Competition Grows in Belgium's Industrial Supply Sector

During the past few years, competition has grown in Belgium’s industrial gas supply market and major consumers are preferring contracts with a short duration, of one or two years, says the federal energy market regulator Creg in a new study.

Creg’s researchers based their study on analyses of supply contracts for natural gas and purchases. Large industrial consumers are those with supplies coming directly from the high pressure grid. Last year, that was 149, accounting for 50 TWh or 28.4% of the country’s total gas demand.

That year, 46.8% of those consumers had a two-year contract and 36.2% had a one-year contract. In most cases (77%), the prices were based on international gas market prices. About 14% of the large gas consumers were tied to fixed prices and 9% were on oil market prices, although the shift is away from those.

Customers using more than 1 TWh/year on average enjoy a small benefit (€1/MWh) compared with customers using above 10 GWh/year. About half of the large customers paid between €20/MWh and €26/MWh in 2015.

Since 2007 the market share held by Eni, which bought the incumbent Distrigaz, has fallen almost continuously. In 2007 Eni met 76.9% of demand. In 2015, this share had shrunk to 35.7%. In response, Eni is trying to amend its gas contract with Dutch marketer GasTerra, but the seller has held firm on the terms, leading to an acrimonious dispute.

Initially, Engie, Wingas and – since 2009 – Statoil were dominant but the market has since become more fragmented. The aggregate shares of the three largest gas suppliers fell from 98.4% in 2007 to 63.6% in 2015. Every year, between a sixth and a quarter of industrial users switch to another supplier. Some large consumers have also started to take their gas supply in their own hands.

Koen Mortelmans