In this Market Assessment report, Key Note analyses the EU downstream natural gas industry in terms of its basic activities — gas transportation, transmission, distribution and supply — and gives an account of the main companies active in the field, issues that have to be addressed and future challenges for the EU gas market.

The EU internal gas market is developing a response to EU legislation that has to be transposed into the legislation of each member state. Development of the market is a two-stage process; large users should have had a choice of supplier by July 2004 and all users, including households, were to have had a choice of supplier by July 2007. Progress towards this aim has been uneven, partly due to the EU being expanded by ten new members in 2004 and two in 2007, bringing the total number to 27 member states.

Despite some headway, considerable work has yet to be done in order to achieve a completely open market. Some companies have not yet fully separated their transmission, distribution and supply activities in order for a level playing field to exist for competitors. Further progress must also be made to enable access to national transmission networks and have national market regulators operate to the same standards. One issue in providing fair competition is the large influence exercised by a few major players in the EU gas industry; their dominant position effectively inhibits new entrants to some national markets.

The EU's gas-production industry is relatively small in relation to gas demand. Production is decreasing but demand is increasing — a fact that is focusing attention on how future demand will be met. Russia is the main supplier to the EU and will probably continue to be so for the foreseeable future, although gas will also be obtained from a range of countries in Africa and the Middle East. Major investments are being made to upgrade the EU's internal gas infrastructure and to provide more facilities for importing gas, including liquefied natural gas (LNG) by sea. The latter involves the construction of LNG terminals and regasification facilities. In the power-generation sector, the increasing use of renewable energy (mainly wind energy) and possibly nuclear power will decrease the potential demand for gas in electricity generation.

Terrorism is a widespread problem and terrorists are well aware of the strategic importance of energy supplies. It is possible that EU gas supplies could be seriously disrupted by attacks inside the EU or on gas-transport facilities, for example on pipelines or LNG tankers transporting gas to the EU.

Climate change is now a global problem and the EU is taking action to reduce `greenhouse gas' emissions. Gas is the preferred fossil fuel because it emits fewer carbon emissions than coal or oil for the same amount of energy produced. (This is a major feature of gas.) However, it remains a carbon-emitting source and efforts will be made to curb its use and to use carbon-neutral energy where possible. One EU initiative is the Emission Trading Scheme (ETS), in which companies have allocated carbon allowances. As a supplier of carbon-emitting fuel, it is important for the gas industry to follow trends in carbon trading.

1. Introduction
OVERVIEW
DEFINITION
LEGISLATION
THE EU POPULATION

2. Strategic Overview
MARKET DYNAMICS
Development of an Open Market
Consumption of Natural Gas
Production of Natural Gas

3. Current Issues
COMPLETION OF THE EU INTERNAL GAS MARKET
Further Unbundling of Key Activities
Gas Network Access
Regulation
Significance of Major Companies in the EU Natural Gas Industry
Growing Demand for Gas
Climate Change
CORPORATE ACTIVITY

4. Austria
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
OMV Aktiengesellschaft
EconGas

5. Belgium
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Distrigas SA
Other Companies

6. Bulgaria
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Bulgargaz EAD

7. Cyprus
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Electricity Authority of Cyprus

8. The Czech Republic
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
RWE Transgas

9. Denmark
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
DONG Energy
Energinet.dk

10. Estonia
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
AS Eesti Gaas Group

11. Finland
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Gasum Oy

12. France
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR PLAYERS
Gaz de France
Other Companies

13. Germany
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
E.ON Ruhrgas
RWE AG
Wingas GmbH
Verbundnetz Gas AG

14. Greece
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Public Gas Corporation SA

15. Hungary
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Magyar Olaj-es-Gazipari
Other Companies

16. Italy
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Eni SpA

17. Latvia
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Latvijas Gaze

18. Lithuania
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
AB Lietuvos Dujos

19. Luxembourg
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
SOTEG SA

20. Malta
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Enemalta Corporation

21. The Netherlands
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
NV Nederlandse Gasunie

22. Poland
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Polskie Gornicturo Naftowe Gazownictwo

23. Portugal
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Gás de Portugal

24. The Republic of Ireland
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Bord Gáis

25. Romania
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Romgaz SA
Other Companies

26. The Slovak Republic
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Slovensk Plynárensk Priemysel

27. Slovenia
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Geoplin Group

28. Spain
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Gas Natural
Enegas
Endesa

29. Sweden
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
E.ON Sverige

30. The UK
MARKET STRUCTURE
Natural Gas Production and Consumption
MAJOR COMPANIES
Centrica PLC
National Grid
Other Companies

31. PEST Analysis
POLITICAL FACTORS
Security of Gas Supplies
Fair Competition in the EU Gas Market
Climate-Change Politics
Terrorist Activities
ECONOMIC FACTORS
Gas Infrastructure Investment
Environmental Economics
Gas Prices in the EU
SOCIAL FACTORS
Household Gas Prices
Energy Conservation
Marketing of Energy
TECHNOLOGICAL FACTORS
Climate Change
Gas-Powered Vehicles
Biogas

32. The Future
COMPLETION OF THE EU INTERNAL GAS MARKET
SECURITY OF FUTURE GAS SUPPLIES
EU GAS INFRASTRUCTURE
Northern Europe
South East Europe
European/Mediterranean
NUCLEAR POWER
RENEWABLE ENERGY
CLIMATE CHANGE
FORECASTS FOR GAS DEMAND

33. Consumer Confidence
METHODOLOGY
KEY FINDINGS THIS QUARTER
THE WILLINGNESS TO BORROW
Confidence Improves
Willingness to Borrow Slips Slightly
SPENDING FROM SAVINGS
Slight Increase in Spending from Savings
Saving Grows in Relative Importance

34. Further Sources