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The market in Portugal 
 

Natural gas was introduced in Portugal in 1997 in order to provide a competitive, convenient and ecological energy source. Besides allowing the diversification of Portugal's energy resources, natural gas reduces oil dependence and increases the competitiveness of the Portuguese industry

Galp Energia was the leader of this national project and participated in every development stage of this sector in Portugal, both in the construction of high and low-pressure infrastructures and in the creation of the Portuguese natural gas market.

Organisation of the natural gas market in Portugal

Retrospective

Until February 2006, the Portuguese natural gas market was organised in two large areas:

 

  1. The activities of import, storage, transportation and regasification of natural gas or liquefied natural gas were subject to a sole concession awarded to Transgás, a subsidiary of the Galp Energia Group.
  2. The local and regional distribution was made under concession or licence awarded to local or regional distribution companies, where Galp Energia holds a significant stake, except Portgás.

Natural gas consumers with annual consumption levels lower than 2 mm³ were supplied by regional distribution companies – concessionaires – and local distribution companies – licensees – while consumers with annual consumption levels equal or higher than 2 mm³ were directly supplied by Transgás.

 

For large customers, with consumption higher than 50,000 m³, prices were not regulated and were set according to a free-market logic, competitive with other energy products and based on individual contracts. For customers with consumption levels lower than 50,000 m³, the pricing formula and the updates arising from the inflation rate and the price of natural gas were built in the concession agreements.

The situation today

Decree-law no. 30/2006, of 15 February, was the adoption of the EU directive on deregulation of the market for natural gas by the Portuguese state. This decree-law imposed the deregulation of the markets through free access to any company in equal conditions and determined the separation of marketing activities from the activities for operating distribution infrastructure. The directive provides the existence of a regulator for each member state  in Portugal, ERSE  and enforces the publication of the access tariffs to the networks.

 

According to the new law, in the meanwhile completed with decree-law no. 140/2006, of 26 July, the natural gas distribution companies with over 100,000 customers were bound to legally separate distribution from marketing activities. For the other companies, there was an accounting segregation of the activities.

 

The new law enforced the creation of last-resort marketing companies, which sell natural gas at a regulated tariff, and free marketing companies, whose sales price of natural gas are set in a free-market logic. For both activitis, the award of a licence by the Portuguese state is required.

Schedule of the sector liberalisation

The new law also set the schedule of the sector liberalisation, which should occur until early 2010.

 

Value chain of the natural gas sector in Portugal

Supply of natural gas

The natural gas enters the Portuguese market through Spain by the international pipelines that connect Tarifa to Córdoba (Gasoducto Al Andalus) and Córdoba to Campo Maior (Gasoducto Extremadura) or through the Sines LNG regasification terminal.

 

The international pipelines that connects Portugal to Spain transports the natural gas acquired to Sonatrach, in Algeria, which enters Spain through the Europe-Maghreb gas pipeline. This pipeline connects the natural gas fields of Hrassi R’Mel in Algeria to the natural gas transportation network of Spain. The Sines LNG regasification terminal receives tank ships mainly acquired to NLNG in Nigeria.

Transportation and distribution of natural gas

The regulated distribution networks in Portugal are organised in three categories: high pressure, medium pressure and low pressure. Tariffs for network use are determined by the regulator.

 

  • The high-pressure network is held by Redes Energéticas Nacionais. This network is typically used to transport large amounts of natural gas through long distances.
  • The medium-pressure network connects the high-pressure network to the low-pressure network. It is the backbone that conducts the low-pressure network.
  • The low-pressure network is held by distribution companies and connects each customer to the medium-pressure network.

The distribution of natural gas in Portugal is provided by six distributors - five of which are Galp Energia subsidiaries - that operate under concession contracts and four so-called autonomous natural gas distribution units, where Galp Energia also has equity holdings and which operate under licence.

Sales of natural gas in Portugal

The sales of natural gas in Portugal are organised in three large segments: the electricity segment, which includes the electrical plants of Tapada do Outeiro and TER (Termoeléctrica do Ribatejo), the industrial segment, which includes several industries such as ceramic, textiles, the food industry and the glass industry, and natural gas marketing companies that supply customers with lower consumption levels, such as residential customers and small enterprises.

 

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Last update: 23 May 2013

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