The need for regulation of gas storage: the case of France

In Europe, the deregulation process of natural gas markets is based upon the liberalization of services to consumers on the one hand, and the third party access (TPA) to the network infrastructures on the other hand. Regulators have focused on defining non-discriminatory rules for the access to pipelines. But, in importing countries like France, shippers face a rationing in transportation capacity: they need storage facilities in order to cover the gap existing between the instantaneous demand and their reserved capacity on the grid. Moreover, with deregulation, new spot markets will arise, on which operators need storage capacities in order to trade gas and create financial tools despite the bottlenecks existing on the network. In this paper, we study the need for storage of suppliers on deregulated gas markets. We show that, in France and importing countries, as storage is a scarce resource, the TPA must be completed by a regulation on reservoirs in order to introduce effective competition on the gas scene and to create efficient trading places.