However, the creation of these companies. Moreover, this has been a relatively slow process, it retained a majority stake in all three contributing to delays in gas distribution companies, with the rest assigned to development as well; and strategic investors. Putting the latter in charge of most of the financial obligations · In the early 90s, Bulgaria was divided into a for investment, while not providing them large number of concession regions for gas commensurate management control in the distribution. This deterred large investors distribution companies, has also contributed because of the potentially small volumes of to delays in residential gas penetration; and sales expected in many of these regions. This policy has recently been reversed, with the · Delays in DEPA's privatization have also country being divided into large (nine) negatively affected gas distribution. concession regions. 67Based on Comgas' figures for 2003, only 10 percent of its revenues came from the residential sector, whereas the share of commercial sector was 5 percent. Meanwhile, industrial clients accounted for 73 percent of Comgas' revenues, power plants and (CHP) ­ 6 percent and vehicles ­ 6 percent. Source: www.comgas.com.br 68Fawcett, T., et al. Country Pictures, op. cit., 42. 58 Annex Table A1: Indicators of Overall and Residential Gas Penetration in Group I Countries Country Share of Share of Number of Residential Approximate Total Gas Gas in Consumers Connected to Percentage Consumption Residential Natural Gas (year) of Households in TPES in Energy Connected to 2004 (%) Consumption Natural Gas in 2004 (%) (%)** Africa Algeria 64.3 38.7* 1,392,200 (2001) 30 Asia Japan 13.2 18.4 21,151,000 (2000) 44 Australia 19.6 29.0 3,223,000 (2001) 44 Europe Czech Republic 17.1 40.2 2,592,400 (2004) 59 France 14.6 36.1* 10,731,000 (2004) 44 Germany 22.6 37.2 17,730,000 (2004) 49 Italy 35.8 56.7 15,050,000 (2004) 67 Netherlands 44.7 75.7 6,357,000 (2001) 93 Russia Federation 54.0 31.7 39,812,800 (2001) 60 United Kingdom 37.4 68.4 21,378,000 (2004) 86 North America Canada 29.0 44.4 4,195,300 (2001) 33 United States 22.1 42.9 61,100,000 (2003) 57 South America Argentina 50.9 64.3 5,939,000 (2003) 56 Sources: IEA, Eurogas, EIA, American Gas Association (for United States), Sonelgaz (for Algeria), APEC (for Japan, Australia), http://www.unchs.org/programmes/guo/guo_hsdb4.asp (for number of households). * Share of gas in residential and commercial-public services consumption. ** Calculation based on dividing the total number of households by the number of residential consumers connected to natural gas for the given year. 59 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE gnitifeneB oleR from oN oN oN oN seY seY seY seY oN seY seY oN oN ransitT imports for in role Level supplies supplies Supply supply supplies importer dominant neta Historical 2004) exporter exporter exporter exporter indigenous indigenous exporter exporter as and Indigenous of and neta indigenous 2004 neta net as 2004 neta indigenous 2004 imports imports gradually neta 2004 neta 2004 role (% as 2004 in as in 2004 in 2004 2004 Supply in as 2004 as as 1973 in role limited 2004 significant for 2004 significant for 2004 in limited in in in Gas in role in growing role role in role in in role role role in 140.4% 203.0% from imports from from from 16.1% imports 146.9% major 369.7% 3.5% 98.7% 84.3% some 120.5% growing major for 2.3% 3.0% 20.3% self-sufficient; for major 167.6% major Indigenous Supply 1973; 1973; of 1973; role dominant dominant 1973; role 1973; 1973**; 1973; 1973; Gas in 1973; in in benefiting 1973; benefiting 1973; benefiting 1973; highly in benefiting 1973; data). in in in in in in in in self-sufficient; in of Role Self-sufficiency rest The of Primary Self-sufficient;· 235%· Self-sufficient;· 80%· Self-sufficient;· 105.4%· Self-sufficient;· 173.6%· Initially· dominant 37%· Initially· gradually 47%· Initially· gradually 56%· Initially· 90.1%· Initially· dominant 38.8%· Self-sufficient;· 185%· Self-sufficient;· 99.6%· Self-sufficient· 97.3%· Largely· 98.6%· the (for 2004 23.5 39.3 26.4 89.9 6.9 45.6 101.2 80.6 83.5 51.3 IEA 421.8 102.5 631.0 2005), (bcm) of 2000 20.5 36.5 22.6 90.3 2.9 39.7 87.7 70.7 80.4 48.9 391.2 101.8 661.3 end Supply the Gas 15.0 22.5 17.7 67.0 6.6 of 1990 28.2 69.7 47.4 53.9 43.5 58.3 as I 714.3* 530.2 Primary Group 1973 1.9 8.3 3.8 43.4 3.1 17.1 41.3 17.1 8.6 03 reserves 40.4 gas for 255.7* 624.1 in proven (2005) Issues 825 477 4 11 452 422 93 525 (for Reserves bcm 4,494 1,584 1,736 47,040 5,390 side- Journal Gas Supply Republic Federation Kingdom States and USSR. A2: Oil for Algeria Argentina Australia Canada Czech France Germany Italy Japan Netherlands Russia United United ableT Source: Figures* 60 0.2 8.4 50.0 5.6 16.6 49.5 7.4 28.1 28.5 24.0 26.7 30.5 3.1 31.9 21.6 16.3 35.7 31.4 )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f (continued...) Gas bcm 2004 Industry in 3.2 5.71 6.27 3.7 0.12 2.05 8.7 8.63 6.72 6.82 1.73 2.03 3.2 4.83 3.72 9.51 0.24 8.72 for Energy Consumption Industry )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f Gas otalT 2000 in in 2.5 Consumers Development: Consumption otalT Gas 1990 )d 16.6)e 66.3 8.4 )f )d 21.2)e 48.9 7.2 )f )d 40.5)e 26.5 )f 7.22)d 34.0)e 33.3 2.2 )f )d 34.1)e 15.2 )f 7.21)d 45.0)e 22.8 )f in of Gas % % 0.23 12.2 31.3 6.2 30.9 34.2 1.8 47.0 9.9 6.41 33.5 22.2 0.57 44.2 2.5 4.7 43.5 10.3 Anchor Market d) e) f) Consumption 1973 )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f 9.2 9.8 9.7 5.4 1.7 4.6 2.6 3.2 Market Gas 10.1 42.8 97.0 1.31 33.3 54.7 34.3 12.3 17.7 13.6 2004 )a )b )c )a )b )d )a )b )c )a )b )c )a )b )c )a )b )c Gas bcm from Generation in for 7.9 Consumption 2000 )a 38.5)b 96.7)c 8.21)a 35.1)b 55.0)c 4.7 )a 20.8)b 12.6)c 0.9 )a 10.0)b 5.5 1.5 )c )a 16.2)b 4.9 7.2 6.8 2.1 )c )a )b )c Power Gas Generated 4.9 1990 32.7 93.7 2.6 27.5 39.0 4.1 27.5 10.6 3.2 4.1 2.0 0.82 12.5 0.6 5.0 1.8 0.7 Consumers Consumption otalT in otal)T )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c Gas % of Anchor Development: a) b) Electricity)c 0.2 4.3 2.5 6.0 0.9 5.2 5.5 (% 1973 0.38 19.8 54.9 24.2 24.5 .940 24.6 12.1 .160 12.6 14.6 )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c (2003) )%( 58.8 1.09 29 4.08 4.37 3.67 Urbanization level of m m;5 to 92­ 28­ 5­ -20 3­ 29­ D to D D Large 5 Density of 2000 in number­ above to1­B D,4­ 27,­ D,5­ D,2­ ­100,000 ­250,000 D 250,000) I Cities A( Presence cities C Settlement people; m;1 C,1­B,0­ C,3­B,0­ C,5­B,0­ -12, C -4,B,0­ C,1­B,0­ 20,­ ) A A C,3­B,1­ A A A A 2 Group km 2 3 for Density 31 41 Population (persons per (2004) 921 011 (WB Issues of capita on 2005) Method) in Gross National Income side Gas per 2,730 4,470 Patterns based Atlas (US$ 32,220 32,600 10,710 34,810 Determinants Demand- Household oN seY seY seY seY Main Consumption Climate Space es**Y Requiring Heating Substantial Major A3: Republic Countries ableT Algeria Argentina Australia Canada Czech France 61 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE 24.0 23.7 26.9 20.7 25.7 37.0 12.9 15.4 7.7 8.4 16.3 32.5 30.7 7.3 21.8 13.1 12.8 27.4 )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f 146.4)d 23.2 29.2 )e )f Gas bcm Industry 2004 in 7.22 1.03 7.42 1.52 0.43 8.23 9.5 11.8 6.1 1.51 3.52 6.23 47.5 2.11 0.12 7.81 7.51 4.93 for Energy Consumption Industry )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f 189.2)d 8.62 2.53 )e )f widespread. Gas otalT in 2000 is consumers). in Consumers Development: Consumption otalT Gas 25.1)d 36.0)e 22.1 )f 17.8)d 37.5)e 33.1 4.7 8.7 3.3 )f )d )e )f 12.3)d 28.2)e 41.7 )f 198.9)d 27.8)e 44.6 )f 14.7)d 25.3)e 28.1 051 )f )d 28.3)e 31.2 )f in 1990 anchor heating of Gas % % 17.4 42.2 12.6 10.5 61.7 18.1 1.9 28.2 1.5 11.4 28.2 38.5 98.6 38.5 31.8 11.2 37.4 15.7 (for Anchor Market d) e) f) Consumption )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f 216.8)d 34.7 37.0 space )e )f IEA 1973 use. level, pita); Market Gas 21.1 20.8 10.1 28.8 35.7 44.3 55.8 62.9 22.8 16.9 32.9 60.6 2004 )a )b )c )a )b )c )a )b )c )a )b )c 243.9)a 57.8 45.2 33.5 32.8 40.6 )b )c )a )b )c 179.0)a 28.1 17.6 ca )b own )c country Gas bcm per from tor's Generation in the for Consumption 2000 15.6)a 17.8)b 9.3 )c 22.8)a 32.2)b 37.6)c 56.1)a 69.7)b 23.1)c 14.6)a 29.9)b 58.8)c sec 226.8)a 58.0)b 42.3)c 31.6)a 31.1)b 40.2)c 166.8)a 25.2 15.8 on b) c) income but Power Gas Generated 8.31 19.8 7.4 8.9 20.7 18.7 7.93 67.7 19.8 9.9 22.8 50.9 39.5 33.8 4.1 2.4 1.6 5.02 (for energy Consumers Consumption otalT 1990 11.9 Bank in otal)T )a )b )c )a )b )c )a )b )c )a )b )c 282.4)a )b )c )a )b )c 108.8)a )b c) includes localities, Gas % of Anchor Development: a) b) Electricity)c 2.1 7.0 3.1 3.2 2.3 1.1 3.6 1.0 World (% 1973 9.21 31.2 10.9 34.4 1.31 32.4 79.5 2.78 34.1 18.4 )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c 102.0)a 3.61 6.81 )b )c The several in generation (2003) )%( 1.88 4.76 4.56 8.56 3.37 1.98 1.08 density); heat Urbanization level and households in -126 of m m;5 to 18­ 28­ 51­ 17­ 96­ 33­ to D D D settlement power D D D D Large 5 (for in Density of 2000 in number­ above to1­B -17, 13,­ 25,­ -8, -63, 87,­ demand ­100,000 ­250,000 D 250,000) Cities Presence A( cities C Settlement people; m;1 C,9­B,0­ A C,4­B,0­ C,4­B,2­ C,2­B,0­ C C gas Division of consumption A A A -11,B,2­ 24,-C,3­B,1­ A A 33,­B,4­ gas source A ) Population for 2 km 032 291 733 593 8 342 03 data principal Density Population (persons per (2004) Affairs, the period, not of (WB Social is this capita on 2005) Method) and Gas Patterns Gross in National Income 34,580 30,010 38,980 36,620 4,460 37,600 43,740 For per heating based Atlas (US$ USSR. Determinants Household Climate Main Consumption gniriuqeR Economic to Space of Space Heating seY seY seY seY seY seY Substantial es**Y refers exist. Department ­ continued) 1973-1990 exceptions A3 Federation* Kingdom States UN for able Countries (...T Germany Italy Japan Netherlands Russian United United Sources: Data* Regional ** 62 ANNEX Table A4: Gas Consumption in Households in Group I Country Total Residential Gas Consumption Approximate Gas Consumption in bcm (year) per Household in Cubic Meters (same year) Algeria* NA NA Argentina 6,245 (2001) 1,051 Australia 3,065 (2001) 951 Canada 15,778 (2001) 3,761 Czech Republic 2,611 (2004) 1,008 France 16,110 (2001) 1,554 Germany 31,519 (2004) 1,777 Italy 19,020 (2004) 1,263 Japan 8,883 (2000) 420 Netherlands 11,558 (2001) 1,818 Russian Federation 47,820 (2001) 1,201 United Kingdom 34,074 (2004) 1,593 United States 138,730 (2002) 2,270 Sources: Eurogas, IEA. Note: NA=Not applicable. * Algeria provides figures for the aggregate consumption of residential and commercial public services sectors, which lead to significant bias in estimating gas consumption per household. Therefore, in 2001, 1,800 Cubic Meters (m3) were consumed by residential and commercial public services on ­ average. 63 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Table A5: Average Size of Households in Group I Country Average Size of Average Size of Households in 1985 Households in 2000 Algeria 7.1 6.3 Argentina 3.8 3.5 Australia 3.0 2.6 Canada 2.8 2.5 Czech Republic 2.6 2.3 France 2.7 2.4 Germany 2.4 2.3 Italy 3.0 2.5 Japan 3.2 2.6 Netherlands 2.7 2.3 Russian Federation 2.9 2.2 United Kingdom 3.6 3.2 United States 2.8 2.6 Source: UN Habitat (www.unchs.org). 64 Table A6: Role of Gas vs. Competing Fuels in Households of Group I Countries Country Ranking of Competing Fuels for Major Fuels Displaced by Gas Share of Gas in Total Residential Energy Residential Use in 2004 in Households Since 1973* Consumption in 2004 (%) Algeria 1) Petroleum Products NA 38.6** 2) Gas 3) Electricity 4) Combust Renewables and Waste Argentina 1) Gas Petroleum Products 64.3 2) Electricity 3) Petroleum Products 4) Combust Renewables and Waste Australia 1) Electricity Petroleum Products, Coal 29.0 2) Gas 3) Combust Renew & Waste 4) Petroleum Products 5) Geothermal-solar 6) Coal Canada 1) Gas Petroleum Products, Coal 44.4 2) Electricity 3) Petroleum Products 4) Combust Renewables and Waste 5) Coal Czech Republic 1) Gas Coal 40.2 2) Electricity 3) Heat 4) Coal 5) Combust Renewables and Waste 6) Petroleum Products France 1) Gas Coal 36.1** 2) Electricity 3) Petroleum Products 4) Combust Renewables and Waste 5) Coal 6) Geothermal-solar Germany 1) Gas Petroleum Products, Coal 37.2 2) Petroleum Products 3) Heat 4) Electricity 5) Combust Renewables and Waste 6) Coal 7) Geothermal-solar Italy 1) Gas Petroleum Products, Coal 56.7 2) Electricity 3) Petroleum Products 4) Combust Renewables and Waste 5) Coal 6) Geothermal-solar Japan 1) Electricity Coal 18.4 2) Petroleum Products 3) Gas 4) Geothermal-solar 5) Combust Renewables and Waste 6) Heat Netherlands 1) Gas Petroleum Products, Coal 75.7 2) Electricity 3) Combust Renewables and Waste 4) Heat 5) Petroleum Products 6) Geothermal-solar 7) Coal Russian Federation 1) Heat NA 31.7 2) Gas 3) Electricity 4) Coal 5) Petroleum Products 6) Combust Renewables and Waste United Kingdom 1) Gas Coal 68.4 2) Electricity 3) Petroleum Products 4) Coal 5) Combust Renewables and Waste 6) Heat United States 1) Gas Petroleum Products, Coal 42.9 2) Electricity 3) Petroleum Products 4) Combust Renewables and Waste 5) Geothermal-solar Source: IEA. Note: NA= Not applicable. * Owing to the lack of detailed surveys on residential consumption patterns, fuel displacement is evaluated on a countrywide basis rather than individual households before and after gas connection. Fuels have been considered displaced by natural gas if their residential consumption has exhibited a consistent drop in terms of both physical volumes and share in total residential energy consumption from 1973 to 2002. ** Includes commercial and public services sector. 65 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Table A7: Number of Households per km of Distribution Grid in Group I Countries Country Length of Distribution Total Number of Number of Households Grid(km-year) Households Connected per km of Distribution to the Grid (same year) Grid* Algeria NA NA NA Argentina 109,500 (2001) 5,742,600 52 Australia 73,300 (2001) 3,223,000 44 Canada 345,000 (2001) 4,195,300 12 Czech Republic 69,201 (2004) 2,592,400 37 France 182,022 (2004) 10,731,000 59 Germany 314,000 (2003) 17,590,000 56 Italy 200,000 (2004) 15,050,000 75 Japan 233,244 (2001) 21,151,000 91 Netherlands 119,000 (2001) 6,357,000 53 Russia Federation 540,000 (2001) 39,812,800 74 UnitedKingdom 274,600 (2004) 21,378,000 78 UnitedStates 1,458,000 (2001) 60,800,000 42 Sources: Eurogas Annual Report 2001, Eurogas Annual Report 2003, Eurogas Annual Report 2004, Asia-Pacific Energy Research Center (Natural Gas Reform in the APEC Region, APERC, 2003). Note: NA= Not applicable. * The number of households per km of distribution grid is derived by dividing the total number of households connected to natural gas by the length of the distribution grid in the same year. As the two numbers may not correspond to the same date (or month) of the year, the derived statistics are an approximation for the given year. 66 ANNEX Table A8: Consumption in the Commercial and Public Services Sector in Group I Countries Country Residential Commercial and Total Commercial-public Consumption in Services Households Services 2004 (bcm) Consumption and Commercial Consumption in 2004 (bcm) and Services per every 1,000 Consumption in Cubic Meters 2004 (bcm) Consumed in Households (Cubic Meters) Algeria NA NA NA NA Argentina 6,564 1,749 8,312 266 Australia 3,133 1,055 4,188 337 Canada 15,543 12,277 27,819 790 Czech Republic 2,611 1,411 4,022 540 France NA NA 19,442 NA Germany 31,519 8,355 39,874 265 Italy 19,020 6,677 25,697 351 Japan 9,832 7,443 17,276 757 Netherlands 8,776 4,911 13,687 559 Russian Federation 47,449 3,024 50,473 64 United Kingdom 34,074 7,466 41,540 219 United States 126,365 80,092 206,457 634 Sources: IEA, Eurogas (for France and Italy). Note: NA= Not applicable. 67 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE on grid; A TP since vertical for Distribution choose Australian the companies (continued...) in Governments trading marketing Liberalization Privately-owned distribution on to on A transmission network negotiated and and 1997); and free ales,W TP unbundle activities. Law: nine limits Major the in since Victoria and Australian Distribution; unbundled on users transmission 80s Gas South A of and Stringent TP and transport marketing distribution resulting of ransmissionT effect regulated (in New grid; functionally distribution, Discos Structure: since of of Natural the consumers. in Council residential rritoryeT to and 1985: provinces transmission on Market Reforms NA­ 1992­ two companies; integration; APT eligible 1994­ Agreement ransmissionT unbundling functions companies 2002, suppliers Capital After­ transmission required transport Subsequently functions multiple ­ erticalV and initial the of of Major (Sonelgaz several controlled Estado in LNG) between of del ransmissionT subsequently Projects* integration medium upstream, export and in transmission. controls Gas provinces; between but,, segments Presence Period vertical and in large, distribution between integration Distribution to and Distribution some ransCanadaT all the of role in in in (pipelines and pipelines) and for Distribution monopoly exports sales integrated and company Structure: in vertical integration integration role degree players dominant consumers, 1992 States Distribution chain Market Integration Growth High­ Sonatrach wholesale, infrastructure Also Limited­ ransmissionT dominates small high-pressure ransmissionT­ vertically by until erticalV­ ransmissionT some erticalV­ and dominant transmission multiple gas CountriesI in the some more 2003, for in on high the of Group Distribution with involved but on in role in owning Discos players Discos them States level, level one of Concentration Ownership High­ Monopoly­ Sonelgaz Medium­ Nine­ companies than Medium­ Eighteen­ some multiple Low­ Multiple­ national concentration provincial Structure until Market Public Gas Estado); ownership us in varying municipal del limited role and vers ownership ownership private or (Gas private States 1992 Private Ownership Distribution Public­ Public­ 1992 mainly after Ownership­ across Mainly­ ownership; provincial government Ownership A9: ableT Country Algeria Argentina Australia Canada 68 of out be of of Discos for their six 2003 (to Discos as eight ransgasT in of and gas vertically provide of introduced with (continued...) all into 1994; Distribution; demand to with A 2006; households consumers 2004 2007) their ransmissionT Liberalization in separation TP unbundling of back for the removed of in thresholds; unbundling and eligible unbundled activities choose major split as unbundling large as 1998: on (with to all choose for to four obliged Major monopoly grid; production, in to legal free company account storage; sales choice imports for Act gradual consumers mcm/year 80s Act: integrated of supply suppliers introduced grid for Company and and 2003; consumers no 1999, 2 lifted; all A distribution A supplier allowed TP ransmissionT introducedA consumers decree: companies TP Structure: since after Gas to Energy Industry with TP consumers; transmissiona transmission Discos after and 2003. above 2007 monopoly Requirement choose 1995: to Distribute mcm/year)2 imports the Market Reforms Czech­ and 2000­ eight of ni transmission on transmission of ransgas;T as GdF­ 2003 transportation, storage free extended Energy­ 2000 consumers suppliers negotiated ­ production, regulated and required supply January After­ above suppliers; integrated mandatory demand the erticalV Gas in of in fully of Major 1994 integrated of Czech transmission, role rights between integrated and Projects* until of integration transmission, upstream, segments companies commencement resenceP under of Period verticallya and all fully charge in a vertical integration distribution of upstream significant four after the of 40s in monopoly in for in charge distribution of and Distribution 2003) role and integration in role and players some since role 1969 Structure: in (GdF) (till production (ENI) integrated degree in Market Integration Growth erticalV­ multiple chain; Company transmission, Dominant­ company distribution imports High­ between but gas transmission Dominant­ company transmission, distribution Dominant­ LNG vertically of six in 2002 but but (RWE) since GdF Discos, market four companies shares of for Discos, the Discos, for Distribution in Discos role of Italgas 200 company majority hundred cross-ownership hundred by share eight) than integrated quarter of a Concentration Ownership High­ Single­ holding (out High­ Dominant­ Medium­ Several­ significant Medium­ Several­ but controlled High­ More­ dominant vertically with role Discos; Public Gas ownership ownership with for in private for mixed limited involvement versus ownership public municipalities) public municipally share role private private Discos Discos 1994; 2002 and and 1946 Private Ownership Distribution Public­ partial after Dominant­ after Mainly­ (GdF after Mainly­ (municipalities) growing private Private,­ owned dominant private Mainly­ ownership; municipal continued) A9 Republic able (...T Country Czech France Germany Italy Japan 69 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE in ;A TP Act 1993; in in grid in other Gas States Gas legal all choose sales choose Liberalization with after to negotiated allowed British to Gasunie's trading; and introduced transport Gazprom 1997 A of transmission multiple free companies the transmission of TP of in Major 2004; of and of on 1986; the subsequently upstream A since in eligible on 80s liberalized July transport in TP 1997; consumers, 1998 A of of Discos grid in being TP activities 1992, in distribution Structure: since consumers as separation storage of privatization large unbundling since market all involvement privatized in Gazprom negotiated for trading Market Reforms Gas­ 2000: suppliers accounts transport, unbundling functions artialP- limited than 90s; transmission BGC­ unbundling 1996 consumers suppliers Regulated­ 1985 in Functional and companies applied erticalV few the a of of Major USSR) 2000s and BGC; between of (and assets); Projects* integration transmission under (in and resenceP integrated under segments Period and 90s vertical structure Industry in ansmissionrT upstream all the in integration in of in Gas fullyfo transmission transmission Distribution of monopoly Structure: in production role retained vertical and countries. degree Gasunie) integrated integrated players owning players most Ministry Market Integration Growth High- between (under Fully­ the Dominant Gazprom ullyF­ chain Distribution multiple Limited­ for upstream Discos multiple gas Gas mid-80s in to 200 30 holding Discos 5% to Discos, British Centrica Discos, 60s holding of Distribution than for for for the in role Gazprom role 1,000 above them more hundred by continuing role mainly dropping Municipalities shares than of share is major 90s; a few but Concentration Ownership Low­ Initially­ Discos, 2002. major Medium­ Several­ but controlled High­ Monopoly­ until dominant Low­ More­ with market varies until Public Gas most BGC in dominant of 90s 1986 of distribution limited versus public; involvement gas municipalities ownership late in ownership private after in of 1949 Private Ownership Distribution Mainly­ continuing role Public­ privatization Discos Public­ after Private privatization Mainly­ ownership; municipal growth major of continued) A9 Kingdom States period able (...T Country Netherlands Russia United United The* 70 ANNEX Table A10: Indicators of Overall and Residential Gas Penetration in Group II Countries Country Share of Share of Numbers of Approximate Period when Significant Total Gas Gas in Residential Percentage of Household Gasification Consumption Residential Consumers Households Started** in TPES in Energy Connected to Connected to 2004 (%) Consumption Natural Gas Natural in 2004 (%) (year) Gas (%) Asia China 2.6 2.8 43,200,000 (2003) 3 Early 90s (total persons with natural gas) India 4.1 0.24 428,000 (2004) 0.2 Late 60s, but major activity since early 90s Indonesia 19.4 0.04 64,900 (2003) 0.1 Early 80s Korea 11.9 44.6 7,055,000 (2001) 49 Mid 80s Europe Bulgaria 13.2 0 2,000 (2004) 0.06 Early 90s Greece 7.3 1 30,800 (2004) 0.8 Late 90s Portugal 12.4 5.6 744,000 (2004) 18 Late 90s Spain 17.7 20.6 5,203,000 (2003) 41 Mid-70s but major activity since 80s Turkey 22.8 20.3 3,345,000 (2004) 19 Late 80s North Africa Tunisia 39.1 9.2 120,700 (2001) 6 Mid-80s North America Mexico 26.4 4.8 2,300,000 (2002)* 9 20s, but major activity since late 90s South America Bolivia 28.3 1.1 38,000 (2003) 2 Late 80s Brazil 7.7 0.8 995,000 (2003) 2 Late 90s (total clients) Chile 24.2 6.9 397,000 (2004) 10 Major activity since late 90s Sources: IEA, Eurogas, EIA, APEC (for Korea and Mexico). * Includes the number of consumers from the public-commercial services sector. ** Gasification refers to natural gas. Many countries in the group (Korea, Chile and Portugal) had a significant legacy of manufactured gas-based networks before the introduction of natural gas. Others (Mexico, Tunisia, China, Indonesia, and Greece) also benefited from a legacy of manufactured gas-based networks, but at a more limited extent. 71 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Table A11: Share of Gas in TPES in Group I and Group II Countries (percent) Group I 1973 1990 Algeria 5.8 15.6 Argentina 10.3 20.7 Australia 4.1 10.1 Canada 14.8 20.7 Czech Republic 4.0 8.8 France 6.0 10.5 Germany 6.2 11.5 Italy 9.9 20.7 Japan 2.2 3.3 Netherlands 30.9 34.5 Russia Federation 13.4 20.5 United Kingdom 10.7 19.7 United States 21.1 15.7 Group Average 10.7 16.3 Group II Bolivia 0.0 6.1 Brazil 0.3 1.8 Chile 1.1 6.7 China 0.5 1.3 Colombia 1.4 3.6 Greece 0.0 0.5 India 0.2 1.5 Korea 0.0 0.7 Mexico 13.6 11.4 Portugal 0.7 0.3 Spain 1.3 5.1 Tunisia 0.4 5.8 Turkey 0.2 1.3 Group Average 1.4 4.0 Source: IEA. 72 gnitifeneB oleR from oN oN seY oN oN No oN oN ransitT (continued...) in in in Level 2004 supplies; supplies; supplies; in supply 2004 supplies; imports 2004 2004 imports imports 2004 2004 2004 2004) exporter in in in in imports in on on 2004 in Historical and an 594.0% indigenous indigenous indigenous requiring in requiring as 57.2% and 10.7% indigenous 23.3% 104.3% 100% 100% indigenous 0.8% of 1990 limited imports limited role 1990; in imports dependent dependent Supply (% significant 1990; 1990; for 1990; demand 1990; 1990; demand 1990; in very limited in in in very 1990; in 1973, Gas in majora on in 438% fully role fully from from from excess from in excess in 100% 0.1% 100% 100% 100% 100% with 1973; nearly (but nearly 100% (but Indigenous supply in dominant of benefiting dependence 1973; 1973; 1973; future) 1973; 1973; future) 1973; gas in benefiting in benefiting in in in benefiting 1973; in near in near Role Self-sufficiency Self-sufficient 1877.8% Initially growing 100% Initially subsequently 100% Initially gradually 100% Self-sufficient the 100% Self-sufficient 100% Initially subsequently 0% Self-sufficient the 100% The of primary · · · · · · · · · · · · · · · · 2004 1.7 18.9 3.1 8.0 44.2 7.8 2.7 28.4 2000 1.4 3.9 3.7 6.5 27.4 7.3 2.1 25.3 Supply II Gas 1990 0.78 8.3 6.8 1.8 17.0 4.3 0.12 11.9 Group Primary 1973 0.1 2.0 0.2 0.62 4.5 1.9 0 0.72 for in Issues (2005) 276 223 6 79 311 1 side- Reserves bcm 1,493 1,089 Supply A12: Bolivia Brazil Bulgaria Chile China Colombia Greece aidnI ableT 73 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE gnitifeneB oleR from oN oN oN oN seY seY teY Not ransitT in Level 2004 supply in 2004 2004 imports in 2004) for 2004 in 2004 Historical exporter in in and an 198.3% 2004 2004 supplies in role 82.2% in 64.8% and indigenous as 0% 0% 1.2% 3.1% of 1990 1990; role in 1990; imports 1990; imports Supply (% 1990; 1990; indigenous 1990; 1973, increasing in on 1990; in on Gas imports in in major in imports in in in 230.5% on 0% 98.4% on 0% limited 26.8% 6.1% with dependent 25.6% dependent Indigenous supply 1973; 1973; 1973; from 1973; 1973; 1973; of gas in dependent in self-sufficient; in dependent in fully 1973; in fully in in Role Self-sufficiency Self-sufficient 100% Fully None Initially 100% Fully None Nearly 0% Benefiting 100% Nearly None The of primary · · · · · · · · · · · · · · 2004 38.7 27.8 50.4 7.3 rest). 27.0 3.7 22.4 the (for IEA 2000 36.3 18.9 39.6 3.2 16.7 3.0 14.8 2005), of Supply Gas 1990 22.2 3 26.0 0 5.4 1.3 5.3 end the of as Primary 1973 0.23 0 12.4 0 1 0.12 0 reserves in gas (2005) 7 0 3 448 77 8 proven Reserves bcm 2,738 (for Journal Gas continued) and A12 Oil able Indonesia Korea Mexico ortugalP Spain unisiaT urkeyT (...T Source: 74 0.43 25.4 40.3 0.7 37.1 9.3 0.8 26.1 20.6 3.5 43.3 30.8 13.4 30.4 2.8 7.1 21.9 23.8 0.45 16.6 10.2 )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f (continued...) Gas bcm Industry 2004 in 0.35 25.4 71.1 8.4 51.5 9.6 1.7 45.6 33.8 0.7 11.4 11.8 1.31 47.7 3.8 1.1 14.9 18.7 0.44 20.9 7.0 for Energy Consumption Industry )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f Gas otalT in 2000 0 0 0 in Consumers Development: Consumption otalT Gas .180)d 4.22)e 6.75 5.2 )f )d 4.96)e 7.6 2.9 )f )d 2.14)e 4.72 )f )d )e )f 6.01)d 0.26)e 3.5 )f 88.0)d 0.42)e 18.2 )f .090)d 9.96)e 2.1 )f in 1990 of 0 0 0 Gas % % 1.0 0 0 0 0 0 0 50.0 0.7 4.2 43.1 1.9 32.0 0 0 0 12.3 7.6 Anchor Market d) e) f) Consumption )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f 1973 0.6 7.4 5.0 1.1 3.6 3.4 4.4 9.9 0.4 0.2 1.9 Market Gas 35.5 29.2 24.9 35.3 42.3 34.0 25.5 12.9 70.8 15.3 2004 )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c Gas bcm from Generation in for 0.5 Consumption 2000 )a 34.7)b 46.0)c 0.1 )a 10.7)b 1.1 1.4 )c )a 38.0)b 4.7 2.0 )c )a 31.0)b 21.9)c 3.3 )a 12.0)b 0.5 5.2 )c )a 34.1)b 18.8)c 1.5 )a 73.1)b 11.1)c Power Gas Generated 0.3 38.5 37.7 1.0 2.6 0.01 3.4 50.0 20.7 0.07 3.9 1.3 1.1 6.5 0.5 7.1 39.3 12.4 0.02 13.0 0.2 Consumers Consumption otalT 1990 in total) )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c Gas % of 0 0 0 0 0 0 0 0 0 0 0 0 Anchor Development: a) b) Electricity)c 2.7 4.8 1.1 8.0 (% 1973 0.02 19.4 0.03 83.0 20.0 )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c (2003) )%( 3.46 1.38 9.86 78 6.83 5.67 0.86 Urbanization Level to 4­ 70­ 5­ D 61­ 29­ D 15­ 7­ of m D Large 5 m;5 to Density of 2000 in number­ above to1­B D,2­ 37,­ D,2­ D,5­ D,1­ 250,000­ 100,000­ D 250,000) Cities A( Presence Cities C Settlement people; m;1 C,2­B,0­ C 13,­B,2­ C,1­B,0­ 231,­ 19,­ C C,1­B,0­ A A C,0­B,1­ II A A 85,­B,4­ C,3­B,1­ A A A ) 2 8 km 12 76 12 631 73 08 Group Density Population (persons per (2004) for of (WB capita on 2005) Method) in Issues Gas Patterns Gross 1,010 3,460 3,450 5,870 1,740 2,290 National Income 19,670 per Based Atlas (US$ side Determinants Household oN oN seY seY oN seY Main Consumption Climate Space Requiring Heating *seY Substantial Demand- A13: Countries ableT Bolivia Brazil Bulgaria Chile China Colombia Greece 75 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE 7.7 27.0 7.2 9.5 15.4 20.5 4.4 15.8 5.7 11.9 23.7 34.6 1.1 29.1 11.7 13.5 50.1 33.6 0.66 17.8 33.6 2.6 11.7 10.9 )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f Gas bcm Industry 2004 in 10.4 41.0 12.1 4.11 31.4 36.8 3.2 17.0 5.0 11.9 30.0 35.3 0.7 32.3 7.8 5.01 63.1 28.4 0.5 16.7 28.1 2.1 14.2 8.0 for Energy Consumption Industry )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f Gas otalT in 2000 0 0 0 in 6.1 Consumers Development: Consumption otalT Gas )d 1.55)e 10.2 8.5 )f )d 6.22)e 42.7 )f .080)d 2.7 0.2 consumers). )e )f 15.0)d 7.75)e 6.13 1.4 )f )d )e )f )d 6.57)e 15.1 )f .290)d 22.2)e 19.7 0.8 )f )d 3.52)e 4.9 )f in 1990 anchor of Gas % % 0.3 43.2 1.4 31.0 0 0 0 0 0 0 58.0 6.3 8.1 65.5 41.7 24.0 0 0 0 41.6 2.0 0.01 9.1 2.8 (for Anchor Market d) e) f) Consumption )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f )d )e )f IEA 1973 9.5 8.4 2.3 4.8 2.8 Market Gas 15.5 54.6 12.4 16.1 11.8 41.1 16.2 21.6 44.5 38.8 61.2 26.1 31.1 20.0 76.7 90.2 13.2 58.9 41.3 apita);c 2004 )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c Gas bcm per from Generation in for Consumption 2000 1.11)a 43.9)b 10.0)c 3.6 )a 17.3)b 28.3)c 4.6 )a 33.9)b 10.7)c 7.01)a 27.0)b 19.5)c 1.3 )a 57.0)b 16.5)c 9.2 )a 17.4)b 9.1 2.3 )c )a 9.67)b 63.7)c 3.9 )a 62.8)b 37.0)c income Power Gas Generated 2.4 35.3 3.4 73.0 1.7 2.3 3.2 75.6 9.1 9.3 0 0 0 14.8 11.6 3.0 5.5 1.0 0.98 7.37 34.7 6.2 (for 74.5 17.8 Consumers Consumption otalT 1990 Bank in total) )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c Gas % of 0 0 0 0 0 0 0 0 0 0 0 0 heating. Anchor Development: a) b) Electricity)c 45.8 0.5 9.1 41 15.3 14.2 1.0 World (% 1973 33.0 41.0 0.12 96.0 32.7 )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c )a )b )c The space (2003) )%( 3.82 6.54 3.08 5.57 4.65 5.67 3.76 3.66 density); require not Urbanization Level to 102­ 20­ 8­ 48­ 6­ 30­ 5­ 36­ do of m D to D D D D D settlement Large 5 m;5 (for China, Density of 2000 in number­ above to1­B D,2­ D,1­ ­107, 20,­ 26,­ 54,­ 250,000­ 100,000­ C D 250,000) Division Cities A( Presence Cities C Settlement people; m;1 26,­B,6­ C,7­B,1­ C,6­B,1­ C,0­B,0­ 12,­ 18,­ A A C,1­B,1­ C,1­B,0­ A C,4­B,1­ southern in A A C,01­B,1­ A A A those ) Population 2 km 823 621 194 35 411 58 16 98 Density Population (persons per (2004) Affairs, especially of (WB Social capita on 2005) Method) in 027 and localities, Gas Patterns Gross 1,280 National Income 15,830 7,310 16,170 25,360 2,890 4,710 per Based Atlas (US$ Some Economic Determinants exist. Household Space oN oN seY oN seY seY oN seY of Main Consumption Climate Requiring Heating Substantial exceptions Department ­ continued) UN A13 regional able Countries (...T India Indonesia Korea Mexico ortugalP Spain unisiaT urkeyT Sources: *Some 76 ANNEX Table A14: Gas Consumption in Households for Selected Countries in Group II Country Number of Total Residential Approximate Annual Gas Households Connected Gas Consumption in Consumption per to Natural Gas (year) bcm (same year) Household in Cubic Meters (same year) Chile 318,300 (2002) 0.358 1,125 Colombia 2,175,000 (2001) 1 387 Korea 7,055,000 (2001) 7.097 1,006 Portugal 744,000 (2004) 0 269 Spain 5,203,000 (2003) 3.037 584 Turkey 3,345,000 (2004) 4.044 1,208 Sources: IEA (for residential gas consumption), International Gas Union (for number of household connections), www.dosider.org (for number of household connections in Turkey). Table A15: Average Size of Households in Group II Country Average Size of Average Size of Households in 1985 Households in 2000 Bolivia 5 5.2 Brazil 4.5 4 Bulgaria 2.9 3 Chile 4.4 4 China 4.5 4 Colombia 5.8 4.8 Greece 3.2 2.7 India 5.8 5.5 Indonesia 4.8 4 Korea 4.2 3.3 Mexico 5.3 4.3 Portugal 3.3 2.7 Spain 3.7 3.1 Tunisia 5.5 4.7 Turkey 5.3 4.2 Sources: UN Habitat (www.unchs.org). 77 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Table A16: Role of Gas vs. Competing Fuels in Households in Group II Countries Country Ranking of Competing Fuels for Major Fuels Displaced by Gas Share of Gas in Total Residential Energy Residential Use in 2004 in Households Since 1990* Consumption in 2004 (%) Bolivia 1) Petroleum Products None 1.1 2) Combust Renewables and Waste 3) Electricity 4) Gas Brazil 1) Combust Renewables and Waste None 0.8 2) Electric 3) Petroleum Products 4) Gas Bulgaria 1) Electricity Petroleum Products, Coal 0.03 2) Combust Renewables and Waste 3) Heat 4) Coal 5) Petroleum Products 6) Gas Chile 1) Combust Renewables and Waste Coal 6.9 2) Petroleum Products 3) Electricity 4) Gas 5) Coal China 1) Combust Renewables and Waste Coal 2.8 2) Coal 3) Electricity 4) Petroleum Products 5) Heat 6) Gas Colombia 1) Combust Renewables and Waste Coal 16.9 2) Electricity 3) Gas 4) Petroleum Products 5) Coal Greece 1) Petroleum Products Coal 0.55 2) Electricity 3) Combust Renewables and Waste 4) Geothermal-solar 5) Heat 6) Gas 7) Coal India 1) Combust Renewables and Waste Coal 0.24 2) Petroleum Products 3) Electricity 4) Coal 5) Gas Indonesia 1) Combust Renewables and Waste None 0.04 2) Petroleum Products 3) Electricity 4) Gas 5) Coal Korea 1) Gas Coal 44.6 2) Electricity 3) Petroleum Products 4) Heat 5) Coal 6) Combust Renewables and Waste 7) Geothermal-solar Mexico 1) Petroleum Products None 4.8 2) Combust Renewables and Waste 3) Electricity 4) Gas Portugal 1) Combust Renewables and Waste Petroleum Products** 5.6 2) Electricity 3) Petroleum Products 4) Gas 5) Geothermal-solar 6) Heat Spain 1) Electricity Coal 20.6 2) Petroleum Products 3) Gas 4) Combust Renewables and Waste 5) Coal 6) Geothermal-solar Tunisia 1) Combust Renewables and Waste None 9.2 2) Petroleum Products 3) Electricity 4) Gas Turkey 1) Combust Renewables and Waste Petroleum Products, Coal 20.3 2) Gas 3) Petroleum Products 4) Coal 5) Electricity 6) Geothermal-solar Source: IEA. * Owing to lack of detailed surveys on residential consumption patterns, fuel displacement is evaluated on a countrywide basis rather than by individual households before and after obtaining a gas connection. Fuels have been considered displaced by natural gas if their residential consumption has exhibited a consistent drop in terms of both physical volumes and share in total residential energy consumption from 1990 to 2004. ** Refers to fuels displaced by natural gas only in terms of their overall share in total residential energy consumption although no drop has been recorded in terms of physical volumes. 78 ANNEX Table A17: Consumption in the Commercial and Services Sectors in Group II Countries Country Residential Commercial and Total Commercial Consumption in Services Households and Services 2004 (bcm) Consumption Commercial Consumption in 2004 (bcm) and Services per every 1,000 Consumption in Cubic Meters 2004 (bcm) Consumed in Households (cubic meters) Bolivia 0.009 0.012 0.021 1,375 Brazil 0.191 0.277 0.468 1,448 Bulgaria 0.007 0 0.024 5,000 Chile 0.354 0.106 0.46 298 China 10.13 3 13.494 332 Colombia 0.783 0.138 0.921 176 Greece 0.033 0.044 0.077 1.333 India NA NA 1 NA Indonesia 0.025 4 4.206 163,609 Korea 8.588 2.877 11 335 Mexico 0.955 0.222 1.178 232 Portugal 0.2 0.156 0.356 778 Spain 3.366 0 3.722 105 Tunisia 0.185 0.054 0.24 293 Turkey 4.044 1.378 5 340 Source: IEA. Note: NA = not applicable. 79 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE of gas; no to legal Law upstream, involving trading etrobras'P in But.waL sales to across vertically dominating (continued...) and companies in ansmissionrT gas Sinopec­ unbundling amendment, practice separate new sales Reforms: forbids in but grid grid grid from grid Reforms and Law and in allowed (into players two 2003). direct created and in companies after Capitalization upstream etroleumP gas in ransmissionT CNPC, companies constitutional retained for transmission, 1997 cross-ownership sell transmission transmission transmission multiple to Three 1994 distribution transmission required (nine role on or involved companies Structure privatization the transmission Liberalization Hydrocarbon in the 1995 participation and the the after buy after on activities. on on on 1997, consumers consumers Market Major artialP­ A A YPFB 1996­ transmission directly APT After­ Unbundling private imports dominant ­ transmission entities) restrictions these cannot TP­ TP­ APT­ addition CNOOC. After­ transmission companies large In­ integrated and upstream, large in owned- several structure under limited in structure Reforms: State imports, between (upstream between Gasco, monopoly­ and as transmission wholesale in shares and Integration under before integrated YPFB such integration and transit, distribution several integrated CNPC integration erticalV etrobrasP transmission holding in monopoly and pipelines), and distribution) of Structure vertically vertical imports integration ­ and and vertically State-owned distribution vertical ENAP companies, shares owned- State-owned in Market P resence Initially­ under Initially­ State upstream, erticalV­ Bulgargaz transmission role Some­ upstream company transmission transmission (several holding pipelines Initially­ under Countries II than than Gas; in (YPFB) more etrobas)P Discos (Gasco) more Gas) Group of Distribution in example, company China controlling shares in example, in in distribution. and (for with multiple (for and anvaP company companies gas gas private in company companies major Kong Gas; region Natural Discos region Structure Concentration Ownership High­ Single­ dominating Medium­ Several­ distributing one Gas Medium­ Single­ (Overgas) stakes Medium­ Single­ owning most Medium­ Several­ distributing one Hong Xinao role Market Public Gas ownership 1986, 1995 for 1997 growing limited after Discos in and role after but participation significant versus public participation until YPFB) since public have public Discos ionaltutitsnoc significant of private mainly, private ownership private still for Private Ownership Distribution Mainly­ (under Private­ allowed but Mainly­ ownership Growing­ private 1995 amendment Mainly­ Initially ownership; involvement municipalities ­ public Mainly­ Initially ownership ­ ownership, role municipal remaining Ownership A18: ableT Country Bolivia Brazil Bulgaria Chile China 80 A on direct TP 2001 grid A to and PGN 90s ending over TP competitive from introduced Gas) since of (continued...) take GAIL too especially upstream requires integration: late A to allows in and subject Reforms: barred DEP regional ones; sales company and transmission Reforms transmission since imports vertically unbundling of prohibits vertical in transmission expansion upstream new and in the 2001 after production, in and in regulated on retail Prometheus created, distribution competition, the of grid, trading, PGN's of 1996 gas companies another build distribution awL involvement companies limits in and with and companies and unbundling company interstate and upstream parta Gas from and Structure since independent GAIL, competition (through Liberalization of transmission Market Major Unbundling­ activities Stringent­ transmission involvement distribution ransmissionT­ Rise­ distribution Limited­ 1991 in Account­ monopolys'APED­ in wholesale 90s of 's all participation 1994, 2006 in 1984,nI­ late and integrated nearly transmission networks, involved Rising­ after private Since­ chargeni Oil­ the companies transmission ertaminaP two for by exports. under Reforms: under and company upstream, and Integration vertical of before of Ecopetrol) integration monopoly­ ransmissionT dominated State-owned OIL) gas and erticalV level integration production (under Depa sector charge oil distribution of (ONGC, Structure high, ni vertical wholesale, gas integrated in­ vertical distribution Market P resence Initially­ integration transmission Initially­ State-owned imports, and Initially­ vertically companies Initial­ State-owned ertaminaP transmission, in A) in with a (DEP Discos; stake (GAIL) (BG) Discos (PGN) of Discos all Distribution in 20 distribution significant multiple than company Discos company nearly company company but controlling in in Concentration Ownership Medium­ More­ 2004 cross-ownership High­ Single­ three holds all Medium­ Single­ stakes Another partner High­ Single­ dominating )A for DEP for State till Public Gas ownership in ownership by role privatized Discos in after in role after GAIL; for PGN) growing versus public public (under growth public companies owned role Discos ownership and private minority dominant (under partially for Private Ownership Distribution Initial­ Main­ distribution privatization mid-90s Mainly­ ownership with private Initially­ (Discos governments); 1984 State-owned growing private Public­ 2001 PGN­ 2001, in role continued) A18 able (...T Country Colombia Greece aidnI Indonesia 81 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE to A (EU in an and TP based 1999 of subject in Since allowed LNG in weakened­ with Energia networks (continued...) Directive own preserved Discos gas Reforms: ogasK Kogas choose creation operator GALP electricity allowing role for allowed, grid wholesale; state Gas the Reforms of public). they to transportation of Energia the EU the REN); on to than after Law imports from Distribution to free 2004; of A network accounts GALP in with TP sold other Gas company integration 2008) unbundling provided and of of left withit transmission line July sector transmission until operator domination in of ransgasT Structure privatization shares private shares as unbundling terminals Liberalization of entities LNG, Natural theno distribution consumers vertical monopoly mexeP weroP regulated ownership integrating LNG Market Major artialP­ separation (39% 2001, import facilities 1995­ growing transmission APT­ the by on eligible Some­ on Privatization­ minority GDP­ derogation Decisions­ legal 2003: suppliers independent after (separating and transmission to trading; and of to in in sale and GALP to with charge structure role ransgasT Gas Reforms: integration in and structure in integration under sales with monopoly Integration and GALP before Kogas vertical integrated emexP integrated GdP stakes transmission in vertical etrogalP and erticalV of transmission ransgasT- owned major and of Structure vertically degree vertically, further (GALP transmission Discos) State-owned imports, consumers State- State-owned monopoly GdP 2000, consumers, in Market P resence High­ under LNG large Initially­ under Initially­ under distribution, The­ imports. In­ uniting Energia imports, large stakes of than six in with only more (GdP) the Lisbon) of Distribution 2003, in example, shares Discos in in in Seoul (for companies gas (for stake company major Discos serving regional Disco region Natural) Concentration Ownership Low­ 28­ them Medium­ Several­ distributing one Gas High­ Single­ six owning all controlling largest 90s for for Public Gas late since in (under CFE) role role some GdP versus private ownership public until Discos for and Discos GdP) Discos but 1995 1995 in 90s Private Ownership Distribution Mainly­ Public­ until emexP Dominant­ private since Mainly­ ownership (under Dominant­ private late stakes retained continued) A18 able (...T Country Korea Mexico ortugalP 82 as main­ of in 1996 limits owned , to Discos eligible since (with be of choosing sector Group nominated to unbundling unbundling for for Reforms: grid leading unbundling competition grid gas integration Reforms Law Enagas operator shares 35%);­ grid functions of after the Natural 1994 Natural; eligible 2003) Law: of vertical in Gas system Gas retail Gas transmission since Botas) maximum company and and transmission distribution by Structure further Enagas the introduction on consumers the the Liberalization Hydrocarbon Natural on reorganization: distributor A single all transmission suppliers and on on A A Market Major Reorganization­ lowingla gas acquired TP­ 1998­ a Enagas transport major the imposed by of of (with their NA­ 2001­ Botas wholesale TP­ (controlled TP­ consumers a­ between integration: monopoly upstream (performed structure monopoly Reforms: 1972) INH monopoly transmission, in gas) integration: dominated transmission, facto consumers, AP a­ limited upstream Integration vertical (since under Hidrocarburos and before of de de body and (ET integration in distribution integrated Botas facilities, large oil vertical AP erticalV level to Discos of wholesale ET STEG); STEG Enagas and of LNG in vertical of wholesale distribution Structure high sales functioning Nacional integrated and degree wnedo- vertically, in State-owned shares downstream role State-owned Market P resence Initially­ imports, imports, state-owned ni Enagas storage, and ­ (Instituto vertically and High­ Upstream Stateyb imports);ni transmission by involvement Initially­ under in and in Gas with charge for of in Distribution region in role 1991 distribution since State-owned (STEG) companies one for than Concentration Ownership High­ Dominant­ Natural High­ Single­ distribution company of Medium­ Several­ licenses more role Public Gas 1991 and 2001 for in in privatization since versus municipally, under private until role privatization Discos, Natural ownership public STEG) Discos existing Natural and Discos Initially Private Ownership Distribution ­ owned integrated Gas Subsequent­ Gas of dominant Public­ (under Mainly­ ownership Growing­ some private 2001 of public continued) A18 able (...T Country Spain unisiaT urkeyT 83 List of Formal Reports Region/Country Activity/Report Title Date Number SUB-SAHARAN AFRICA (AFR) Africa Regional Anglophone Africa Household Energy Workshop (English) 07/88 085/88 Regional Power Seminar on Reducing Electric Power System Losses in Africa (English) 08/88 087/88 Institutional Evaluation of EGL (English) 02/89 098/89 Biomass Mapping Regional Workshops (English) 05/89 -- Francophone Household Energy Workshop (French) 08/89 -- Interafrican Electrical Engineering College: Proposals for Short- and Long-Term Development (English) 03/90 112/90 Biomass Assessment and Mapping (English) 03/90 -- Symposium on Power Sector Reform and Efficiency Improvement in Sub-Saharan Africa (English) 06/96 182/96 Commercialization of Marginal Gas Fields (English) 12/97 201/97 Commercializing Natural Gas: Lessons from the Seminar in Nairobi for Sub-Saharan Africa and Beyond 01/00 225/00 Africa Gas Initiative -- Main Report: Volume I 02/01 240/01 First World Bank Workshop on the Petroleum Products Sector in Sub-Saharan Africa 09/01 245/01 Ministerial Workshop on Women in Energy 10/01 250/01 and Poverty Reduction: Proceedings from a Multi-Sector 03/03 266/03 and Multi-Stakeholder Workshop Addis Ababa, Ethiopia, October 23-25, 2002 Opportunities for Power Trade in the Nile Basin: Final Scoping Study 01/04 277/04 Energies modernes et réduction de la pauvreté: Un atelier multi-sectoriel. Actes de l'atelier régional. Dakar, Sénégal, du 4 au 6 février 2003 (French Only) 01/04 278/04 Énergies modernes et réduction de la pauvreté: Un atelier multi-sectoriel. Actes de l'atelier régional. Douala, Cameroun 09/04 286/04 du 16-18 juillet 2003. (French Only) Energy and Poverty Reduction: Proceedings from the Global Village Energy Partnership (GVEP) Workshops held in Africa 01/05 298/05 Power Sector Reform in Africa: Assessing the Impact on Poor People 08/05 306/05 The Vulnerability of African Countries to Oil Price Shocks: Major 08/05 308/05 Factors and Policy Options. The Case of Oil Importing Countries Angola Energy Assessment (English and Portuguese) 05/89 4708-ANG Power Rehabilitation and Technical Assistance (English) 10/91 142/91 Africa Gas Initiative - Angola: Volume II 02/01 240/01 85 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Region/Country Activity/Report Title Date Number Benin Energy Assessment (English and French) 06/85 5222-BEN Botswana Energy Assessment (English) 09/84 4998-BT Pump Electrification Prefeasibility Study (English) 01/86 047/86 Review of Electricity Service Connection Policy (English) 07/87 071/87 Tuli Block Farms Electrification Study (English) 07/87 072/87 Household Energy Issues Study (English) 02/88 -- Urban Household Energy Strategy Study (English) 05/91 132/91 Burkina Faso Energy Assessment (English and French) 01/86 5730-BUR Technical Assistance Program (English) 03/86 052/86 Urban Household Energy Strategy Study (English and French) 06/91 134/91 Burundi Energy Assessment (English) 06/82 3778-BU Petroleum Supply Management (English) 01/84 012/84 Burundi Status Report (English and French) 02/84 011/84 Presentation of Energy Projects for the Fourth Five Year Plan (1983-1987) (English and French) 05/85 036/85 Improved Charcoal Cookstove Strategy (English and French) 09/85 042/85 Peat Utilization Project (English) 11/85 046/85 Energy Assessment (English and French) 01/92 9215-BU Cameroon Africa Gas Initiative ­ Cameroon: Volume III 02/01 240/01 Cape Verde Energy Assessment (English and Portuguese) 08/84 5073-CV Household Energy Strategy Study (English) 02/90 110/90 Central African Republic Energy Assessment (French) 08/92 9898-CAR Chad Elements of Strategy for Urban Household Energy The Case of N'djamena (French) 12/93 160/94 Comoros Energy Assessment (English and French) 01/88 7104-COM In Search of Better Ways to Develop Solar Markets: The Case of Comoros 05/00 230/00 Congo Energy Assessment (English) 01/88 6420-COB Power Development Plan (English and French) 03/90 106/90 Africa Gas Initiative ­ Congo: Volume IV 02/01 240/01 Côte d'Ivoire Energy Assessment (English and French) 04/85 5250-IVC Improved Biomass Utilization (English and French) 04/87 069/87 Power System Efficiency Study (English) 12/87 Power Sector Efficiency Study (French) 02/92 140/91 Project of Energy Efficiency in Buildings (English) 09/95 175/95 Africa Gas Initiative ­ Côte d'Ivoire: Volume V 02/01 240/01 Ethiopia Energy Assessment (English) 07/84 4741-ET Power System Efficiency Study (English) 10/85 045/85 Agricultural Residue Briquetting Pilot Project (English) 12/86 062/86 Bagasse Study (English) 12/86 063/86 Cooking Efficiency Project (English) 12/87 Energy Assessment (English) 02/96 179/96 Gabon Energy Assessment (English) 07/88 6915-GA Africa Gas Initiative ­ Gabon: Volume VI 02/01 240/01 The Gambia Energy Assessment (English) 11/83 4743-GM Solar Water Heating Retrofit Project (English) 02/85 030/85 Solar Photovoltaic Applications (English) 03/85 032/85 Petroleum Supply Management Assistance (English) 04/85 035/85 86 LIST OF FORMAL REPORTS Region/Country Activity/Report Title Date Number Ghana Energy Assessment (English) 11/86 6234-GH Energy Rationalization in the Industrial Sector (English) 06/88 084/88 Sawmill Residues Utilization Study (English) 11/88 074/87 Industrial Energy Efficiency (English) 11/92 148/92 Corporatization of Distribution Concessions through Capitalization 12/03 272/03 Guinea Energy Assessment (English) 11/86 6137-GUI Household Energy Strategy (English and French) 01/94 163/94 Guinea Bissau Energy Assessment (English and Portuguese) 08/84 5083-GUB Recommended Technical Assistance Projects (English & Portuguese) 04/85 033/85 Management Options for the Electric Power and Water Supply Subsectors (English) 02/90 100/90 Power and Water Institutional Restructuring (French) 04/91 118/91 Kenya Energy Assessment (English) 05/82 3800 KE Power System Efficiency Study (English) 03/84 014/84 Status Report (English) 05/84 016/84 Coal Conversion Action Plan (English) 02/87 -- Kenya Solar Water Heating Study (English) 02/87 066/87 Peri-Urban Woodfuel Development (English) 10/87 076/87 Power Master Plan (English) 11/87 -- Power Loss Reduction Study (English) 09/96 186/96 Implementation Manual: Financing Mechanisms for Solar Electric Equipment 07/00 231/00 Lesotho Energy Assessment (English) 01/84 4676-LSO Liberia Energy Assessment (English) 12/84 5279-LBR Recommended Technical Assistance Projects (English) 06/85 038/85 Power System Efficiency Study (English) 12/87 081/87 Madagascar Energy Assessment (English) 01/87 5700-MAG Power System Efficiency Study (English and French) 12/87 075/87 Environmental Impact of Woodfuels (French) 10/95 176/95 Malawi Energy Assessment (English) 08/82 3903-MAL Technical Assistance to Improve the Efficiency of Fuelwood Use in the Tobacco Industry (English) 11/83 009/83 Status Report (English) 01/84 013/84 Mali Energy Assessment (English and French) 11/91 8423-MLI Household Energy Strategy (English and French) 03/92 147/92 Islamic Republic of Mauritania Energy Assessment (English and French) 04/85 5224-MAU Household Energy Strategy Study (English and French) 07/90 123/90 Mauritius Energy Assessment (English) 12/81 3510-MAS Status Report (English) 10/83 008/83 Power System Efficiency Audit (English) 05/87 070/87 Bagasse Power Potential (English) 10/87 077/87 Energy Sector Review (English) 12/94 3643-MAS Mozambique Energy Assessment (English) 01/87 6128-MOZ Household Electricity Utilization Study (English) 03/90 113/90 Electricity Tariffs Study (English) 06/96 181/96 Sample Survey of Low Voltage Electricity Customers 06/97 195/97 Namibia Energy Assessment (English) 03/93 11320-NAM 87 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Region/Country Activity/Report Title Date Number Niger Energy Assessment (French) 05/84 4642-NIR Status Report (English and French) 02/86 051/86 Improved Stoves Project (English and French) 12/87 080/87 Household Energy Conservation and Substitution (English and French) 01/88 082/88 Nigeria Energy Assessment (English) 08/83 4440-UNI Energy Assessment (English) 07/93 11672-UNI Strategic Gas Plan 02/04 279/04 Rwanda Energy Assessment (English) 06/82 3779-RW Status Report (English and French) 05/84 017/84 Improved Charcoal Cookstove Strategy (English and French) 08/86 059/86 Improved Charcoal Production Techniques (English and French) 02/87 065/87 Energy Assessment (English and French) 07/91 8017-RW Commercialization of Improved Charcoal Stoves and Carbonization Techniques Mid-Term Progress Report (English and French) 12/91 141/91 SADC SADC Regional Power Interconnection Study, Vols. I-IV (English) 12/93 - SADCC SADCC Regional Sector: Regional Capacity-Building Program for Energy Surveys and Policy Analysis (English) 11/91 - Sao Tome and Principe Energy Assessment (English) 10/85 5803-STP Senegal Energy Assessment (English) 07/83 4182-SE Status Report (English and French) 10/84 025/84 Senegal Industrial Energy Conservation Study (English) 05/85 037/85 Preparatory Assistance for Donor Meeting (English and French) 04/86 056/86 Urban Household Energy Strategy (English) 02/89 096/89 Industrial Energy Conservation Program (English) 05/94 165/94 Seychelles Energy Assessment (English) 01/84 4693-SEY Electric Power System Efficiency Study (English) 08/84 021/84 Sierra Leone Energy Assessment (English) 10/87 6597-SL Somalia Energy Assessment (English) 12/85 5796-SO Republic of South Africa Options for the Structure and Regulation of Natural Gas Industry (English) 05/95 172/95 Sudan Management Assistance to the Ministry of Energy and Mining 05/83 003/83 Energy Assessment (English) 07/83 4511-SU Power System Efficiency Study (English) 06/84 018/84 Status Report (English) 11/84 026/84 Wood Energy/Forestry Feasibility (English) 07/87 073/87 Swaziland Energy Assessment (English) 02/87 6262-SW Household Energy Strategy Study 10/97 198/97 Tanzania Energy Assessment (English) 11/84 4969-TA Peri-Urban Woodfuels Feasibility Study (English) 08/88 086/88 Tobacco Curing Efficiency Study (English) 05/89 102/89 Remote Sensing and Mapping of Woodlands (English) 06/90 -- Industrial Energy Efficiency Technical Assistance (English) 08/90 122/90 Power Loss Reduction Volume 1: Transmission and Distribution System Technical Loss Reduction and Network Development (English) 06/98 204A/98 Power Loss Reduction Volume 2: Reduction of Non-Technical Losses (English) 06/98 204B/98 88 LIST OF FORMAL REPORTS Region/Country Activity/Report Title Date Number Togo Energy Assessment (English) 06/85 5221-TO Wood Recovery in the Nangbeto Lake (English and French) 04/86 055/86 Power Efficiency Improvement (English and French) 12/87 078/87 Uganda Energy Assessment (English) 07/83 4453-UG Status Report (English) 08/84 020/84 Institutional Review of the Energy Sector (English) 01/85 029/85 Energy Efficiency in Tobacco Curing Industry (English) 02/86 049/86 Fuelwood/Forestry Feasibility Study (English) 03/86 053/86 Power System Efficiency Study (English) 12/88 092/88 Energy Efficiency Improvement in the Brick and Tile Industry (English) 02/89 097/89 Tobacco Curing Pilot Project (English) 03/89 UNDP Terminal Report Energy Assessment (English) 12/96 193/96 Rural Electrification Strategy Study 09/99 221/99 Zaire Energy Assessment (English) 05/86 5837-ZR Zambia Energy Assessment (English) 01/83 4110-ZA Status Report (English) 08/85 039/85 Energy Sector Institutional Review (English) 11/86 060/86 Power Subsector Efficiency Study (English) 02/89 093/88 Energy Strategy Study (English) 02/89 094/88 Urban Household Energy Strategy Study (English) 08/90 121/90 Zimbabwe Energy Assessment (English) 06/82 3765-ZIM Power System Efficiency Study (English) 06/83 005/83 Status Report (English) 08/84 019/84 Power Sector Management Assistance Project (English) 04/85 034/85 Zimbabwe Power Sector Management Institution Building (English) 09/89 -- Petroleum Management Assistance (English) 12/89 109/89 Charcoal Utilization Pre-feasibility Study (English) 06/90 119/90 Integrated Energy Strategy Evaluation (English) 01/92 8768-ZIM Energy Efficiency Technical Assistance Project: Strategic Framework for a National Energy Efficiency Improvement Program (English) 04/94 -- Capacity Building for the National Energy Efficiency Improvement Programme (NEEIP) (English) 12/94 -- Rural Electrification Study 03/00 228/00 Les réformes du secteur de l'électricite en Afrique: Evaluation de leurs conséquences pour les populations pauvres 11/06 306/06 EAST ASIA AND PACIFIC (EAP) Asia Regional Pacific Household and Rural Energy Seminar (English) 11/90 -- China County-Level Rural Energy Assessments (English) 05/89 101/89 Fuelwood Forestry Preinvestment Study (English) 12/89 105/89 Strategic Options for Power Sector Reform in China (English) 07/93 156/93 Energy Efficiency and Pollution Control in Township and Village Enterprises (TVE) Industry (English) 11/94 168/94 Energy for Rural Development in China: An Assessment Based on a Joint Chinese/ESMAP Study in Six Counties (English) 06/96 183/96 Improving the Technical Efficiency of Decentralized Power Companies 09/99 222/99 89 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Region/Country Activity/Report Title Date Number Air Pollution and Acid Rain Control: The Case of Shijiazhuang City 10/03 267/03 and the Changsha Triangle Area Toward a Sustainable Coal Sector In China 07/04 287/04 Demand Side Management in a Restructured Industry: How Regulation and Policy Can Deliver Demand-Side Management Benefits to a Growing Economy and a Changing Power System 12/05 314/05 A Strategy for CBM and CMM Development and Utilization in China 07/07 326/07 Fiji Energy Assessment (English) 06/83 4462-FIJ Indonesia Energy Assessment (English) 11/81 3543-IND Status Report (English) 09/84 022/84 Power Generation Efficiency Study (English) 02/86 050/86 Energy Efficiency in the Brick, Tile and Lime Industries (English) 04/87 067/87 Diesel Generating Plant Efficiency Study (English) 12/88 095/88 Urban Household Energy Strategy Study (English) 02/90 107/90 Biomass Gasifier Preinvestment Study Vols. I & II (English) 12/90 124/90 Prospects for Biomass Power Generation with Emphasis on Palm Oil, Sugar, Rubberwood and Plywood Residues (English) 11/94 167/94 Lao PDR Urban Electricity Demand Assessment Study (English) 03/93 154/93 Institutional Development for Off-Grid Electrification 06/99 215/99 Malaysia Sabah Power System Efficiency Study (English) 03/87 068/87 Gas Utilization Study (English) 09/91 9645-MA Mongolia Energy Efficiency in the Electricity and District Heating Sectors 10/01 247/01 Improved Space Heating Stoves for Ulaanbaatar 03/02 254/02 Impact of Improved Stoves on Indoor Air Quality in Ulaanbaatar, Mongolia 11/05 313/05 Myanmar Energy Assessment (English) 06/85 5416-BA Papua New Guinea Energy Assessment (English) 06/82 3882-PNG Papua New Guinea Status Report (English) 07/83 006/83 Institutional Review in the Energy Sector (English) 10/84 023/84 Power Tariff Study (English) 10/84 024/84 Philippines Commercial Potential for Power Production from Agricultural Residues (English) 12/93 157/93 Energy Conservation Study (English) 08/94 -- Strengthening the Non-Conventional and Rural Energy Development Program in the Philippines: A Policy Framework and Action Plan 08/01 243/01 Rural Electrification and Development in the Philippines: Measuring the Social and Economic Benefits 05/02 255/02 Solomon Islands Energy Assessment (English) 06/83 4404-SOL Energy Assessment (English) 01/92 979-SOL South Pacific Petroleum Transport in the South Pacific (English) 05/86 -- Thailand Energy Assessment (English) 09/85 5793-TH Rural Energy Issues and Options (English) 09/85 044/85 Accelerated Dissemination of Improved Stoves and Charcoal Kilns (English) 09/87 079/87 Northeast Region Village Forestry and Woodfuels Preinvestment Study (English) 02/88 083/88 90 LIST OF FORMAL REPORTS Region/Country Activity/Report Title Date Number Impact of Lower Oil Prices (English) 08/88 -- Coal Development and Utilization Study (English) 10/89 -- Why Liberalization May Stall in a Mature Power Market: A Review 12/03 270/03 of the Technical and Political Economy Factors that Constrained the Electricity Sector Reform in Thailand 1998-2002 Reducing Emissions from Motorcycles in Bangkok 10/03 275/03 Tonga Energy Assessment (English) 06/85 5498-TON Vanuatu Energy Assessment (English) 06/85 5577-VA Vietnam Rural and Household Energy-Issues and Options (English) 01/94 161/94 Power Sector Reform and Restructuring in Vietnam: Final Report to the Steering Committee (English and Vietnamese) 09/95 174/95 Household Energy Technical Assistance: Improved Coal Briquetting and Commercialized Dissemination of Higher Efficiency Biomass and Coal Stoves (English) 01/96 178/96 Petroleum Fiscal Issues and Policies for Fluctuating Oil Prices In Vietnam 02/01 236/01 An Overnight Success: Vietnam's Switch to Unleaded Gasoline 08/02 257/02 The Electricity Law for Vietnam -- Status and Policy Issues -- The Socialist Republic of Vietnam 08/02 259/02 Petroleum Sector Technical Assistance for the Revision of the 12/03 269/03 Existing Legal and Regulatory Framework Western Samoa Energy Assessment (English) 06/85 5497-WSO SOUTH ASIA (SAS) Bangladesh Energy Assessment (English) 10/82 3873-BD Priority Investment Program (English) 05/83 002/83 Status Report (English) 04/84 015/84 Power System Efficiency Study (English) 02/85 031/85 Small Scale Uses of Gas Pre-feasibility Study (English) 12/88 -- Reducing Emissions from Baby-Taxis in Dhaka 01/02 253/02 India Opportunities for Commercialization of Non-conventional Energy Systems (English) 11/88 091/88 Maharashtra Bagasse Energy Efficiency Project (English) 07/90 120/90 Mini-Hydro Development on Irrigation Dams and Canal Drops Vols. I, II and III (English) 07/91 139/91 WindFarm Pre-Investment Study (English) 12/92 150/92 Power Sector Reform Seminar (English) 04/94 166/94 Environmental Issues in the Power Sector (English) 06/98 205/98 Environmental Issues in the Power Sector: Manual for Environmental Decision Making (English) 06/99 213/99 Household Energy Strategies for Urban India: The Case of Hyderabad 06/99 214/99 Greenhouse Gas Mitigation In the Power Sector: Case Studies From India 02/01 237/01 Energy Strategies for Rural India: Evidence from Six States 08/02 258/02 Household Energy, Indoor Air Pollution, and Health 11/02 261/02 Access of the Poor to Clean Household Fuels 07/03 263/03 The Impact of Energy on Women's Lives in Rural India 01/04 276/04 Environmental Issues in the Power Sector: Long-Term Impacts And Policy Options for Rajasthan 10/04 292/04 91 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Region/Country Activity/Report Title Date Number Environmental Issues in the Power Sector: Long-Term Impacts 10/04 293/04 And Policy Options for Karnataka Nepal Energy Assessment (English) 08/83 4474-NEP Status Report (English) 01/85 028/84 Energy Efficiency & Fuel Substitution in Industries (English) 06/93 158/93 Pakistan Household Energy Assessment (English) 05/88 -- Assessment of Photovoltaic Programs, Applications, and Markets (English) 10/89 103/89 National Household Energy Survey and Strategy Formulation Study: Project Terminal Report (English) 03/94 -- Managing the Energy Transition (English) 10/94 -- Lighting Efficiency Improvement Program Phase 1: Commercial Buildings Five Year Plan (English) 10/94 -- Clean Fuels 10/01 246/01 Household Use of Commercial Energy 05/06 320/06 Regional Toward Cleaner Urban Air in South Asia: Tackling Transport 03/04 281/04 Pollution, Understanding Sources. Sri Lanka Energy Assessment (English) 05/82 3792-CE Power System Loss Reduction Study (English) 07/83 007/83 Status Report (English) 01/84 010/84 Industrial Energy Conservation Study (English) 03/86 054/86 Sustainable Transport Options for Sri Lanka: Vol. I 02/03 262/03 Greenhouse Gas Mitigation Options in the Sri Lanka Power Sector: Vol. II 02/03 262/03 Sri Lanka Electric Power Technology Assessment (SLEPTA): Vol. III 02/03 262/03 Energy and Poverty Reduction: Proceedings from South Asia 11/03 268/03 Practitioners Workshop How Can Modern Energy Services Contribute to Poverty Reduction? Colombo, Sri Lanka, June 2-4, 2003 EUROPE AND CENTRAL ASIA (ECA) Armenia Development of Heat Strategies for Urban Areas of Low-income 04/04 282/04 Transition Economies. Urban Heating Strategy for the Republic Of Armenia. Including a Summary of a Heating Strategy for the Kyrgyz Republic Bulgaria Natural Gas Policies and Issues (English) 10/96 188/96 Energy Environment Review 10/02 260/02 Central Asia and The Caucasus Cleaner Transport Fuels in Central Asia and the Caucasus 08/01 242/01 Central and Eastern Europe Power Sector Reform in Selected Countries 07/97 196/97 Increasing the Efficiency of Heating Systems in Central and Eastern Europe and the Former Soviet Union (English and Russian) 08/00 234/00 The Future of Natural Gas in Eastern Europe (English) 08/92 149/92 Kazakhstan Natural Gas Investment Study, Volumes 1, 2 & 3 12/97 199/97 Kazakhstan & Kyrgyzstan Opportunities for Renewable Energy Development 11/97 16855-KAZ Poland Energy Sector Restructuring Program Vols. I-V (English) 01/93 153/93 Natural Gas Upstream Policy (English and Polish) 08/98 206/98 Energy Sector Restructuring Program: Establishing the Energy 92 LIST OF FORMAL REPORTS Region/Country Activity/Report Title Date Number Regulation Authority 10/98 208/98 Portugal Energy Assessment (English) 04/84 4824-PO Romania Natural Gas Development Strategy (English) 12/96 192/96 Private Sector Participation in Market-Based Energy-Efficiency 11/03 274/03 Financing Schemes: Lessons Learned from Romania and International Experiences. Slovenia Workshop on Private Participation in the Power Sector (English) 02/99 211/99 Turkey Energy Assessment (English) 03/83 3877-TU Energy and the Environment: Issues and Options Paper 04/00 229/00 Energy and Environment Review: Synthesis Report 12/03 273/03 Turkey's Experience with Greenfield Gas Distribution since 2003 03/07 325/05 MIDDLE EAST AND NORTH AFRICA (MENA) Turkey Turkey's Experience with Greenfield Gas Distribution since 2003 05/07 325/07 Greenfield Gas Distribution: Cross-country Experience 12/07 328/07 Arab Republic of Egypt Energy Assessment (English) 10/96 189/96 Energy Assessment (English and French) 03/84 4157-MOR Status Report (English and French) 01/86 048/86 Morocco Energy Sector Institutional Development Study (English and French) 07/95 173/95 Natural Gas Pricing Study (French) 10/98 209/98 Gas Development Plan Phase II (French) 02/99 210/99 Syria Energy Assessment (English) 05/86 5822-SYR Electric Power Efficiency Study (English) 09/88 089/88 Energy Efficiency Improvement in the Cement Sector (English) 04/89 099/89 Energy Efficiency Improvement in the Fertilizer Sector (English) 06/90 115/90 Tunisia Fuel Substitution (English and French) 03/90 -- Power Efficiency Study (English and French) 02/92 136/91 Energy Management Strategy in the Residential and Tertiary Sectors (English) 04/92 146/92 Renewable Energy Strategy Study, Volume I (French) 11/96 190A/96 Renewable Energy Strategy Study, Volume II (French) 11/96 190B/96 Rural Electrification in Tunisia: National Commitment, Efficient Implementation and Sound Finances 08/05 307/05 Yemen Energy Assessment (English) 12/84 4892-YAR Energy Investment Priorities (English) 02/87 6376-YAR Household Energy Strategy Study Phase I (English) 03/91 126/91 Household Energy Supply and Use in Yemen. Volume I: Main Report and Volume II: Annexes 12/05 315/05 LATIN AMERICA AND THE CARIBBEAN REGION (LCR) LCR Regional Regional Seminar on Electric Power System Loss Reduction in the Caribbean (English) 07/89 -- Elimination of Lead in Gasoline in Latin America and the Caribbean (English and Spanish) 04/97 194/97 Elimination of Lead in Gasoline in Latin America and the Caribbean - Status Report (English and Spanish) 12/97 200/97 Harmonization of Fuels Specifications in Latin America and the Caribbean (English and Spanish) 06/98 203/98 Energy and Poverty Reduction: Proceedings from the Global Village 93 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Region/Country Activity/Report Title Date Number Energy Partnership (GVEP) Workshop held in Bolivia 06/05 202/05 Power Sector Reform and the Rural Poor in Central America 12/04 297/04 Estudio Comparativo Sobre la Distribución de la Renta Petrolera en Bolivia, Colombia, Ecuador y Perú 08/05 304/05 OECS Energy Sector Reform and Renewable Energy/Energy 02/06 317/06 Efficiency Options The Landfill Gas-to-Energy Initiative for Latin America and the Caribbean 02/06 318/06 Bolivia Energy Assessment (English) 04/83 4213-BO National Energy Plan (English) 12/87 -- La Paz Private Power Technical Assistance (English) 11/90 111/90 Pre-feasibility Evaluation Rural Electrification and Demand Assessment (English and Spanish) 04/91 129/91 National Energy Plan (Spanish) 08/91 131/91 Private Power Generation and Transmission (English) 01/92 137/91 Natural Gas Distribution: Economics and Regulation (English) 03/92 125/92 Natural Gas Sector Policies and Issues (English and Spanish) 12/93 164/93 Household Rural Energy Strategy (English and Spanish) 01/94 162/94 Preparation of Capitalization of the Hydrocarbon Sector 12/96 191/96 Introducing Competition into the Electricity Supply Industry in Developing Countries: Lessons from Bolivia 08/00 233/00 Final Report on Operational Activities Rural Energy and Energy Efficiency 08/00 235/00 Oil Industry Training for Indigenous People: The Bolivian Experience (English and Spanish) 09/01 244/01 Capacitación de Pueblos Indígenas en la Actividad Petrolera. Fase II 07/04 290/04 Boliva-Brazil Best Practices in Mainstreaming Environmental & Social Safeguards Into Gas Pipeline Projects 07/06 322/06 Estudio Sobre Aplicaciones en Pequeña Escala de Gas Natural 07/04 291/04 Brazil Energy Efficiency & Conservation: Strategic Partnership for Energy Efficiency in Brazil (English) 01/95 170/95 Hydro and Thermal Power Sector Study 09/97 197/97 Rural Electrification with Renewable Energy Systems in the Northeast: A Preinvestment Study 07/00 232/00 Reducing Energy Costs in Municipal Water Supply Operations 07/03 265/03 "Learning-while-doing" Energy M&T on the Brazilian Frontlines Chile Energy Sector Review (English) 08/88 7129-CH Colombia Energy Strategy Paper (English) 12/86 -- Power Sector Restructuring (English) 11/94 169/94 Energy Efficiency Report for the Commercial and Public Sector (English) 06/96 184/96 Costa Rica Energy Assessment (English and Spanish) 01/84 4655-CR Recommended Technical Assistance Projects (English) 11/84 027/84 Forest Residues Utilization Study (English and Spanish) 02/90 108/90 Dominican Republic Energy Assessment (English) 05/91 8234-DO Ecuador Energy Assessment (Spanish) 12/85 5865-EC Energy Strategy Phase I (Spanish) 07/88 -- Energy Strategy (English) 04/91 -- Private Mini-hydropower Development Study (English) 11/92 -- 94 LIST OF FORMAL REPORTS Region/Country Activity/Report Title Date Number Energy Pricing Subsidies and Interfuel Substitution (English) 08/94 11798-EC Energy Pricing, Poverty and Social Mitigation (English) 08/94 12831-EC Guatemala Issues and Options in the Energy Sector (English) 09/93 12160-GU Health Impacts of Traditional Fuel Use 08/04 284/04 Haiti Energy Assessment (English and French) 06/82 3672-HA Status Report (English and French) 08/85 041/85 Household Energy Strategy (English and French) 12/91 143/91 Honduras Energy Assessment (English) 08/87 6476-HO Petroleum Supply Management (English) 03/91 128/91 Jamaica Energy Assessment (English) 04/85 5466-JM Petroleum Procurement, Refining, and Distribution Study (English) 11/86 061/86 Energy Efficiency Building Code Phase I (English) 03/88 -- Energy Efficiency Standards and Labels Phase I (English) 03/88 -- Management Information System Phase I (English) 03/88 -- Charcoal Production Project (English) 09/88 090/88 FIDCO Sawmill Residues Utilization Study (English) 09/88 088/88 Energy Sector Strategy and Investment Planning Study (English) 07/92 135/92 Mexico Improved Charcoal Production Within Forest Management for the State of Veracruz (English and Spanish) 08/91 138/91 Energy Efficiency Management Technical Assistance to the Comisión Nacional para el Ahorro de Energía (CONAE) (English) 04/96 180/96 Energy Environment Review 05/01 241/01 Proceedings of the International Grid-Connected Renewable Energy Policy Forum (with CD) 08/06 324/06 Nicaragua Modernizing the Fuelwood Sector in Managua and León 12/01 252/01 Policy & Strategy for the Promotion of RE Policies in Nicaragua. (Contains CD with 3 complementary reports) 01/06 316/06 Panama Power System Efficiency Study (English) 06/83 004/83 Paraguay Energy Assessment (English) 10/84 5145-PA Recommended Technical Assistance Projects (English) 09/85 Status Report (English and Spanish) 09/85 043/85 Reforma del Sector Hidrocarburos (Spanish Only) 03/06 319/06 Peru Energy Assessment (English) 01/84 4677-PE Status Report (English) 08/85 040/85 Proposal for a Stove Dissemination Program in the Sierra (English and Spanish) 02/87 064/87 Energy Strategy (English and Spanish) 12/90 -- Study of Energy Taxation and Liberalization Peru of the Hydrocarbons Sector (English and Spanish) 120/93 159/93 Reform and Privatization in the Hydrocarbon Sector (English and Spanish) 07/99 216/99 Rural Electrification 02/01 238/01 Saint Lucia Energy Assessment (English) 09/84 5111-SLU St. Vincent and the Grenadines Energy Assessment (English) 09/84 5103-STV Sub Andean Environmental and Social Regulation of Oil and Gas 95 GREENFIELD GAS DISTRIBUTION: CROSS-COUNTRY EXPERIENCE Region/Country Activity/Report Title Date Number Operations in Sensitive Areas of the Sub-Andean Basin (English and Spanish) 07/99 217/99 Trinidad and Tobago Energy Assessment (English) 12/85 5930-TR GLOBAL Energy End Use Efficiency: Research and Strategy (English) 11/89 -- Women and Energy -A Resource Guide The International Network: Policies and Experience (English) 04/90 -- Guidelines for Utility Customer Management and Metering (English and Spanish) 07/91 -- Assessment of Personal Computer Models for Energy Planning in Developing Countries (English) 10/91 -- Long-Term Gas Contracts Principles and Applications (English) 02/93 152/93 Comparative Behavior of Firms Under Public and Private Ownership (English) 05/93 155/93 Development of Regional Electric Power Networks (English) 10/94 -- Round-table on Energy Efficiency (English) 02/95 171/95 Assessing Pollution Abatement Policies with a Case Study of Ankara (English) 11/95 177/95 A Synopsis of the Third Annual Round-table on Independent Power Projects: Rhetoric and Reality (English) 08/96 187/96 Rural Energy and Development Round-table (English) 05/98 202/98 A Synopsis of the Second Round-table on Energy Efficiency: Institutional and Financial Delivery Mechanisms (English) 09/98 207/98 The Effect of a Shadow Price on Carbon Emission in the Energy Portfolio of the World Bank: A Carbon Backcasting Exercise (English) 02/99 212/99 Increasing the Efficiency of Gas Distribution Phase 1: Case Studies and Thematic Data Sheets 07/99 218/99 Global Energy Sector Reform in Developing Countries: A Scorecard 07/99 219/99 Global Lighting Services for the Poor Phase II: Text Marketing of Small "Solar" Batteries for Rural Electrification Purposes 08/99 220/99 A Review of the Renewable Energy Activities of the UNDP/ World Bank Energy Sector Management Assistance Program 1993 to 1998 11/99 223/99 Energy, Transportation and Environment: Policy Options for Environmental Improvement 12/99 224/99 Privatization, Competition and Regulation in the British Electricity Industry, With Implications for Developing Countries 02/00 226/00 Reducing the Cost of Grid Extension for Rural Electrification 02/00 227/00 Undeveloped Oil and Gas Fields in the Industrializing World 02/01 239/01 Best Practice Manual: Promoting Decentralized Electrification Investment 10/01 248/01 Peri-Urban Electricity Consumers -- A Forgotten but Important Group: What Can We Do to Electrify Them? 10/01 249/01 96 LIST OF FORMAL REPORTS Region/Country Activity/Report Title Date Number Village Power 2000: Empowering People and Transforming Markets 10/01 251/01 Private Financing for Community Infrastructure 05/02 256/02 Stakeholder Involvement in Options Assessment: 07/03 264/03 Promoting Dialogue in Meeting Water and Energy Needs: A Sourcebook A Review of ESMAP's Energy Efficiency Portfolio 11/03 271/03 A Review of ESMAP's Rural Energy and Renewable Energy 04/04 280/04 Portfolio ESMAP Renewable Energy and Energy Efficiency Reports 05/04 283/04 1998-2004 (CD Only) Regulation of Associated Gas Flaring and Venting: A Global 08/04 285/04 Overview and Lessons Learned from International Experience ESMAP Gender in Energy Reports and Other related Information 11/04 288/04 (CD Only) ESMAP Indoor Air Pollution Reports and Other related Information 11/04 289/04 (CD Only) Energy and Poverty Reduction: Proceedings from the Global Village Energy Partnership (GVEP) Workshop on the Pre-Investment Funding. Berlin, Germany, April 23-24, 2003. 11/04 294/04 Global Village Energy Partnership (GVEP) Annual Report 2003 12/04 295/04 Energy and Poverty Reduction: Proceedings from the Global Village Energy Partnership (GVEP) Workshop on Consumer Lending and Microfinance to Expand Access to Energy Services, Manila, Philippines, May 19-21, 2004 12/04 296/04 The Impact of Higher Oil Prices on Low Income Countries 03/05 299/05 And on the Poor Advancing Bioenergy for Sustainable Development: Guideline 04/05 300/05 For Policymakers and Investors ESMAP Rural Energy Reports 1999-2005 03/05 301/05 Renewable Energy and Energy Efficiency Financing and Policy Network: Options Study and Proceedings of the International Forum 07/05 303/05 Implementing Power Rationing in a Sensible Way: Lessons 08/05 305/05 Learned and International Best Practices The Urban Household Energy Transition. Joint Report with 08/05 309/05 RFF Press/ESMAP. ISBN 1-933115-07-6 Pioneering New Approaches in Support of Sustainable Development In the Extractive Sector: Community Development Toolkit, also Includes a CD containing Supporting Reports 10/05 310/05 Analysis of Power Projects with Private Participation Under Stress 10/05 311/05 Potential for Biofuels for Transport in Developing Countries 10/05 312/05 Experiences with Oil Funds: Institutional and Financial Aspects 06/06 321/06 Coping with Higher Oil Prices 06/06 323/06 97 Energy Sector Management Assistance Program 1818 H Street, NW Washington, DC 20433 USA Tel: 1.202.458.2321 Fax: 1.202.522.3018 Internet: www.esmap.org Email: esmap@worldbank.org