EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 16.7.2009 
SEC(2009) 979 final 
  
COMMISSION STAFF WORKING DOCUMENT 
 
Accompanying document to the 
Proposal for a 
 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
 
concerning measures to safegu ard security of gas supply  
and repealing Directive 2004/67/EC 
  
IMPACT ASSESSMENT  
{COM(2009) 363} 
{SEC(2009) 980} 
 
 
EN 2   EN This report commits only the Commission's servi ces involved in its pr eparation and does not 
prejudge the final form of any deci sion to be taken by the Commission.  
Table of contents: Introduction Section 1: Procedural issues and c onsultation of interested parties  
Section 2: Problem definition  Section 3: Objectives  Section 4: Policy options  Section 6: Comparing the options  Section 7: Monitoring and evaluation  Annexes Introduction The Commission set out in the 2
nd Strategic Energy Review an EU approach to security of 
energy supply , including a five-point EU Energy Security and Solidarity Action Plan1. The 
approach and the Action Plan have been solidly endorsed by Council, Parliament and European Council
2, and by stakeholders3. This impact assessment c oncerns one element in the 
Action Plan - the strengthening of provisions for crisis prevention and response in the gas 
field and in particul ar, the revision of Directive 2004/67  on measures concerning the security 
of gas supply.  
A concept of security of energy supply , from a policy perspective, was put forward by the 
Commission in the 2000 Green Pape r "Towards a European strate gy for the security of energy 
supply"4: "The European Union's long-term strate gy for energy supply security must be 
geared to ensuring, for the well-being of its  citizens and the proper functioning of the 
economy, the uninterrupted physical  availability of energy products on the market, at a price 
which is affordable for all c onsumers (private and industrial) , while respecting environmental 
concerns and looking towards sustainable development".  
In the gas field, this general definition of the outcome  sought could translate into an objective 
of an acceptable level of risk of involuntary interruption of supplies to consumers. What 
would an acceptable level be? Gas, unlike electric ity, is substitutable by other fuels in several 
of its main uses, so some risks of disr uption of supplies will be acceptable to many 
consumers. Many industrial consumers with  possibilities for fuel switching choose 
interruptible contracts offere d in the market. Thus the 2004 Directive on security of gas 
                                                 
1 COM(2008)781, "2nd Strategic Energy Review: An EU Ener gy Security and Solidarity Action Plan" 
2 EP Resolution of 2 February 2009 on the 2nd Strategic Energy Review (2008/2239(INI)); Energy 
Council Conclusions, 19 February 2009 (6692/09); Presidency Conclusions, European Council, 19 March 2009 
3 See report of public consultation, annex 4 
4 COM/2000/0769 
 
EN 3   EN supply protects only household and some ot her customers who are unlikely to have 
satisfactory fuel switching possibili ties. It establishes security of  supply standards in terms of 
the severe weather conditions and other disruptions  during which it should still be possible to 
supply protected customers from the market, without emergency measures.  
The basic idea in the Directive, as in the earlier and subsequent internal gas market Directives, 
is that the internal gas market  should be well-functioning and flexible enough, with 
sufficient infrastructure, to mitigate most gas supply disruptions. At the same time, for disruptions which turn out to be beyond the ca pacity of the market to mitigate, the 2004 
Directive establishes a framework, compatible  with the internal market, for emergency 
measures by public authorities (e.g. imposition of reduction of supplies to customers). This joint focus  on the functioning of the market  and emergency measures if needed  is a 
fundamental structure in gas security of  supply policy in Europe. The 2004 Directive 
complements the internal energy market Dir ectives, notably by establishing standards for 
security of supply which are implemented by market  participants. It is self-standing as regards 
the framework which it establishes for emer gency actions, although compatibility with the 
internal market is a prime criterion.  
The establishment of robust re lations with producer and tran sit countries is clearly an 
important part of EU gas security of supply policy. However, external relations actions  are 
largely
5 outside the scope of this impact assessment.  
In recent years, much has changed  as regards Europe's security of gas supply. Dependence 
on imports is increasing and at the same time , supply and transit risks are growing (see 
Section 2). The Russian-Ukraini an gas crisis in January 2 009 (summarised in Section 2) 
brought an unprecedented disruption of gas supplie s to Europe, far greater than any earlier 
disruptions. 30% of Europe's imports were  cut off for two weeks. This is now a realistic gas 
supply disruption scenario . The situation within Europe ha s also been changing. With the 
growing importance of long-distance network flows of gas and the development of the 
internal gas market, gas supply crises are quick ly felt across large parts of Europe and by the 
same token, the internal gas market  is offering an increasingly powerful means of mitigating 
gas supply disruptions.   The increasingly important European dimension  requires an adequate  regulatory framework 
for security of supply at EU le vel. This should develop and use the potential of the internal 
gas market to deal with supply disruptions an d address today's risks of disruptions. If an 
integrated liquid EU gas market already exis ted, it could be expect ed that most supply 
disruptions could be mitigated. But this is not yet the case. Infrastructure and market 
integration developments are stil l needed (see Section 2). In this context and after examining 
the implementation of Directive 2004/67, th e Commission proposed in November 2008 that 
the Directive be revised. Afte r the Russian-Ukrainian gas cris is in January 2009, the Council, 
Parliament and the European Council all calle d for the revision of the Directive to be 
accelerated.   The Member States  are in very different situations as regards reliance on gas in their energy 
mixes, their main uses of gas and thus substitution possibilities, indigenous production, 
storage, geographical position in gas networks etc. (See Table 1.) The priority attached to 
security of gas supply varies among Member Stat es. Very concretely, th e risks and impacts of 
                                                
 
5 A monitoring mission to Ukraine and Russia was part of the EU response to the January 2009 gas crisis 
 
EN 4   EN gas supply disruptions are diffe rent in different Member States, as are their means of 
mitigating disruptions, although the internal gas market is an increasingly important factor. 
The flexibility  allowed to Member States in the 2004 Directive is a reflection of these 
differences. Nevertheless, given the external an d internal developments  noted above, the clear 
message from Council and Parliament is to revise  the Directive. This is an EU and internal 
energy market matter,  as is reflected in the areas of impor tance in the revision of the Directive 
indicated by the Council and Parliament.   They focused on an EU framework for emergenc y action as well as the importance of a well-
functioning internal gas market. The Energy Counc il "recognizes the need to improve, as an 
urgent priority, both national and EU level in struments for ensuring security of gas supply, 
through the revision of the Directive, with no tably a better definitio n of the major supply 
disruption indicator and a more  effective crisis response mechanism (e.g. through predefined 
emergency plans at the appropriate levels)"
6. For the European Council, the revision should 
include "an appropriate crisis mechanism ensu ring the preparedness of  all actors, including 
the energy industry, transparency and prior info rmation through the development of plans for 
security of supply; solidarity among Member States through the de velopment of regional 
plans; and improved assessment and coordination  through the redefinition of the threshold for 
deciding actions at Community level"7. For the Parliament, key el ements in the revision are 
"mandatory and effective national and EU emer gency action plans, which among other things, 
define a common declaration of an emergency situation, allocation of available supplies and 
infrastructure capacity among the affected count ries, coordinated disp atching, activation of 
emergency measures in unaffected or less affected  states in order to increase the amount of 
gas available to the affected markets using all means possible, in cluding, among others, 
interruptible contracts, fuel switching, storage withdrawal, s upply flexibilities for example; 
considers that it is essentia l to improve the functioning of the market through transparency 
and increase the availability of gas in the mark et; calls on the EU and its Member States to 
develop gas storage with fast-release capacity"8. 
 Table 1: Sectoral consumption of natural gas by Member State 2007 (mtoe) and gas as % of 
primary fuel mix 
 Power 
generation House-
holds Industry Services District 
heating Other Gas as % of 
primary fuel mix 
Austria 29% 18% 37% 7% 2% 7% 21 
Belgium 29% 22% 39% 10% 0% 0% 26 
Bulgaria 26% 1% 46% 3% 7% 17% 15 
Czech Republic 6% 28% 35% 18% 7% 5% 15 
Denmark 39% 15% 18% 7% 3% 16% 20 
Estonia 12% 6% 36% 6% 39% 1% 13 
Finland 55% 1% 27% 1% 8% 9% 10 
France 15% 34% 28% 21% 0% 2% 14 
Germany 23% 37% 27% 14% 1% 0% 23 
Greece 73% 5% 16% 3% 0% 2% 10 
                                                 
6 Council Conclusions, 19 February 2009 (6692/09) 
7 Presidency Conclusions, European Council, 19 March 2009 
8 Par 67, EP Resolution of 2 February 2009 on the 2nd Strategic Energy Review (2008/2239(INI)) 
 
EN 5   EN Hungary 32% 30% 15% 16% 4% 3% 40 
Ireland 64% 14% 15% 8% 0% -1% 27 
Italy  40% 23% 24% 10% 0% 3% 38 
Latvia 46% 8% 21% 10% 15% 1% 29 
Lithuania 31% 5% 49% 4% 10% 1% 32 
Luxembourg 41% 26% 34% 0% 0% 0% 26 
Netherlands 33% 20% 23% 19% 1% 4% 40 
Poland 8% 26% 40% 13% 2% 12% 13 
Portugal 59% 6% 27% 5% 0% 4% 15 
Romania 28% 16% 32% 9% 4% 11% 32 
Slovakia 9% 22% 26% 19% 9% 16% 28 
Slovenia 10% 9% 74% 1% 5% 0% 12 
Spain 44% 12% 30% 9% 0% 5% 22 
Sweden 31% 4% 40% 13% 1% 12% 2 
United 
Kingdom 33% 33% 14% 9% 2% 8% 37 
EU27 31% 26% 25% 12% 1% 4% 24 
Source: Eurostat 
Section 1: Procedural issues and c onsultation of interested parties  
Identification : DG TREN, Agenda planning/W P reference: 2009/TREN/042 
Organisation and timing of the Impact Assessment : The impact assessment was prepared in 
house in DG TREN, drawing from consultations and expertise, assessments of the January 
2009 gas crisis and relevant st udies. DGs COMP, ECFIN, EM PL, ENTR, ENV, JLS, JRC, 
RELEX, REGIO, as well as SG participated in the Impact Assessment Steering Group which 
met on 25 May 2009. LS had a separate disc ussion with DG TREN on 25 May. The Impact 
Assessment Board discussed the draft impact assessment on 10 June, provided a first opinion 
on 12 June and a second on 24 June on the resubmitted draft impact assessment of 18 June.  
The recommendations of the Board were followed up in the revisions of the draft, notably as 
follows: - A definition of "security of gas supply" and the intended scope of the initiative, 
starting from the concept adopted by the Commission in its 2000 Green Paper; this 
underlined the joint fo cus of security of gas supply policy on th e functioning of the gas 
market and emergency measures.. 
- Strengthening of the section on analyses  of the January ga s supply disruption, 
including its economic impacts, drawing from academic research.  
- Stronger consideration the first policy option, "No new EU action" (the baseline 
scenario) including the 3
rd internal energy market pack age and the European Economic 
Recovery Plan. Inclusion of EERP pr ojects in a calculation of n-1. 
- Consideration of the applica tion of n-1 at regional and EU as well as Member State 
level.  
- Further material on assessment of costs of additional investments, notably from 
Transmission System Operators on reverse fl ow projects. Comparison with overall gas 
costs to consumers. 
Consultation of stakeholders on the substance of the impact assessment: 
 
EN 6   EN - Public consultation on basis of Co mmission's November 2008 evaluation report9 on 
the implementation of the 2004 Directive on me asures concerning the security of gas 
supply, November 2008-March 2009 (report in Annex 4).  
- Gas Coordination Group10 discussions (23 February, 2 April, 13 May), responses of 
members to questionnaires and issue papers. 
External expertise11: 
- Study on natural gas storage in the EU, Ramboll, October 2008 
- Study on Interoperability of LNG Facilities and Interchangeability of Gas and Advice 
on the Opportunity to Set-up an Action Plan for the Promotion of LNG Chain Investments, MVV Consulting, May 2008 
- Studies on the January 2009 gas crisis, not ably from the International Energy Agency, 
the Regional Center for Energy Policy Resear ch at Corvinus University of Budapest, 
Oxford Institute for Energy Studies, IEA report The Ukraine-Russia Gas Dispute  
(20.01.2009)
12 
Main results of consultations, positions e xpressed, how taken into account or not: 
In the public consultation on the revision of  the 2004 Directive, based on the Commission's 
evaluation report on its implemen tation, fifteen responses were received from Member States 
(4), European associations of energy regulator s and individual regulators (3), infrastructure 
operators (1), suppliers  (4), traders (1) and users (2).  The consensus was that a well-
functioning internal gas market provides the best guarantee of s ecurity of supply. At the same 
time, there was general agreement on the need for specific efforts across Europe to mitigate 
future disruptions. Some Member States noted th at only on the basis of shared responsibility 
for security of supply can so lidarity actions be properly developed. Respondents offered 
detailed views and proposals, as summa rized at the end of this section.  
Thus, there is a consensus amongst EU institutions that a revision of Directive 2004/67 is 
necessary, improving the capacity and organisati on of the EU, Member States and internal 
energy market participants to prevent and deal  with gas supply crises. The public consultation 
demonstrated a readiness of the main stakeholde rs to engage in the development of detailed 
proposals to achieve an effective revision. Th e various proposals of the institutions and 
stakeholders are considered in this impact assessment. The Commissi on’s minimum standards 
for consultations have all been met.  
Summary of public consultation: 
(i) The first question concerned the definition of security of supply standards  which 
would put reasonable, equal burden on mark et participants while respecting the 
different situations of Memb er States. The 2004 Directiv e established security of 
supply standards in terms of consumers to be protected and extreme weather 
conditions and supply disruptions during whic h it should be still possible to supply 
these customers. However, much flexibility  was allowed, reflecting the very different 
                                                 
9 COM(2008)0769; report on public consultation in Annex 4 
10 The Gas Coordination Group, established under the 2004 Directive, brings together Member States and 
the gas industry and consumers through their Euro pean associations (Eurogas, OGP, GIE, IFIEC, 
BEUC, Eurelectric) 
11 First two studies at http://ec.europa.eu/ energy/gas_electricity /studies/gas_en.htm 
12 The IEA Secretariat's note Overview of the Russia - Ukrain e gas dispute of January 2009 (11 March 
2009)  also provides a useful chronology of the crisis. 
 
EN 7   EN situations of Member States (reliance on gas in their energy mixes, uses and 
substitution possibilities, indigenous production, storage, position in the gas network etc.), with the result that standards across Europe are very heterogeneous, more than seems justifiable
13.  
 The Commission had raised at the Ga s Coordination Group, during the public 
consultation, the idea of a disruption for wh ich provision should be made - the failure 
of the largest supply infrastructure or source.  This concept, already established in the 
electricity sector, is known as "n-1" . The January gas crisis de monstrated that this is 
now a realistic disruption scenario. The Co mmission had also raised the ideas of 
requiring bi-directional flows on interconnectors , and a security of supply capacity 
margin . Respondents to the public consultation tended to acce pt the idea of adding "n-
1" to the disruption events specified in the Directive. However, they made clear that the devil is in the details, with proposals on definitions and comments on the availability of data. There was less support for the bidi rectional flows and capacity 
margin  ideas, mainly on cost-benefit grounds.  
 
To accommodate the differing situations of  Member States, several respondents put 
forward the idea that each  Member State should do a risk assessment, referring to the 
agreed disruptions (e.g. n-1, weather), and reflecting their individual situations as 
regards the potential impact of disruptions and available ways of mitigating them. The risk assessments should be peer reviewed by other Member States. If investments or 
new measures are needed in order to deal with the disruptions, Member States should establish national action plans  and implement them within a transition period.  
 Some respondents noted that disruption scenario analyses at regional and 
European levels  would make it easier to assess the potential impacts of a crisis and 
could help in identifying critical investme nt needs. Coordination with the proposed 10-
year Network Development Plans
14 would improve synergy. 
  
(ii) The second question concerned the extension beyond households of mandatory 
protection  under the Directive. This could concern power generators, small and 
medium sized enterprises and other vulnerable customers. Views were split. Some emphasized the importance of security of gas supply for essential service providers 
(e.g. hospitals). Some noted that gas fired power plants and Combined Heat and Power 
units without adequate fuel switching possibi lities could need protec tion as residential 
consumers are likely to switc h to electricity in a ga s crisis. Other respondents 
considered that overprotection would dimini sh the ability of the market to handle 
shocks and would remove incentives on mark et participants to increase their own 
security of supply.  
 (iii) The third question concerned the actions  which should be defined in the Community 
mechanism, in EU emergency plans . There was consensus that the market should be 
allowed to function as long as possibl e and emergency measures, solidarity 
mechanisms and government in tervention should come as a last resort. Some argued 
that governments should guarantee that c ontractual obligations  (e.g. cross-border 
access to storage) could be fu lfilled even in emergency si tuations. A European crisis 
                                                
 
13 November 2008 evaluation report, op cit. 
14 In 3rd internal energy market package 
 
EN 8   EN management mechanism should include a mechanism for declaring an emergency  at 
European level. The idea of setting up a network of emergency contact points was proposed by a Member State. Many responden ts considered that the Gas Coordination 
Group should have a stronger role in coordination and information exchange in the event of a crisis. Regulators invited the Commission to ensure that authorities responsible for dealing with emergency res ponse are the same in all Member States. 
 
There was broad agreement that national emergency plans should be communicated 
in advance to the Commission and other Me mber States, as well as to market 
participants throughout Europe. Several respond ents argued that th ey should be based 
on a harmonized European-level scheme.   Cooperation at regional level  was widely supported. However, views on the scope and 
field of cooperation varied, with some l ooking for regional emergency plans and 
solidarity mechanisms, others focusing on improving regional trading platforms and 
infrastructures.   
(iv) The fourth question concerned the definition of regions  for security of gas supply 
purposes. The few stakeholders who re sponded focused on infrastructural and 
technical issues, such as existing and planned interconnections, predominant gas 
flows, location of storage and import faciliti es. Some added that existing bilateral or 
multilateral agreements for emergency situat ions should be taken into account. All saw 
ERGEG
15's Gas Regional Initiatives as a good starting point. Purely administrative 
groupings should be avoided.  
 (v) The fifth question addressed the economic compensation of solidarity . The few 
replies suggested that solidarity  is seen as a marginal opti on. Some noted that it should 
preferably not be used. If it is used, it should be based on pre-agreements between the operators with market-based compensation (concerning for example, reservation of 
capacity rights or purchase of gas for solidarity reasons).  
 (vi) The final question concerned how secu rity of gas supply can be strengthened at lowest 
cost. Most respondents considered that a transparent, well-i ntegrated, fully functional, 
open and competitive market with supply a nd demand flexibilities is a basic guarantee 
in preventing and mitigating supply disrup tions. Better transparency of data would 
help better capacity allocation and c ongestion management. Exposing market 
participants to the full costs of disrup tions may serve as an incentive to provide 
flexible answers to risks, based on knowledge of willingness to pay. Promotion and transparent operation of commercial storages , diverse supply interconnections, rapid 
demand reduction through interruptible cont racts can also help. Solidarity and 
government intervention may be applied as a la st resort only if the market is unable to 
cope with the problems arisen. National s ecurity of supply measures should be 
reviewed to ensure that they do not hinder the internal market excessively. 
Section 2: Problem definition  
What is the issue or problem that may require  action? What are the underlying drivers of the 
problem? 
                                                
 
15 European energy regulato rs, www.energy-regulators.eu 
 
EN 9   EN The fundamental issue is the EU relies heav ily on gas and will do so for the foreseeable 
future. 24% of Europe's primary energy consumpti on is gas. It is used directly by households 
and industry and in power and h eat generation. As demonstrated in the scenario analyses in 
Table 2 below, the achievement of the EU's  2020 targets for renewables, efficiency and 
greenhouse gas emissions reductions should diminish  EU demand for gas, the net effect of 
energy efficiency gains, new energy sources (re newables) and the impact s of a carbon price. 
However, shrinking domestic production will mean  that the EU's dependence on gas imports 
is unlikely to drop below today's levels in te rms of volumes, and may well increase. Imports 
account for a large (60%) and growing part (71-77% in 2020, depending on scenarios) of 
Europe's gas consumption. 
Security of gas supply is directly  important  for households, many indus tries (e.g. chemicals, 
fertilizers) and for power gene ration. At the level of the energy system as a whole, gas is 
expected to play an important role in Eur ope's transition to a high-efficiency, low-carbon 
energy system, notably in the period before rene wables are competitive. Loss of confidence in 
the security of gas supply could undermine the cont ribution of gas to this transition, as well as 
creating major problems for current users. With insecure gas supplies, the issue of back-up 
fuels comes to the fore. In power generation for example, in the period before renewables are 
competitive and the necessary grid developments have been put into place, and before Carbon 
Capture and Sequestration is commercially availa ble, insecurity of gas supply could mean 
more investment in coal-fired generation and the lock-in of high CO2 emissions technologies.  
Why is security of gas supply in doubt now? Me dium-term trends for global gas consumption 
point to a sustained increase in demand, particul arly from developing countries. At the same 
time, remaining reserves and spare produc tion capacities are becoming increasingly 
concentrated in a few hands. For the EU in particular, surrounded by several gas producers, 
today's questions focus more on transit risks an d the adequacy of investments in new supplies 
in producer countries. Th ere are growing doubts16 about the adequacy of investments in 
upstream resources, notably in Russia, the EU's main source of gas imports. Uncertainty about 
future gas demand, notably in the EU, is cer tainly making it more difficult to plan and 
undertake investments. The situation as regards tran sit is worrying, particul arly in the case of 
Ukraine. The January 2009 dis pute between Naftogaz (Ukraine) and Gazprom (Russia) could 
be repeated at any stage, the fundamentals have  not changed substantially. In this situation, 
alongside external action, the EU needs to diminish its vulnerability to gas supply 
disruptions .  
 
Table 2 – Scenarios for EU-27 in 2020 
This Table shows the results of four scenario analys es: (i) baseline scenar io (i.e. without the 
Energy Policy for Europe17), with oil prices at 61$/bbl; (ii)  baseline scenario with oil prices 
at $100/bbl; (iii) a scenario with the Energy Policy for Europe and the moderate oil price; 
(iv) a scenario with the Energy Policy  for Europe and the higher oil price. 
EU-27  
Mtoe 2005 Baseline 
projection, oil price 61$/bbl Baseline 
projection, oil price $100/bbl New Energy 
Policy projection, New Energy 
Policy projection, 
                                                 
16 See reports by the Inte rnational Energy Agency 
17 20-20-20 by 2020, as proposed in the January 2007 Strategic Energy Review and followed up in 
legislation: Reduction in greenhouse gas emissions to 20% below 1990 levels, 30% in the context of a global agreement on climate; 20% contribution of renewables to final energy consumption; reduction in 
primary energy use to 20% below the baseline projection for 2020. The baseline scenario includes only 
policies implemented by end-2006  
 
EN 10   EN oil price 
$61/bbl oil price 
$100/bbl  
Primary energy demand 1811 1968 1903 1712 1672 
Oil  666 702 648 608 567 
Gas  445  505  443 399 345 
Solids 320 342 340 216 253 
Renewables 123 197 221 270 274 
Nuclear18 257 221 249 218 233 
 
EU energy 
production  896 725 774 733 763 
Oil 133 53 53 53 52 
Gas  188  115  113 107 100 
Solids 196 142 146 108 129 
Renewables 122 193 213 247 250 
Nuclear 257 221 249 218 233 
 
Net imports  975  1301 1184 1033 962 
Oil  590  707 651 610 569 
Gas Mtoe ( bcm) 257 
(298)  390 (452)  330 (383)  291 (337) 245 (284)  
Solids 127  200 194 108 124 
 
Final electricity 
demand  238  303 302 257 260 
Sources: Eurostat and analyses based on PRIMES model; see Commission Services Working Paper, "Europe's 
current and future energy position: demand – resources – investment".  
Based on the outline of the situat ion in the Introduction, there are two main issues  in the 
reduction of the EU's vulnerability to gas supply disruptions. One is whether flexibility in the 
internal gas market is developing sufficiently to  mitigate gas supply disruptions such as that 
of January 2009. Are updated stan dards or some other incentiv e needed? The second is the 
effectiveness of emergency arrangements as cu rrently implemented at national, regional and 
EU levels, their impact on capacity of the intern al gas market to mitigate disruptions and on 
solidarity. Is a better organization needed?  
The January 2009 gas supply disruption  provided an opportunity to examine Europe's 
resilience and preparedne ss for supply disruptions19: 
                                                 
18 Assumes nuclear  phase-outs decided by Member States as at end-2006  
 
EN 11   EN Brief resume of the crisis : 
The crisis resulted from an unresolved comm ercial dispute between Naftogaz (Ukraine) and 
Gazprom (Russia). Gazprom stopped supplying gas for Ukrainian consumption (111 mcm/day) on 1 January 2009. Gas for transit through Ukraine for European consumption 
(about 300 mcm/day) continued to  be delivered to Ukraine. Fr om 2 January, gas deliveries to 
several European Member States were aff ected, notably Poland, Sl ovakia, Hungary, and 
above all Bulgaria and Romania. Gas deliverie s gradually shrank on the Western Balkan route 
and at Western Ukraine entry points. During th e night of 6-7 Januar y, all supplies through 
Ukraine to the EU were cut. There were no Ru ssian supplies to Europe from 7 January to 20 
January.   In response, the EU, led by the Czech Presiden cy and the Commission, mediated between the 
partners at company and government levels. This  led to the signing of a monitoring agreement 
between Ukraine, Russia and th e EU on 9 January, which provide d for independent monitors 
from government and industry in  all parties to establish cl early what was happening as 
regards the transit of gas. On 17 January, EU  mediation was intensified, with a high level 
summit between the parties in Moscow. This re sulted in an agreement on 18 January between 
the Russian and Ukrainian Prime Ministers. On  19 January, within the political agreement, 
Gazprom and Naftogaz signed a new 10-year agr eement on the purchase of gas by Ukraine 
and the transit of gas to the EU via Ukraine. On 20 January, normal gas transit towards the EU resumed.   As regards the impact of the supply disruption, on  the ground in Europe:  
- Most Member States  were affected, direc tly or indirectly.  
- There were considerable economic and social impacts  in some Member States. 
Estimates, related mainly to involuntary re strictions of gas supplies to industry, are 
1000m€ in Slovakia, 255m€ in Bulgaria, 70m€ in Hungary
20.  
- The impact of the disruption in Member States depended on a range of domestic 
factors , alongside importance of Russian gas in the energy mix. Analyses21 suggest 
that Member States on which the supply di sruption had a low im pact (A, CZ, SLO, 
RO) had the benefit of some import dive rsification, some achie vements in closer 
market integration (SLO-A, CZ-D), and relatively plentiful local production and 
storage. In middle impact Member States  (HU, SK), local production and massive 
storage compensated for a low level of di versification. In high impact countries, 
notably BG, key problems were inadequate storage and limited domestic production, limited import diversification, dependence on uni-directional single  lines, distance 
from liquid markets (D) and low levels of preparedness for emergencies (e.g. low levels of oil reserves for heating). 
- The internal gas market  responded to the disruption.  Almost immediately, flows 
changed direction on the UK-Belgium Interc onnector and were reduced on the UK-
Netherlands BBL Interconnector, increasing th e supplies available on the Continent. 
Within a few days, additional spot LNG cargoes arrived in Greece and Turkey, flows 
increased from Germany to Croatia, from H ungary to Serbia and Bosnia, and Croatia 
                                                                                                                                                        
 
19 See separate report on January 2009 gas supply disruption. See also See International Energy Agency 
analysis, based on information from EU Member Stat es; also Stern, OIES, Fe bruary 2009; Kovacevic, 
OIES, March 2009 
20 Peter Kaderjak, Regional Center for Energy Policy Research, Corvinus University of Budapest; 
presentation of 3 April 2009  
21 This list from Kaderjak, op cit 
 
EN 12   EN increased its production share off-take from  the Croatian-Italia n gas field in the 
Adriatic. By ten days or so into the crisis , reverse flows had been organised from the 
Czech Republic to Slovakia and, on the last da y of the crisis, from Greece to Bulgaria.  
- It was mainly inadequacies in gas transport  which constrained flows (capacities, 
reverse flow capabilities, unusual routes, insu fficient integration of gas networks in 
Central and South Eastern Europe), not lack  of gas. The supply shortfall to the EU 
through the Ukraine amounted to 300 million cubic meters per day (mcm/d), compared to daily consumption of the EU  of some 2000 mcm/d. Available storage 
withdrawal capacities in the EU were around 800 mcm/d. Gas imports from Norway 
increased.  
- The crisis tested the gas emergency arrangements  in those Member States which 
used them. Some reconsideration of supp lies curtailment procedures is underway
22. 
- Slovakia introduced an emergency regul ation prohibiting expor ts from storage 
facilities in Slovakia. Italy introduced an  emergency regulation optimizing use of 
import pipelines. Such regulations may have prevented some gas flows  which would 
have been useful.  
- There were no solidarity actions  between Member State governments.  
- Information exchange in the Gas Coordi nation Group was widely considered useful. 
However, the data available  to governments and market participants on gas flows, 
stocks and available capacities was inadequa te, making market deci sions and decisions 
on emergencies more difficult.  
The January 2009 gas crisis provided a practical demonstration of the European dimension of 
today's gas supply disruptions and of the res ponse. By the time Russian supplies via Ukraine 
reached Europe again, action within Europe had largely compensated for the supply gaps. At the same time, the crisis demonstrated that investments in infrastructures  across Europe to 
prevent disruptions becoming cris es are still needed (e.g. storag e, reverse flows, some new 
interconnectors) and that further market integration  would improve security of supply. The 
question of the compatibility with the internal market of emergency measures  of Member 
States has arisen.  
To what extent can the undesired effects of the January gas supply disruption be attributed to 
poor implementation  of existing regulations, including the Directive on gas security of 
supply?   In Member States which were most hit , the factors were poor diversity of imports, 
dependence on uni-directional singl e lines, distance from liquid ma rkets, inadequate storage 
and limited domestic production, as well as low levels of preparedness for emergencies (e.g. low levels of oil reserves for substitute heating fuel). Several of these countries are operating with energy systems developed in a different  context, still relatively poorly geared to 
benefiting from the developing internal energy ma rket. Investments are needed, as reflected in 
the list of eligible projects  in the European Economic Rec overy Plan and expenditures under 
the Structural Funds. Those Member States which were able to accommodate  the January 
supply disruption had the benefit of some import  diversification and so me achievements in 
closer market integration.  Good implementation of the 2004 Directive would not  have directly affected import diversity 
nor import infrastructures. It would not have  increased domestic production but could have 
encouraged further investment in commercial  storage. It would have ensured better 
preparedness for emergencies. What are the underlying drivers  for poor implementation, 
                                                
 
22 HU, according to Kaderjak op.cit. 
 
EN 13   EN notably on storage and emergency planning? The lack of clear standards in the 2004 Directive 
and the consequent practical limitations on en forcement must come into the picture. As 
regards emergency planning, the January crisis  was unprecedented and, for many, unexpected.  
  
The January crisis demonstrated the potential already developed in the internal gas market  
to mitigate quite substantial gas supply di sruptions. The crisis has encouraged the 
identification by Member States and Tran smission System Operatorss of necessary 
infrastructure investments, so future disruptions should be accommodated at least as effectively. Thus, although there is still progress to  be made in the development of the internal 
energy market, the indications from the January crisis were positive.  
The introduction of emergency regulations  by some Member States may have prevented 
some gas flows which would have been useful. However, this does not seem to have had a 
major impact this time. Nevertheless, market partic ipants in particular want clarity on what is 
allowed.  
In general, the analyses if the crisis support the two i ssues identified at the start of this section 
– Is flexibility in the internal gas market developing sufficiently? Are emergency 
arrangements effective, what is their impact on the mitigation of disruptions by the internal 
gas market and on solidarity?  
What are the drivers of these two issues? 
  The January crisis suggested that inadequate flex ibility on the internal ga s market is currently 
mainly a matter of inadequate infrastructures . A number of missing links and inadequate 
capacities were evident in the January crisis (eg reverse flow on Greece-Bulgaria pipeline). 
Many were included as eligible projects in th e European Economic Recovery Plan, agreed 
shortly after the January crisis (see Annex 3).  
 More generally, there is arguably a risk of underinvestment in infrastructures  which are 
intended to be available for mitigating disruptio ns, preventing crises. Individual elements of 
infrastructure which would not  be used much in normal circumstances (e.g. provision for 
reverse flows on routes normally used one way)  are unlikely to be profitable and attract 
financing unless without their wider benefit to  the network being recognized. In Europe's 
unbundled internal gas market after the 3
rd internal energy market package , it will be for 
energy regulators to work this out among themselves and with Transmission System 
Operators. The rolling 10-year Network Development Plans, at Member State, regional and 
EU levels, agreed in the 3rd internal energy market package,  should provide a good vehicle for 
this. However, the current situation  is worrying. As demonstrat ed in the Winter Outlook 
prepared by Gas Infrastructure Europe23, a significant part of Eu rope's gas transmission 
capacities is totally or nearly totally saturated du ring the cold winter temperatures. There is no 
spare capacity to increase gas flow if so mething happens. Spare capacities, more 
interconnections and reverse flow capacities must be built in order to have  a buffer capacity in 
transmission and distribution of gas. With th e prospect of further gas supply disruptions, 
urgent action on infrastructures is needed.  
                                                
 
23 See Annex1 or www.gie.eu 
 
EN 14   EN There may be a risk of underinvestment in gas supplies for security of supply . Costs of gas 
supply insecurity are visible to  suppliers and consumers (e.g. back-up supplies, uncertainty 
about investments) and incentives to diminish insecurity correspondingly clear. However, in 
many of the actions to reduce insecurity, benefits are widely shared, which normally 
encourages free-riding. The classi c example is oil prices. If so me consumers act (e.g. stocks, 
demand reduction) to reduce pressure on the s upply/demand balance, the resultant price drop 
is felt by all. Hence intern ational cooperation among consumers on oil stocks. Less research 
work has been done on gas but the same factors should operate24. An example would be 
power generators making provisions for fuel swit ching, thereby leaving mo re gas for others in 
a crisis.   Under the 2004 Directive, securi ty of supply standard s are already in place. They specify 
severe weather conditions and other disruptions  during which it should still be possible to 
supply protected customers from the market, without emergency measures. For the moment, 
there does not seem to be a problem about qua ntities of gas in Europe. However, with 
growing import dependence, the situati on should be kept under review.  
 
The flexibility of the internal gas market to  mitigate supply disrupti ons depends not only on 
investments in infrastructu res and gas but also on its functioning . There is currently 
insufficient physical network integration, inade quate transparency in network utilisation as 
well as inflexibility in cap acity reallocation and conges tion management. Technical 
difficulties in transporting gas over non-standard routes were evident in the January crisis. 
There is insufficient market integration, pric e-response mechanisms are inadequate. All of 
these can undermine a market response to a gas supply disruption. Thus the coming into 
operation of the 3
rd internal energy market package  will enhance the in ternal gas market's 
ability to deal with s upply interruptions, through measures such as transparency (obligations 
to publish data on forecast and actual gas flow s, amount of gas in storage and available 
pipeline and storage capacities), harmonisation of access rules through codes as well as clear 
roles for Transmission System Operators an d regulators, the creation of ACER for 
cooperation of regulators and ENTSOG for co operation of TSOs and for coordination of 
investment plans through the 10- year Network Development Plan25.  
The main driver for the issue of the effectiveness of emergency arrangements  and their 
impact on the mitigation of disruptions by the in ternal gas market and on solidarity is the 
evidence of unilateral and uncoordinated acti on by some Member States in gas supply 
emergencies. There are several problems with  this. By creating doubt on when emergencies 
will be declared in parts of the internal gas market, when non-market actions will be 
introduced, confusion is created around the basic agreement on having the internal gas market 
mitigate supply disruptions for as long as possibl e. Once an emergency is declared, clarity is 
needed on what this implies. Gas market player s from several Member States have raised the 
issue of uncertainty about cont inued access to storage in nei ghbouring countries in a crisis, 
despite commercial contracts, for example. Th ese concerns about getting the functioning of 
emergency systems right are influenced by the gene ral sense that there could be further severe 
gas supply disruptions in the futu re and the reality that as the internal gas market develops, 
clarity is needed by all participants on wh en non-market measures might be applied.  
                                                 
24 CEPS Policy Brief: "National and EU-level Estimates of External Supply Externalities", Arnold and 
Hunt, April 2009 
25 Agency for Cooperation of Energy Regulators, European Network of Transmission System Operators - 
Gas 
 
EN 15   EN A driver of both issues – adequacy of investments and organization of emergency 
arrangements – is the objective of solidarity  in the EU. In the energy field, reflecting 
interdependence of Member States, the ideas of responsibility and solidarity have been linked. 
Thus there may be greater readiness to agree in advance on solidarity measures which would 
come into play in an emergency when there is  trust that all Member States have acted to 
reduce the risks of an unmanageable gas supply disruption spilling over into other Member States. Several Member States re peated this in the public consu ltation on the revision of the 
2004 Directive. 
Who is affected, in what ways, and to what extent? 
 
The ultimate sufferers from inadequate and inef ficient gas security of supply arrangements in 
Europe are European citizens  (dependent on gas for cooking a nd heat, directly or via district 
heating; many dependent on gas-fi red electricity generation) and industry  (e.g. power sector, 
chemicals, fertilizers). Gas suppl y disruptions are a serious issu e for electricity  generation in 
several Member States, hence the likelihood that a gas crisis  can become a much more 
disruptive energy crisis
26. 
  
Costs of supply disruptions can be considerable, as demonstrated in the January crisis (see 
earlier in this Section), directly affecti ng industry (e.g. temporar y closure of plant; 
requirement on power plants to switch fuels, provision of back-up fuels or insurance-type 
contracts), then households. Significant economic damage  was felt in the Member States 
most affected in the January crisis.   Supply disruptions will have impacts on jobs. Some 25% of gas consum ption in the EU is in 
industry (fertilizers, other chemicals etc). In terruption of supplies to such continuously 
running enterprises is a negative factor , potentially putting jobs at risk.  
 
How would the problem evolve,  all things being equal?  
As noted earlier in this Secti on, risks of gas supply disruptions  to Europe are growing, with 
growing gas demand from deve loping countries, doubts about adequacy of investments in 
new supplies, and uncertain relations between producer and transit countries, notably Russia 
and Ukraine. Imports are projected to grow fo r the foreseeable future  and the EU is highly 
dependent on a small number of gas suppliers and routes. Crises comp arable to that of 
January 2009 could easily be repeated, leav ing European customers without gas.  
If underinvestment and inefficient investment in the capacity of the market to mitigate 
disruptions continues while risks of disruptions grow, the impact and costs of disruptions will 
increase. The 3
rd internal energy market package and the European Economic Recovery Plan 
will certainly bring releva nt improvements although it will be  some time before the integrated 
liquid internal gas market which could best de al with supply disrupti ons will be achieved . 
 Emergency measures and plans of Member St ates need to be coordinated, lest the 
untransparent and difficult s ituation in January 2009 be re peated in the next crisis, 
undermining the effectiveness of the internal  market in mitigating the disruption. More 
broadly, the development of solidarity between Me mber States in dealing with emergencies is 
likely to be held back by any sense of lack of responsibility of other Member States in making 
the necessary provisions to prevent and mitigate gas supply crises.  
                                                
 
26  During the January 2009 gas crisis, problems emerged in electricity (Slovakia) and oil products supply 
(Bulgaria, Moldova and Serbia). 
 
EN 16   EN As noted earlier, doubt about security of suppl y could undermine the contribution expected of 
gas in the transition to a high-efficiency, low- carbon energy system, notably in the period 
before renewables are competitive.  
Does the EU have the right to act and is EU added-value evident – Treaty base, ‘necessity 
test’ (subsidiarity) and f undamental rights limits?  
 
On security of energy supply, its inclusion in the Lisbon Treaty energy article and the 
endorsement of the 2nd Strategic Energy Review  point to an EU role, consistent with the 
growing reality of the in ternal energy market.  
 The 2004 Directive is based on Art 100, EC Treat y, which applies to si tuations in which 
"severe difficulties arise in th e supply of certain products"
 27. Decisions under this Article are 
taken by the Council acting on a proposal from th e Commission. This is consistent with short-
term and emergency situations, not with longer-term, preventive action in the internal energy 
market. The Commission's original proposal for the 2004 Directive was based on Art 95 
which deals with "the approximation of pr ovisions laid down by law, regulation or 
administrative action in Member States which have as their object the establishment and 
functioning of the intern al market." The justification was that the Directive related to 
provisions, consistent with the internal mark et, to be made by Memb er States to address 
disruptions which could arise in the market (standards for mark et participants , publication of 
planned measures for use in an emergency, transp arency etc). This just ification for using Art 
95 has become stronger as the inte rnal energy market has developed28. In addition, the clear 
purpose of its revision is to achieve advance planning and provisions by Member States and 
market participants, not to fram e ad hoc responses to crises.  
 The adoption of the 3
rd internal energy market package will strengthen the market.  In a 
situation in which national markets are becomi ng increasingly integr ated, it will not be 
possible to consider security of  supply primarily as a national c oncern. This is already partly 
the case. Consequently the legal basis of the related EU legisl ation should arguably no longer 
be disconnected from the internal market ru les of the EU Treaty. Any proposal should – 
consistently with the legal basis for the inte rnal energy market of which it is arguably an 
extension – be based on Article 95. This is the legal basis of a similar instrument adopted in 
2005 in the field of electr icity (Directive 2005/89/EC). 
 
Subsidiarity, proportionality: 
No single Member State, acting on its own, can assure a sufficient regulatory framework and 
investments in the internal market for secu rity of gas supply. Only  EU-wide action can do 
this. No single Member State, acting on its ow n, can ensure that all Member States have 
effective provisions in place, consistent with  the internal market, to handle gas supply 
emergencies. Moreover, individu al non-coordinated actions by MS are increasingly likely to 
                                                 
27  Article 100: 1. Without prejudice to any other pro cedures provided for in this Treaty, the Council, 
acting by a qualified majority on a proposal from  the Commission, may deci de upon the measures 
appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain 
products. 2. Where a Member State is in difficulties or is seriously threatened with severe difficulties 
caused by natural disasters or exceptional occurrences beyond its control, the Council, acting by a 
qualified majority on a proposal from the Commi ssion, may grant, under certain conditions, 
Community financial assistance to th e Member State co concerned. Th e President of the Council shall 
inform the European Parliament of the decision taken. 
28  The 2005 Directive on security of supply of electricity is based on Art 95.  
 
EN 17   EN hamper further development of the internal mark et, lead to discriminatory treatment and put 
security of supply in othe r Member States at risk. 
 As noted earlier, the Member States  are in very different situa tions. The risks and impacts of 
gas supply disruptions are diffe rent in different Member States, as are their means of 
mitigating disruptions. The flexibility allowed to Member States in the 2004 Directive is a 
reflection of this. Nevertheless, given the external a nd internal developmen ts noted above, the 
clear message from Council and Parliament is to revise the Directive. This is an EU matter.  
 
Section 3: Objectives  
What are the general policy objectives?  
The general policy objective is to secure an adequate level of preparedness  in Europe for 
gas supply disruptions, developing  and using the potentia l of the internal gas market to deal 
with supply disruptions and address today's risks of disruptions. The weaknesses made 
evident in the January 2009 ga s crisis must be tackled quickly , before any further crisis.  
Consistency of these objectives  with other EU policies:  
In the changing global gas market, supply and tr ansit disruptions must be expected. Despite 
much effort on developing international cooperation  and partnership, there are continuing 
questions about matching supply side investments and demand, a nd political dimensions of 
supply and transit risks.  As set out in the 2
nd Strategic Energy Review , internal action to 
reduce vulnerability to gas s upply disruptions supports a str ong EU line and action with 
external partners.   Terrorism and other criminal activities, natura l hazards and other causes of accidents are not 
constrained by borders within or outside
29 the EU. The directive on the identification and 
designation of European Critical Infrastructures30 lists the energy sector as one of its 
priorities. This includes as particular in frastructure assets gas production, storage, 
transmission by pipelines, as well as LNG termin als. A strengthened regulatory framework on 
gas security of supply and EU policy on critical infrastructures  could be mutually 
supportive.   Inadequate European responses to gas supply disruptions would have impacts on other EU 
policies, notably internal energy market  development (undermining of efficient market 
response, unclear investment signals), environment and climate  (avoidable switching to 
fuels with greater greenhouse gas emissions e.g. coal, fuel oil), economic development  
(insecure supplies, involuntary closure of plant, loss of competitiveness and jobs), poverty 
alleviation  (relatively great impact of disr uptions on vulnerable customers), external 
relations  (suppliers not helped by unclea r European market rules).  
What are the more specific/operational objectives?  
Reflecting the two issues identifie d earlier and the discussion of  the drivers of the problems, 
the specific/operational objectives for the revision of the 2004 Directive are: 
                                                
 
29  The Commission has recently started a dialogue with  the Member States about an external dimension of 
the EU policy on critical infrastruct ure protection. This strand of work would address the issue of 
critical infrastructures located in third countries, wh ich if disrupted or destroyed would have an adverse 
effect on a certain number of Memb er States or the EU as a whole. 
30  Council Directive 2008/114/EC of 8 December 2008 
 
EN 18   EN (i) Achievement of sufficient flexibility  in the internal gas mark et to mitigate most gas 
supply disruptions, by establishing the necessary incentives for investments in infrastructures and gas and the well-functioning of the market.  
(ii) Effective cooperation in  dealing with gas supply emergencies  in Europe, with pre-
defined emergency plans involving all play ers, at Member State, regional and EU 
levels, minimizing any undermining of the internal gas market response to the disruption and geared to supply disruptions  of the size and sc ope experienced in 
January 2009.  
On flexibility in the internal energy market to  enable it to mitigate most supply disruptions, 
the main focus today, bearing in mind the January gas crisis, is on infrastructures. As noted in 
the previous Section, existing incentives fo r gas supplies seems to be adequate. The 3
rd 
internal energy market package will improve market functioni ng and the conditions in which 
investments can be made. A missing element may be a standard relating clearly to 
infrastructures. This is neither  in the current Direc tive on security of ga s supply (which only 
specifies "a partial disrupti on of supplies") nor in the 3rd internal energy market package. A 
security of supply standard focused on infrastructures  could complement the 3rd internal 
energy market package. The package has create d a new situation in which infrastructure 
investments will be made in future. With clear roles and coopera tion among Transmission 
System Operators and regulator s in Europe, a 10-year Networ k Development Plan will be 
developed, at Member State, regi onal and EU level. A clear s ecurity of supply standard for 
gas infrastructure could suppor t the development of such network development plans.  
  The Commission put forward for discussion in  the Gas Coordinati on Group the idea of a 
disruption for which provision should be made - th e failure of the largest supply infrastructure 
or source. This concept, already establis hed in the electricity sector, is known as "n-1" . The 
January gas crisis demonstrated that a disruption scenario of th is scope, previously considered 
unlikely, is now realistic. The Commission also raised the ideas of requiring bi-directional 
flows on interconnectors , and a security of supply capacity margin .  
 The differences between Member States as  regards risks and impacts of gas supply 
disruptions would clearly be a f actor to be borne in mind in requiring an infrastructure-based 
security of supply standard. An approach base d on n-1 would allow a response tailored to the 
specific situation of each Member State, whil e ensuring the development of a network with 
the capacity  to deal with crises as well as normal circumstances.  Thus, to summarize why a security of supply standard for infrastructure  may now make 
sense as a specific/operational objective for th e revision of the 2004 Directive, it is because 
large-scale failures of supply an d the need to replace supplies from other infrastructures is 
now a realistic disruption scenar io; gas flows across Europe are increasing and the internal 
gas market is developing; and the 3
rd internal energy market package will provide new means 
of implementing such a standard.   The n-1 concept  as a basis for a security of supply standard for infrastructure was accepted by 
many respondents to the public consultation. Howe ver, respondents made clear that the devil 
is in the details, with proposals on definitio ns and comments on the availability of data. 
Compared to the capacity margin  concept which would be applied to all existing 
infrastructures, the n-1 concept would enab le a focus on missing infrastructures. Many 
respondents rejected the capacity margin con cept, mainly on cost-b enefit grounds.  The idea 
 
EN 19   EN of requiring bidirectional flows on all interconnectors  could be assessed on its own merits, 
it would not conflict with the n-1 concept, indeed it could be accommodated within it.  
 In principle, the n-1 concept co uld be applied at any level – Member State, regional or EU . 
The choice as to which level would be best  would be influenced by very concrete 
considerations of existing inte rconnections, existing cross-bord er arrangements (e.g. access to 
storage), existing cooperation frameworks. A pr agmatic approach is justified. The responses 
from the public consultation support a pragmatic  approach, at least as regards regional 
cooperation.   It would clearly be necessary also to have disruption scenario analyses  at EU level, to 
support analyses and risk assessments at regional  and Member State levels. These analyses at 
EU level should be consistent with and contribute to the planned 10-year Network 
Development Plan , to be developed by ENTSOG. The maps in Annex 2, for example, 
produced using the Joint Research Centre's MC-Gen ercis model, give an EU-level view of gas 
flows. They show gas flows in Europe on a nor mal day and on the first day of the January 
2009 gas crisis. Transmission System Operat ors in GTE+ are already working on gas 
disruption scenarios in an EU perspective.  
 
Section 4: Policy options  
 
What are the possible options  for meeting the objectives  and tackling the problem?  
 
4.1 No new EU action – the baseline scenario  
 
Can achievement of the objectives set out abov e be expected from the existing EU policy 
framework and from incentives already in place?   (
i) Achievement of sufficient flexibility in th e internal gas market to mitigate most gas 
supply disruptions, by establishing the necessary incentives for investments in infrastructures and gas and the well-functioning of the market.  
  As noted in Section 2, the January crisis suggested that flexibility in the internal gas market to 
handle gas supply disruptions is most immediately a matter of inadequate infrastructures . In 
Europe's unbundled internal gas market, when the 3
rd internal energy market  provisions are 
operational, it will be for energy regulators to work out among themselves and with Transmission System Operators the costs and be nefits of additional investments, including 
those to  strengthen the capacity of the mark et to mitigate disruptions. The rolling 10-year 
Network Development plans, at Member State,  regional and EU levels, agreed in the 3
rd 
internal energy market package, should provi de a good vehicle for this, when they are 
developed. Security of supply is one of the factors which TSOs and regulators will consider in 
their infrastructure development plans.  In general, strengthened coope ration on security of supply should be possible, through the 
clearer roles, responsibilities and cooper ation obligations established in the 3
rd internal energy 
market package, within Member States and at regional and EU levels.   It will take some time before  all the elements in the 3
rd internal energy market package are 
operational and before their impacts are felt in an integrated, well-functioning liquid internal gas market.. If the 3
rd package is to address imminent gas supply disruption, there will have to 
be early implementation of its pr ovisions by the relevant player s. In response to the January 
 
EN 20   EN gas crisis, Council encouraged the early forma tion of ENTSOG and the start of its work on 
the 10-year Network Development Plan. TSOs in GTE+ have started working on EU-level 
gas supply disruption scenarios. Thus, ev en before full implementation of the 3rd internal 
energy market package, some work towards proper  reflection of security of supply in network 
developments in Europe can be expected.   This is a strong argument for early agreement on a clear security of supply standard for 
infrastructure , providing guidance and support at EU level to enable regulators and 
Transmission System Operators to address the n eed for additional investments. The issue of 
financing investments which are primarily designed  to ensure security of supply is not easy 
and experience, particularly in an unbundled in ternal energy market environment, still needs 
to be built up.   Agreement on the disruptions which each Member State should be able to compensate could 
simplify the lives of regulators  and facilitate a fair burden- sharing. Under the 2004 Directive, 
the definition of such a disruption goes no furthe r than "a partial disr uption" of supplies, 
during a period to be determined by Memb er States, taking into account national 
circumstances. This gives no guidance. Incentiv es for investment in infrastructures to 
strengthen the capacity of the ma rket to mitigate disruptions are not clear enough at this stage. 
A significant part of Europe's gas transmission ca pacities are totally or nearly totally saturated 
during the cold winter temperat ures. There is no spare capacity  to increase gas flow should 
something happen. With the prospect of furthe r gas supply disruptions in the near future, 
urgent improvements in infrastructures  are needed.  
 The European Economic Recovery Plan  includes a list of elig ible gas infrastructure 
projects, to be started in 2009-2010 (Annex 3), ma ny of which would strengthen the capacity 
of the market to mitigate disruptions. This  will certainly help, as will the continued 
implementation of the TEN-E programme. The imp act of the Recovery Plan projects on the 
meeting of an n-1 standard (details in Anne x 1) can be calculated. The following Table 3 does 
not include the Recovery Plan projects concerning reve rse flow capacities as it is not yet 
possible to attri bute the support.  
 
 Table 3: Preliminary calculation of n-1 for Member States:  
 
 
 
EN 21   EN 0%50%100%150%200%250%300%
DK GR DE BE SK AT PL NL LV CZ EE ES IT HU FR UK RO SE LU PT BG SI LT IE FI EUN-1
Normal EERP
 
 
 If all projects in the Recovery Plan are implemented, it would certainly take several Member States nearer to meeting an n-1 standard fo r security of supply. Ho wever, the projects 
included in the Recovery Plan are eligible projects, construction ca nnot be guaranteed. The 
planned revision of Council Regulation EC N° 736/96  on notification of investment projects 
in the gas, electricity and petroleum sector will help to establish greater transparency 
regarding the development of en ergy infrastructure and better understanding of the reasons for 
project delays or withdrawals.    The guidelines for the TEN-E programme will be revised in 2010. One of the ideas put 
forward by the Commission for the public cons ultation is to tailor the programme more 
closely to energy security needs. Th is may involve greater financing.  
 Against this background of the 3
rd internal energy market package and its early 
implementation, the European Economic Recovery  Plan and the TEN-E programme, is there 
need for a security of supply standard relating to infrastructure ? What added value would 
it provide? Firstly, the 3rd internal energy market package does not provide such a standard, 
only much improved means for reflecting one in  decisions on investments and in network 
development plans. The existing 2004 gas secur ity of supply Directive does not provide one 
either. The Recovery Plan will at best only pa rtially deal with the problem of inadequate 
infrastructures. Agreement on a standard would provide guidance and support at EU level  
to enable regulators and Transmission System Op erators to tackle, at Member State, regional 
and EU level, the difficult questions of which additional investments make most sense, how 
should costs be allocated. In timing terms, it would support early advance work by ENTSOG, ACER, the TSOs and regulators.   
Other factors influencing flexibility in the internal gas market to mitigate most gas supply 
disruptions should also improve somewhat in the next years. On the functioning of the 
 
EN 22   EN market, after the 3rd internal energy mark et package, the Commissi on proposes to strengthen 
gas network transparency  through detailed rules throug h comitology by a proposal to 
amend the Annex of the current Gas Regulation 1775/2005. On availability of substitute 
fuels , the recently-agreed revision of  the oil stocks Directive, for example, will provide a 
more clear assurance of supplies.   
 (ii) Effective cooperation in dealing with gas supply emergencies in Europe, with pre-
defined emergency plans involving all play ers, at Member State and EU levels, 
minimizing any undermining of the internal  gas market response to disruptions. 
 The January 2009 gas crisis has certainly stimu lated greater awareness of the need for 
effective cooperation on crises, at Member State,  regional and EU level and in relations with 
supplier and transit partners. As noted in the problem definition section, confusion on timing 
and content of emergency plans of Member St ates can undermine the effectiveness of the 
internal energy market in mitigating supply disruptions. The Gas Coordination Group  has 
already started working on emergency plans as well as security of supply standards.   
 
Work underway on strengthening international energy cooperation  could diminish the risk 
of gas supply disruptions (EU-Russia Ener gy Dialogue, Energy Charter Treaty, Energy 
Community, EU-Russia New Agreement etc).   Thus, the baseline scenario ma y well partially deliver the objectives over the next years, 
through the 3
rd internal energy market package, the European Economic Recovery Plan, the 
revision of Council Regulation EC N° 736/96 on no tification of investment projects in the 
gas, electricity and petroleum sector, the TEN-E  programme, the existing 2004 gas security of 
supply Directive and cooperation on emergency planning following the January gas crisis. 
Nevertheless, given that the internal gas ma rket is far from the integrated, liquid, well-
functioning market which could best deal with supply disruptions, an EU framework is still 
needed to ensure that actions of Member States  for security of gas supply, notably during 
crises, do not undermine the growin g capacity of the market to de al with disruptions and that 
the standards for security of supply which market participants should meet  are clear to 
all. Such standards have not been provided in the 3rd internal energy market package nor in 
the 2004 gas security of supply Directive. More positively, an EU framework is needed to 
ensure that the potential of the internal gas market  to deal with supply disruptions is 
developed and used. The 2004 Directive does not pr ovide sufficient concrete provisions to do 
this. The 3rd internal energy market will radically improve the framework for investments in 
the internal energy market but a clear indication of what is need ed for security of supply has 
not been provided.     
 
4.2 Better enforcement and implementation of the 2004 Directive   
(
i) Achievement of sufficient flexibility in th e internal gas market to mitigate most gas 
supply disruptions, by establishing the necessary incentives for investments in infrastructures and gas and the well-functioning of the market.   
 The Commission's evaluation report on th e implementation of Directive 2004/67
31 
demonstrated heterogeneity of standards among Member States for mitigating gas supply 
                                                 
31 November 2008 evaluation report on implementation of Directive 2004/67 
 
EN 23   EN crises. Member States are required to establish security of supply standards based on certain 
criteria (customers to be protected, their demand to be  met during specified weather 
conditions and partial disruptions of supplies). In their transposition of the Directive, Member 
States have adopted heterogeneous security  of supply standards and in several cases32, they 
have not adopted any standard at all. Eight Me mber States have extended the scope of the 
protection beyond households. The national definiti ons of partial disruption vary from around 
10% (in Slovenia) to around 30% (Slovakia) of  average gas consumption with durations 
ranging from 48 hours (Bulgaria) up  to 6 months (France). Most  Member States use 1-in-20 
or 1-in-50 rules for weather bu t details such as peak duratio n vary. Thus, even though some 
flexibility was intended in th e 2004 Directive, the result in practice does not seem to follow 
any pattern.  The uneven implementation across th e EU is not surprising. With such imprecise 
standards, strict enforcement  is impossible.  
 
(ii) Effective cooperation in dealing with gas supply emergencies in Europe, with pre-
defined emergency plans involving all play ers, at Member State and EU levels, 
minimizing any undermining of the internal  gas market response to disruptions. 
 
For effective cooperation betw een governments on crises wh ich are beyond the capacity of 
the market to handle, Member States must have real emergency plans, they must be shared in 
advance and cooperation arrangements must already be in place. The Directive only requires national emergency measures to be define d in advance of any crisis, published and 
communicated to the Commission. Eighteen Member States have done so. Ten of these have 
developed their national emergency measur es in a systematic way, creating national 
emergency plans.  Others stay at the level of measures. It became clear in the January crisis 
that those Member States which had emergency pl ans in place and tested, were better able to 
mitigate the disruption than other Member States.  The emergency plans are rather different betw een Member States. For example, there are 
substantial differences between Member States in  the roles and responsib ilities for security of 
gas supply. In some cases it is th e Ministry, in others the regula tor, in others the Transmission 
System Operator. The net effect is not conduciv e to easy cooperation at European level in a 
crisis. There are few instances of cooperation or solidarity arrangements in place between 
governments in advance of any crisis.   
 The Community mechanism set out in the Di rective is poorly defined, weak and slow. 
Member States may indicate to the Commissi on events beyond their capacity to manage 
nationally. In such a case, or in a major s upply disruption, the Comm ission convenes the Gas 
Coordination Group and if necessary, the Co mmission submits a proposal to the Council 
concerning further measures. In practice, the Commission has not ch osen to use this relatively 
lengthy, heavy procedure and has preferred to  use the Gas Coordination Group set up under 
the Directive. The information exchanges, discussi ons of best practice etc.  in this group which 
brings together Member States and the gas i ndustry and consumers representatives through 
their European associations (Eurogas, OGP GI E, IFIEC, BEUC, Eurelectric), have proven 
useful and suggest that a pr ocess based on review of plan s by Member States would be 
feasible, effective and flexible to ad apt to sudden crises if necessary.  
 
                                                
 
32 Bulgaria, Greece, Ireland, Luxemburg. 
 
EN 24   EN As noted earlier, agreement on timing of in troduction of emergency action is important, 
particularly if it allows the use of non-market measures. Confusion on timing can undermine 
the effectiveness of the internal gas market in mitigating supply disruptions.   In the January 2009 gas crisis, many considered the current degree of transparency in gas 
flows to be inadequate for decisions by market  participants and govern ments during the crisis. 
A good understanding of the situation, Europe-wid e, in the market and particularly during 
crises, is needed. The reporting  required in the 2004 Directive is clearly insufficient for 
dealing with crises. In additi on, implementation is poor, some Member States do not collect 
the relevant data. Regulators  have proposed developing a harmonised minimum level of 
information to be made available to the market, especially in crisis situations when quick decisions have to be made.   All of these issues constitute weaknesses now, far more than they  were in the past, in today's 
situation in which a gas supply crisis quickly spreads to seve ral Member States and when a 
crisis such as occurred in January 2009 cannot be excluded.  
The Policy Option "Better enforcement and im plementation of the 2004 Directive" is not 
analysed further, essentially because the requ irements are so weakly established in the 2004 
Directive that stronger enfo rcement is not possible.  
 
4.3 Voluntary approach by industr y (self or co-regulation)  
 
(i) Achievement of sufficient flexibility in th e internal gas market to mitigate most gas 
supply disruptions, by establishing the necessary incentives for investments in infrastructures and gas and the well-functioning of the market.   
 There is a strong consensus in Europe that  a transparent, well- func tioning  market with 
supply and demand flexibilities and adequate infr astructures is the best way to mitigate gas 
supply disruptions. Exposing market participants to  the full costs of disr uptions will serve as 
an incentive to provide flexible answers to risks, on both supply and demand sides. Thus 
voluntary approaches by some stakeholders to some aspects of security of supply 
inadequately covered by the Di rective are underway and could be imagined. For example, 
 - improvement of the information and analysis base : Gas Transmission Europe +
33 is 
already working on gas supply disruption scen arios at EU level and on investments in 
reverse flows. 
- coordinated commitments  by infrastructure operators (transmission, storage, LNG, 
interconnections), supported by regulators, to invest in spare capaci ty for security of 
supply purposes could be envisaged. This could be related to the 10-year Network 
Development Plan which should now be prepar ed at Member State, regional and EU 
level by Transmission System Operators.  
- information pooling  to achieve improved transparen cy on gas stocks and flows. 
Regulators have already st arted working on this.  
- commitments by shippers or suppliers  to have back-up contra cts or some equivalent 
insurance or flexibility for a certain proportion of their s upplies could be envisaged. 
                                                 
33 GTE+, the association of gas TSOs in Europe  
 
EN 25   EN The issue of what contracts (fixed, flexible or  back-up) need to be in place, in a cost-
effective security of supply system , is being discussed by the industry34. 
 ii) Effective cooperation in dealing with ga s supply emergencies in Europe, with pre-
defined emergency plans involving all play ers, at Member State and EU levels,  
minimizing any undermining of the internal  gas market response to disruptions. 
 
A disadvantage of a voluntary appro ach is that reliance on market fo rces to deliver security of 
gas supply has limits. Provisions for emergencies ca nnot be left to the ma rket. Participation of 
all participants cannot be guara nteed. Many aspects of security of supply rely on a collective 
effort. Any work of industry on developing standards would need to be followed through into 
a binding instrument. On these grounds, the Po licy Option "Voluntary approach by industry" 
will not reach the objectives sought and is not analysed further.  
 
4.4 Revision of the 2004 Directive  
 
(i) Achievement of sufficient flexibility in th e internal gas market to mitigate most gas 
supply disruptions, by establishing the necessary incentives for investments in infrastructures and gas and the well-functioning of the market.   
 The 2004 Directive established security of supply standards  in terms of the severe weather 
conditions and other disruptions during which it should still be possible to supply protected 
customers from the market, without emergency m easures. In principle, these standards should 
provide clear incentives for investme nts in infrastructures and gas.  
 The Directive left flexibility  for Member States to adapt the prescribed security of supply 
standards to their own sp ecificities and choose their own measur es to enable their standards to 
be met. This reflected the very different situa tions of Member States as regards reliance on 
gas, nature of demand, subs titution possibilities,  availability of indigenous production, 
geographic position, geological pot ential for storage facilities, varying levels of existing 
interconnections etc. Concretely, as demonstrated in Table 1, th e reliance of Member States 
on gas in their primary energy mixes varies  from 2% (Sweden) to 40% (Netherlands, 
Hungary). Member States differ also in the sector al distribution of gas use. In Estonia, almost 
40% of the gas is used in dist rict heating. In Ir eland, 64% is used in  power generation. In 
Slovenia, 74% is used in industry. These figures imply different needs for seasonal flexibility 
(greater for heating), different short-term p eak demand requirements, different possibilities 
for interruptible contracts and fuel substitu tion and fundamentally, different degrees of 
importance attached to security of gas supply. Alongside this, crisis mitigation possibilities 
differ substantially between Member States. Some Member States are well-supplied in 
storage, some are well -interconnected, some have flexible demand.  
 The idea of flexibility in the choice of measur es to deal with gas supply disruptions is 
therefore still valid. The idea of flexibility to set different standards for the type of crisis 
which should be prevented and mitigated is le ss valid. Gas supply di sruptions now spread 
easily throughout the internal market, so it is r easonable to require all Me mber States to make 
provisions to deal with a standard set of supply disruption events . There is little 
justification for the set of disrup tion events to be different. The growing reality of the internal 
market, the prospect of further major gas supply crises, and the consensus that solidarity must 
                                                
 
34 Eg: Private Initiative for Security of Supply, under auspices of German Federal Minister for Economics and 
Technology. 
 
EN 26   EN be underpinned by responsibility , all argue for clear, common security of supply 
standards, with maximum flexibility in the measures used to meet them .  The supply 
disruption events in the 2004 Dire ctive need to be precise and they must relate to today's 
supply disruptions.    In the 2004 Directive, the security  of supply standards relate to (i) customers to be protected, 
(ii) weather conditions during wh ich their demand should be met and (iii) partial disruptions 
of supplies.    Regarding customers to be protected , the 2004 Directive specifies  households and allows 
Member States to extend protection to sma ll and medium-sized enterprises and other 
customers without fuel switching possibilities. The security of the electri city system can also 
be a criterion. It is arguable whether the scope of  customers to be protected should be fixed as 
a common standard or left to Member States . The importance of prot ecting gas supplies to 
particular customer groups (e .g. gas-fired electricity genera tion) varies between Member 
States, which suggests that only a common minimum scope of  protected customers (e.g. 
households) should be fixed. In ad dition, extension of protection w ould diminish the ability of 
the market to handle shocks and would remove incentives on market participants to increase 
own security of supply (as was pointed out by a number of respondents in the public 
consultation). Given internal energy market developments and the objective of increasing 
flexibility in the market, an extension of th e scope of protected customers does not seem 
justified.   Regarding weather conditions , for the peak weather standard, the 1-in-20 rule is currently 
specified but not the peak duration. There is no clear justification for the heterogeneity of durations among Member States which has resulte d. Thus duration should  be specified (e.g. 
extremely cold or hot temperatures during a 7-day peak period occurring statistically once 
every 20 years). Similarly, an extreme winter or summer should be specified (e.g. any period 
of 60 days of exceptionally high gas demand duri ng the coldest or the hottest weather periods 
statistically occurring every 20 years).   For partial disruptions of supplies,  the concept needs to be updated as well as better specified. 
The failure of the largest single infrastructure or supply source  is a realistic scenario 
today, as was demonstrated by the January 2009 crisis.  
 The Commission raised for discussion in the Gas Coordination Group the " n-1"  concept  
commonly used in electricity ne twork planning and operations. It refers to the failure of the 
largest single infrastructure (entry point, production field, LNG termin al, storage etc). In 
principle it could also refer to the largest single supply so urce. The remaining capacities 
should be capable of meeting domestic demand for a specified time period (e.g. 60 days).  
 The idea of using this concept in the EU fr amework for gas security  of supply has been 
cautiously welcomed by most stakeholders, many offering proposals on the details of its 
implementation
35. It could be applied at Member St ate, regional and at EU level. Its 
calculation would demonstrate how fa r from the standard the infrastructure provisions in that 
Member State, region or the EU are. If n-1 is  below 100% (see explanations of calculation in 
                                                 
35 Some Member States (e.g. France, Sp ain) already use the n-1 concept alread y in their planning for security of 
gas supply. Spain's  disruption scen ario, for example, encompasses the failure of a major LNG terminal 
(Barcelona) 
 
EN 27   EN Annex 1), it suggests that the Me mber State, region or EU risks not being able to deal with a 
gas supply crisis which removes from service th e main supply infrastructure The gas situation 
in the Member State, region or the EU may be  such that despite the indicator being below 
100%, the risk of an unmanageab le supply disruption is low. Th is could be the case in a 
Member State with low reliance on gas and stro ng provisions for fuel switching, for example. 
The important issue is whether the risk of a supply disruption which the market cannot handle 
is sufficiently low. This is what is of interest to Member States and market participants in the increasingly integrated internal energy market . Thus, n-1 could be a benchmark, a reference 
scenario against which each Member State, regi on or the EU would do a risk assessment for 
its own situation, and if necessary develop a Preven tive Action Plan to diminish the risk of an 
unmanageable disruption. These risk assessmen ts and the Preventive Action Plans would be 
shared among Member States. Th e Commission would organise a review of risk assessments 
and Preventive Action Plans , involving the Gas Coordination Group, with attention not only 
to the adequacy of the current and planned pr ovisions for security of supply but also for 
compatibility with other Member States' an d regions' risk assessments, coherence of 
provisions in the internal market, possibili ties for cooperation on crisis prevention and 
mitigation and best practice. The Commission would issue recommendations  to the relevant 
Member States or require changes..  
 N-1 is a relatively flexible concept  although  availability of data  is an important 
consideration.  A calculation is shown for illustrative purposes only in Annex 1. This calculation has been kept simple. Security of  supply measures, notably on the demand side, 
are not included in the calculation. They could be brought into the risk assessments. Thus, 
interruptible contracts and provisi ons for fuel switching, if not in cluded in the calculation of 
n-1, could come into the risk assessme nt as security of supply measures. 
 N-1  could in principle apply to supplies as  well as infrastructure. In that case, the 
Commission would propose a definition of wh at would constitute the "same source of 
supply", reflecting physical and commercial realities.   In practice, reducing the risk of unmanag eable gas supply disruptions may depend on 
neighbouring states so a regional approach c ould make sense and indeed be necessary. 
Given the current state of devel opment of the internal gas market , the choice as to whether to 
apply n-1 at Member State or re gional level should be pragmatic , based on the realities in the 
regional market and infrastructu res. For many Member States, it  could make sense in cost-
effectiveness terms. The regions would not nece ssarily coincide with the regions defined in 
ERGEG
36's gas regional initiatives. For a given Me mber State, the regional approach should 
include all interconnected and planned-to-be- interconnected neighbouring Member States.  
 The application of n-1 would also  be envisaged at EU level, w ith use of EU-wide models such 
as MC-Genercis
37 (see Annex 2).  Supply disruption sc enario analyses at regional and 
European levels would support th e assessment of potential impact s at Member State level of a 
disruption and could help in identifying criti cal investment needs. Coordination with the 
proposed 10-year Network Development Plans38 would improve synergy.  Risk assessments 
at Member State level could feed into and be reviewed against the b ackground of analyses of 
                                                 
36 ERGEG – association of European renergy regulators 
37 MC-Genercis, being developed by the Joint Research  Centre, currently enable s the impact of a supply 
disruption in an import pipeline on pipelines and other infrastructure throughout the EU to be modelled 
38 In 3rd internal energy market package 
 
EN 28   EN gas supply disruption scenarios at regional and EU  level. GTE+, the association of TSOs, has 
already started working on EU supply disruptio n scenarios. In the publ ic consultation, there 
was support for the preparation of a yearly European winter outlook report . There is also 
readiness in the Gas Coordina tion Group to periodically discu ss supply disruption scenarios 
and levels of preparedness.   An advantage of using n-1 is that attention is  focused on infrastructu res and possibly supplies 
which are particularly risky in the EU supply sy stem and internal market. A second is that in 
the subsequent risk assessment and Preventiv e Action Plan, Member States would have 
flexibility to bring into play to the whole range of security of supply measures on both supply 
and demand sides which are open to them in th eir particular situations. A third is that a 
region-level application is reas onable and could be chosen by Member States.  These three 
advantages are far less true of two other options for supply and infrastructure standards put 
by the Commission to the Gas Coordination Group.   The option of a security of supply margin  to be maintained in a ll interconnectors and import 
infrastructures as a percentage (e.g. 5%) of the total interconnector capacity was raised in the 
Gas Coordination Group. The defin ition of this margin for securi ty of supply would have to 
be precise, to disti nguish it from other provisions for flexibility. It would normally be 
bookable only on a short term basis, so as to reta in flexibility for use in  managing a crisis. In 
the public consulta tion, a number of responde nts pointed out that th is security of supply 
measure would be expensive. Relative to the n-1 approach, it would be less focused on risky 
or missing infrastructures and supplies in the EU  system. Thus in an EU, regional or Member 
State perspective, it is likely to be  poor in cost-benefit terms.   
 The option of a requireme nt for bidirectional  gas flows  at all borders with other Member 
States was also raised. A variant is that the reverse flows should be at least enough to enable 
supply of all household consumers, if this suppl y can be distinguished from supply of other 
customers. The same arguments of limitation of flexibility and relatively poor focus on 
particularly risky infrastructu res would apply as in the secu rity of supply margin idea. 
However, in cost-benefit terms, given the rela tively low costs of reverse flow provisions, it 
could make sense. GTE+, the association of TSOs, is well-advanced on a study of reverse 
flow projects. Provision has been made in the European Economic Rec overy Plan for funding 
a number of such projects.  To conclude, a security of supply standard for infrastructure, based on the n-1 concept, could 
be defined. It could allow flexibility in it s implementation, including the possibility of 
application at regional level. An EU-level app lication, with supply disr uption scenarios, could 
support its application at regiona l and Member State level and f acilitate consistency with the 
rolling 10-year network development plan. Such a standard, and the accompanying risk 
assessments and preventive action plans, would require a revision of th e 2004 Directive.   
 It is true that most Member States already meet an n-1 standard (see Table 3). The focus in 
terms of necessary infrastructure developments is on a number of missing elements, not in all 
Member States. However, agreement on a sta ndard would provide th e starting point of a 
framework of regular risk assessments. In the developing internal energy market, these risk 
assessments are of mutual interest.     
 
EN 29   EN  (ii) Effective cooperation in dealing with gas supply emergencies in Europe, with pre-
defined emergency plans involving all play ers, at Member State and EU levels, 
minimizing any undermining of the internal  gas market response to disruptions. 
 
Member States are already obliged under the 2004 Directive to publish security of supply 
measures. These need not be emergency plans in the sense of a comprehensive, systematic set 
of measures, with a clear trigger. The Ja nuary 2009 gas crisis unde rlines the need for real 
emergency plans  to be established in all Member States, well in advance of any crisis. An 
emergency plan also needs to be defined in advance at European level and could also make 
sense at regional level. Currently, only  a procedure is defined at EU level39. The idea in the 
2004 Directive is that supply crises would be a ddressed first by the market, then at Member 
State level if necessary and finally at EU level if necessary. Yet in practice, the EU role is important from the earliest stag es, supporting the management of the crisis in the market. In 
the January gas crisis, the Gas Coordinati on Group met regularly, exchanging the latest 
information, and common external action was developed in an EU process led by the 
Presidency and supported by the Commission. In  practice, EU and Member State action 
should be mutually-supportive, wh ile the market is working and when an emergency has to be 
declared and non-market measures launched.  
 To facilitate cooperation at regional and EU leve l in dealing with emergencies, it would make 
sense to agree a common structure and minimum content  for the plans of Member States. 
The Preventive Action Plans as set out in the previous secti on, and the risk assessments 
underpinning them would be fundamental in deve loping emergency plans. It should be clearly 
specified when an emergency would be declared
40. Particularly for emergencies, the roles, 
powers and responsibilitie s of market participants and pub lic authorities should be defined, 
and procedures and measures must be establishe d in advance. There must be an obligation on 
market participants to cooperate. The identific ation of a crisis manager could enable rapid 
cooperation at EU level, inter al ia. There should be an obligation to test out emergency plans.  
 Non-market based instrume nts can be justified only  for the emergency level  and measures 
that could impede flows in the inte rnal market should be specifically authorised by the 
Commission .  
 In general, security of supply policies must be non-discriminatory and compatible with the 
internal energy market. In the January crisis, several Member States brought into operation 
regulations concerning imports of gas or alternative fuels
41. In some instances, the effect was 
to undermine the functioning of the market and imp ede some useful gas flows. Such security 
of supply measures must be proportionate, shoul d disrupt the internal market as little as 
possible and there should be prior information. So me stakeholders argue that assurances are 
needed from all Member States that contract ual commitments (e.g. to give access to stored 
                                                 
39 If measures taken in the market and then by Member  States are not sufficient to deal with the supply 
disruption, the Commission convenes the Gas Coordination Group on its own initiative or at the request of a 
Member State. The Group can assist in the coordination of national measures. The Commission can provide 
guidance to Member States on further measures to assist Member States particularly affected by th e disruption. 
Finally, the Commission can submit a proposal to the Council regarding further necessary measures. 
40 For example, a) normal operational conditions; b) exceptional disruption, but the market is still able to handle 
it; c) Emergency – conditions or sudden crisis in the ener gy market, where the physical safety or security of 
persons, apparatus or installations or system integrity is threatened. 
41 See OIES, March 09 
 
EN 30   EN gas), particularly cross-border commitments, would not be impeded, even in emergency 
situations.   The triggering of a European emergency  has been much discussed. In today's internal 
energy market, it is likely that a major disrupt ion in any Member State will have an impact, 
direct or indirect, across much  of Europe. European action c ould arguably be triggered when 
triggered in one or more Member States.   The crisis managers identified in the nationa l emergency plans should work together in a 
European network , with a clear statement of powers, organisation and actions. The day-to-
day management of the emergency response should be managed by the European Commission in cooperation with national competent authorities. The Gas Coordination Group should continue in its advisory functions. The composition of the Gas Coordination Group 
would need to be upda ted to encompass ACER
42, ENTSO-G43 and the network of crisis 
managers.    In the November 2008 evaluation report, the Commission listed for comment a number of 
actions which could possibly be included in an EU emergency plan : a common declaration 
of an emergency situation, allo cation of available supplies and infrastructure capacity among 
the affected countries, coordinated dispatch ing, activation of emergency measures in 
unaffected or less affected stat es in order to increase the am ount of gas available to the 
affected markets.. At EU level, an EU pro cess could be envisaged to temporarily relax 
security of supply obligations in all Member States, affected or not, for the purpose of 
increasing the amount of gas available to the a ffected markets. Similarly, transmission system 
operators could be requested to ensure availa ble capacity in their transmission systems.   
Some of these ideas for EU emergency actions ar guably make more sense at regional level.   
 No such measures were formally taken in th e January crisis, as pa rt of an emergency 
response. The market response brought addi tional supplies to the affected areas. 
 Developing further the experience of th e January crisis, the deployment of a monitoring 
mission  within or outside the Europe an Union could be envisaged.  
 Where they make sense in te rms of practical cooperation, regional emergency plans  could be 
established and tested. However, it is likely that  most major disruptions at Member State level 
will be taken up at European level. In practice, it is difficult to define the appropriate regions, 
several factors enter into pl ay. A pragmatic "immediate neighbourhood" approach, focusing 
on instances in which a regional approach makes sense (e.g. Baltic Energy Market 
Interconnection Plan) would make more sens e that an artificial layer of cooperation.  
    In general, transparency and exchange of information between Commission, governments, 
regulators, TSOs and other market parties, both under normal market operations to monitor 
the risk of an emergency, and in case of an emergency need to be improved. Regulators are working on a harmonised minimum level of information  to be made available to the 
market, especially in crisis situations. Ho wever, this improved tr ansparency should be 
achievable on the basis of the third internal energy market package, once adopted, and the  
                                                
 
42 (future) Agency for the Cooperation of European Regulators  
43 Organisation for the cooperation of European TSOs dealing with gas 
 
EN 31   EN planned revision of Council Regulation EC N° 736/96  on notification of investment projects 
in the gas, electricity and petroleum sector.   To conclude, the January crisis provided ample demonstration of the need to emergency plans 
to be established in advance of any crisis, at Member State and EU level and at regional level 
when this makes sense. Given the likely EU dimension of any disrup tion and response, there 
must be an obligation to cooperate. These woul d require substantial amendments to the 2004 
Directive.   Thus, amendments to the 2004 Direc tive, notably on security of s upply standards,  related risk 
assessments, regional cooperation, an EU process to ensure mutual consistency of plans, 
supported by EU-level analyses,  obligations concerning emergency plans, would achieve a 
framework ensuring better prep aredness of the EU for possible gas supply disruptions and 
more effective response, primarily in the internal gas market.. The various possible 
amendments have been much discussed by st akeholders in the public consultation and 
elsewhere. This is the firs t short-listed Policy Option.  
 
4.5 A Regulation on gas security of supply  
 
(
i) Achievement of sufficient flexibility in th e internal gas market to mitigate most gas 
supply disruptions, by establishing the necessary incentives for investments in infrastructures and gas and the well-functioning of the market.   
(ii) Effective cooperation in dealing with gas supply emergencies in Europe, with pre-
defined emergency plans involving all play ers, at Member State and EU levels, 
minimizing any undermining of the intern al gas market response to disruptions
. 
The main issue here is whether a Regulation w ould be a better and feasible vehicle for the 
substantial amendments to the 2004 Directive ou tlined in the Policy Option "Revision of the 
2004 Directive".  Timing is one factor. A Regulation could be oper ational well before a Directive. There is a 
real risk of repetition of ga s supply disruptions such as in  January 2009 in the short and 
medium term, so the sooner a clear EU framework is in place, the better.  
  Clarity is a second factor. In a Regulation, common standards for security of supply could be 
directly applicable  to the market participants, notably  the Transmission System Operators 
and the gas suppliers. The current situation in  the Directive of having Member States set 
standards to be implemented s ubsequently by market particip ants, may well be a weakness, 
having the effect of distancing participants from  their responsibilities. As the internal gas 
market develops, the need for a level playing field  in terms of obligatio ns on market players 
for security of supply increases in the competitive part of the market.  
 As noted earlier, Member States are in very di fferent situations as regards reliance on gas and 
possibilities of mitigating supply disruptio ns. The n-1 approach envisaged for an 
infrastructure standard focuses on weaknesses in  infrastructures. Those Member States which 
are already well provided with infrastructures would have no extra burden in meeting such a 
standard. The implementation of an n-1 approach  could also allow a certain flexibility, with 
the possibility of regional approaches, for example.    The arguments for direct application are even  stronger as regards em ergency plans. There 
must be a clear obligation to cooperate. There must also be clarity on who is doing what, 
 
EN 32   EN when, coming up to and during an emergency. A wide range of participants across Europe 
will be involved. Clear definition of roles and procedures and a clear obligation to cooperate 
in this collective  effort is essential. A Regulation could establish th is more effectively and 
quickly than a Directive.   Thus, a "Regulation on gas security of s upply" would enable th e achievement of the 
objectives, should be feasible, could offer advant ages over a Directive in terms of timing and 
clear, direct application, a nd is the second short-listed Po licy Option. There has been some 
support in the public cons ultation for this option. 
  
Section 5: Analysis of impacts  
 
5.1. Economic impacts  
Investment costs 
The economic impacts of both short listed Policy Options would be dominated by the 
investment costs and the resultant benefits of the implementation of n-1 and subsequent 
Preventive Action Plans . Reverse flow capacities could be in cluded in the calc ulation of n-1 
or in the Preventive Action Plans. Costs could be spread over a number of years. 
 A very preliminary calculation  of n-1 for Member States ha s been done, for illustrative  
purposes only in  this Impact Assessment.  
 
Table 4: Preliminary calculati on of n-1 for Member States:   
See Annex 1 for explanati on of the calculation 
  
Mcm/day Production 
withdrawal 
capacity  Maximal 
Consumption*  Storage 
Withdrawal 
capacity  LNG 
send-
out 
capacityIncoming 
Pipeline 
Capacity  Single 
Largest 
Infrastructure  N-1 
AT 12,16 49,41 48,00 0,00 137,52 125,94 145% 
BE 0,00 139,20 22,80 24,70 321,61 94,43 197% 
BG 0,30 15,60 4,20 0,00 72,00 72,00 29% 
CY 0,00 0,00 0,00 0,00 0,00 0,00 - 
CZ 0,30 67,60 55,01 0,00 185,98 141,94 147% 
DE 45,00 400,00 463,32 0,00 579,44 105,96 245% 
DK 29,90 25,70 18,80 0,00 0,00 29,90 73% 
EE 0,00 4,30 0,00 0,00 22,99 16,80 144% 
ES 0,00 160,20 10,54 160,90 67,01 39,70 124% 
FI 0,00 1,00 0,00 0,00 20,68 20,68 0% 
FR 2,40 370,00 231,00 42,44 156,28 50,00 103% 
GR 0,00 14,00 0,00 13,69 38,36 19,20 235% 
HU 9,00 92,50 47,50 0,00 58,04 39,80 81% 
IE 1,00 20,30 2,60 0,00 30,00 30,00 18% 
IT 24,00 425,00 295,85 35,00 284,80 114,60 124% 
LT 0,00 16,00 0,00 0,00 39,11 30,00 57% 
LU 0,00 5,98 0,00 0,00 11,30 4,93 107% 
LV 0,00 9,00 14,69 0,00 24,64 24,64 163% 
MT 0,00 0,00 0,00 0,00 0,00 0,00 - 
NL 440,00 235,00 153,02 0,00 95,62 300,00 165% 
PL 6,48 59,71 34,20 0,00 147,56 108,00 134% 
PT 0,00 19,30 7,00 14,20 13,21 14,20 105% 
RO 34,30 75,00 25,80 0,00 113,00 102,00 95% 
 
EN 33   EN SE 0,00 6,00 0,60 0,00 8,49 8,49 10% 
SI 0,00 5,80 0,00 0,00 14,53 10,13 76% 
SK 0,30 29,90 34,87 0,00 301,00 301,00 118% 
UK 231,00 536,00 126,57 84,56 241,34 73,70 114% 
*(1-in-20 winter case) 
Sources: IHS, Gas Coordination Group 
 
The major infrastructure – "1" in "n-1" - is th e main import pipeline in most Member States. 
For UK, Netherlands and Denmark, it is the main  production facility. Fo r Spain and Portugal, 
it is the main LNG terminal. In many of the importing countries, storage is important but 
usually the main import pipeline has a higher capacity than the main  storage facility.  
 Based on this preliminary calcula tion, nine Member States do not meet the n-1 standard (see 
also Table 3). These Member States are in a va riety of situations, and can bring a variety of 
security of supply measures to bear and coul d develop regional cooperation. Sweden, Finland, 
Denmark, Lithuania and Ireland, for example, ar e relatively poorly conn ected to the network. 
However, Sweden relies very little on gas in its energy mix (2%). Finlan d's gas users, mainly 
in industry, have made substantial fuel swit ching provisions. Denmar k, Lithuania and Ireland 
are focusing on the construction of new interc onnectors and other infrastructures. Bulgaria 
and Hungary are far from meeting the standar d, Romania and Slovenia so mewhat less so. The 
impact of these infrastructure inadequacies was evident in the January gas crisis.  On the basis 
of such calculations, and subsequent risk assessments and Preventive Action Plans by 
Member States, a good idea of necessary infras tructure developments can be developed.  
 While the detailed risk assessments would still need to be done by Member States, it is clear that many of the necessary infrastructure project s are in the list of eligible projects in the 
European Economic Recovery Plan  (Annex 3 for details). N-1 goes above 100% for several 
Member States if eligible projects are incl uded (see Table 3). The assumption that these 
projects will all be constructed has been made in the Table. Provisions in the Recovery Plan 
for reverse flow projects (80m€) have not been allocated in it.   As the  total European Economic Recovery Plan  support for gas infrastructure projects is 
1440m€ over two years, a maximum of 50% of the eligible project costs during that time, then 
as  an order of magnitude, the n-1 standard  applied Europe wide, could imply an investment 
cost of a few b€. However, if the projects ar e already launched under the European Economic 
Recovery Plan, the extra investment costs from  the application of the n-1 standard Europe-
wide would be smaller.   Gas Transmission Europe has prepared a prelim inary overview of reverse flow projects which 
would improve security of supply in Europe. Ov er forty projects have been identified for a 
total investment cost of about 1.5b€.   All of these investment costs would normally be  reflected in regulated gas transport tariffs, 
through an allowable rate of re turn. Thus the costs would nor mally be spread over all gas 
consumers. A very rough estimate of what this could mean for households could go as follows: natural gas prices for households in EU-27 including excise taxes were 18.01€/GJ 
(GCV)
44; final gas consumption by households and services is some 8,000,000 TJ(GCV)45; 
                                                 
44 Eurostat, 2007 prices 
45 Eurostat, 2005 consumption 
 
EN 34   EN thus some 144b€ is spent by households and services on final gas consumption each year. 
Thus, additional costs amounting to as few b€ over several years for investments in 
infrastructures for security of supply would be relatively small compar ed to total household 
gas bills and smaller still compared to total gas b ills in Europe. It is evident, however, that this 
is the roughest of calculations. Gas prices sti ll vary substantially across Europe and between 
households and industrial customer s. Investments are needed more in some Member States 
than in others. Thus the imp act on household customers and indus try in some Member States 
could be significant.  The January gas crisis gave some idea of the bene fits of avoided gas supply disruptions at the 
level of consumers. Estimates, related mainly to involuntary restrictio ns of gas supplies to 
industry, are 1000m€ in Slovakia, 25 5m€ in Bulgaria, 70m€ in Hungary
46. Thus 1-2b€, which 
is still small compared to the total paid for gas in Europe, but concentrated in a small number of Member States.   A regional approach to n- 1 could in principle be more cost -effective. However, it must be 
justifiable by market integration in th e region and existing in frastructure links. 
 
Impact on the internal market and other economic impacts : 
 Security of supply has a cost. One way or anot her, there needs to be some flexibility and 
redundancy in the system if gas su pply disruptions are to be ma naged. The main benefit of the 
n-1 standard and related risk assessments and Preventive Action Plans would be in focusing 
efforts on the remaining weak infrastructures and supplies in Europe, requiring improvements 
where they are actually needed.   Both Policy Options would build  confidence in provi sions for security of gas supply across 
Europe. They would also create the conditions  for effective coopera tion and solidarity in 
dealing with emergencies, allowing the internal market to work as long as possible. Thus there would be a positive interaction with the internal market  through strengthening 
incentives for investment, assessing investments in a regional and EU pr ocess, creating a level 
playing field in terms of security of suppl y obligations, and clearly delimiting emergency 
situations in which non-market instruments coul d be brought into play.  The infrastructure 
improvements, such as more flexible interconnections, should improve trade possibilities, liquidity and price formation in the internal market as well as security of supply.    
 A Regulation, through the direct application of  standards to market participants, could 
arguably encourage investment and ensure in ternal market benefits more directly.  
 The spillover from gas security of  supply into security of electricity supply  raises the stakes, 
given increasing reliance of the European ec onomy on electricity. For example, in late-2008, 
reserves in the Spanish hydroelect rical system were very low. As evidenced in the Quarterly 
Report on European Electricity Markets
47, the stored energy that could have been retrieved 
from the hydro system during a given week in  the fourth quarter was some 1,4 TWh lower 
than the 10-year average. Spain uses 44% of its  gas for power generation. About a third of its 
                                                 
46 Peter Kaderjak, Regional Center for Energy Policy Research, Corvinus University of Budapest; presentation of 
3 April 2009  
47 "Quarterly Report on European Elect ricity Markets", Market Observatory for Energy, Vol 1, Issue 3, Oct-Dec 
2008 
 
EN 35   EN power generation is gas-fired. T hus a gas supply failure during th is time would have been felt 
throughout the electricity system. The reverse situation in South East Europe during the 
January 2009 gas crisis (see 5.2 be low) was simply fortuitous.  
  
Administrative burden 
The administrative costs for businesses of bot h short-listed Policy Options are marginal. 
There are no new reporting obligations. This is why the EU Standard Cost Model has not been 
used in this Impact Assessment.   There could be an increase in administrative costs for public authorities compared to the 
current situation. Thes e would be related to the calcul ation of n-1 and development of 
emergency plans. The administrative costs would be lower for a Regulation which is directly 
applicable and would require no transposition to national le gislation. The costs would be 
marginal compared to investment and other cost s. This is why the EU Standard Cost Model 
has not been used in th is Impact Assessment. 
 
5.2 Social impacts 
 
As regards jobs, the substantial use of gas in industry suggests that job losse s are possible as a 
direct result of any lack of c onfidence in supplies. Some 25% of  gas consumption in the EU is 
in industry (fertilizers, other chemicals etc) . Industry has a particularly high share of 
consumption in Finland (91%), Bulgaria (89%),  Slovenia (81%). Interr uption of supplies to 
such enterprises, often continuously running, is a negative factor, undermining 
competitiveness. Provisions for fuel switching at  customer level are normally quite costly. In 
addition to the cost of set-aside resources, ther e would often be a CO2 emissions cost related 
to relatively higher emissions from back-up and substitute fuels (see below).   Some 26% of gas in Europe is used directly by households, othe rs rely on gas-fired district 
heating. Gas supply crises will  have a direct impact on these consumers, often vulnerable. 
There is a limit to how easily households can reso rt to electricity for heating or cooling. A gas 
crisis in Europe will normally put electricity prices up. The January crisis could have been 
much more difficult for people in South East Eu rope but for the coinci dence that heavy rain 
facilitated very large hydropower pr oduction, averting an electricity crisis
48.  
 While provisions for security of  supply will certainly be felt in  the prices paid by customers 
for gas, a Directive or Regulation enabli ng a focus on the necessary provisions would 
minimise the additional costs and limit tariff increases.  
5.3  Environmental impacts 
 
The continuation of inefficient gas security of supply arrangements in Europe could have an 
impact on the environment, climate and sustainable development.   The question of whether Europe should be investi ng further in infrastructures for fossil fuels, 
given prospects of depletion, uncertainty a bout future energy and gas demand and the 
growing contribution of alternative fuels has been raised. However, as demonstrated by 
alternative scenario analyses
49, Europe will continue to depend on imports of gas until at least 
                                                 
48 "The impact of the Russia-Ukraine gas crisis in South Eastern Europe", Kovacevic, OIES, March 2009  
49 See scenarios in 2nd Strategic Energy Review 
 
EN 36   EN 2020 and on to 2030. Gas has an important role as a transition fuel in the move towards a 
high-efficiency, low-carbon energy system.   Like any other infrastructure development, ne w investments in gas infrastructures will have 
environmental impacts (e.g. biodiversity). The fact that many gas pipelines are underground 
should help. Planning of additional infrastructu res to identify those which would have most 
impact on security of supply, using the flexib ilities offered by the internal energy market, 
should minimise the total environmental impact s. The minimisation of  necessary provisions 
for back-up fuels should also he lp, particularly in the period  when low-carbon fuels are not 
sufficiently developed or available.   
 
Section 6: Comparing the options  
 
The impacts of the baseline option and two shor t-listed Policy Options can be compared as 
follows:    
Policy 
Option Effectiveness in 
achieving objectives Efficiency Coherence 
No new 
EU policy May partially deliver, 
through the 3rd IEM 
package, the European Economic Recovery Plan, TEN-E, the existing 2004 gas security of supply Directive and cooperation on emergency planning following the January gas crisis. Nevertheless, an EU framework is still needed to ensure that 
actions of Member 
States  for security of 
gas supply, notably during crises, do not undermine the growing capacity of the market to deal with disruptions, that the 
standards for security 
of supply which market participants 
should meet  are clear 
to all, and that the 
potential of the 
internal gas market  to 
deal with supply disruptions is Implementation of 3
rd 
package likely to need support, notably assessments of potential gas supply disruptions at EU level and practical guidance to TSOs and regulators; current security of supply standards in the 2004 Directive too imprecise. Not relevant 
 
EN 37   EN developed and used.  
Revision 
of Directive  Yes Would imply well-
focused, limited investment costs; would ensure that the potential of the internal gas market to deal with supply disruptions is 
developed and used. 
would imply administrative burden on public authorities as regards calculation of n-1 standard and emergency provisions   Would have a positive effect 
on the development and functioning of the internal energy market; positive effect on the environment, notably by reducing unplanned recourse to higher-emissions substitute fuels; positive 
effect on competitiveness and 
jobs in gas-using industry, and on households.  
New Regulation  Yes Compared to a 
revision of the Directive, would have the advantage of being operational more quickly; a major gas supply disruption could happen anytime; also a more direct impact  on provisions and investments by market participants; would be more effective in achieving clear arrangements for cooperation around emergencies with clear obligation to cooperate; comparable administrative burden on public authorities as regards emergency provisions;  It would constitute a more 
direct engagement of public authorities and market participants in security of gas supply in an EU perspective, with systems in place earlier. The costs would not be very different from those implied in the revision of the Directive  
 
 
Both short-listed Policy Options would have  similar economic, social and environmental 
impacts compared to the option of no new EU  policy. The major difference between them 
concerns the speed and effectiveness of thei r implementation. Arguably the Regulation option 
is more likely to be effective (clearly attribut ing responsibilities to ma rket participants, clear 
 
EN 38   EN obligation to cooperate around emerge ncies), fair (a leve l playing field in te rms of security of 
supply obligations) and could be in place and in effect more quickly.  
 The importance of getting the necessary improve ments in the EU regulatory framework in 
place quickly needs to be appreciated. Decisi ons taken now in the energy system (e.g. on 
coal-fired power generation) will lock in t echnologies for decades to come. Investment 
decisions not taken now will lead to energy supply and transport constraints and high prices in 
due course, when economic growth restarts. As demonstrated in the preliminary calculation of 
n-1, the projects in the European Economic Rec overy Plan are crucial in meeting reasonable 
security of supply standards. In the current economic and financial cl imate, clear  incentives 
for investment are of fundamental importance.  The Skanled gas pipeline, for example, an 
eligible project in the Recovery Plan, has been suspended by its promoters. In this context, it 
is all the more important to have a clear, rele vant regulatory framework for security of supply 
quickly in place.  
Section 7: Monitoring and evaluation  
 
A reporting and monitoring system is in place for the internal energy market. This system 
yields data which is relevant for security  of supply purposes. Council Regulation EC 736/96 
on notification of investment projects in the ga s, electricity and petr oleum sectors will be 
revised. With input from these, monitoring a nd evaluation mechanisms specifically focused 
on security of supply can be strengthened.   The role of the Gas Coordination Group could be expanded to include regular monitoring and 
assessment, drawing inter alia from the envi saged review of risk assessments by Member 
States.   
 
 
 
EN 39   EN ANNEX 1: Possible calculat ion of the n-1 standard  
 
Please note that the proposal for a Regulation includes a more precise calculation of n-1. 
This simplified calculation is for illustra tive purposes only in this Impact Assessment. 
Nevertheless, the results in terms of the n-1 indi cator are unlikely to be very different.    
 
Technical capacity50 (contracted capacity51 plus available capacity52) of all gas supply 
infrastructure in the event of disruption of th e single largest infrastruc ture should be greater 
than demand for deliveries in a 60 days pe riod of high demand, after taking into account 
interruptible contracts and demonstrated fuel switch possibilities.  
 
The N-1 indicator, calculated as be low, should be higher than 100%.  
………………………. IPm+Pm+Sm+LNGm – Im  
N-1[%] = --------------- ----------------- ------------- * 100, N-1 > 100%  
………………………………………. Dmax  
Definitions required for the calcu lation of the N-1 indicator: 
IPm – Maximum technical capacity of import pipe lines (mcm/d) to the calculated region. It 
includes reverse flow possibilities, tr ansit inflow and outflow capacity.  
Pm – Maximum production capacity (mcm/d) in calculated area for at least the 60 days 
period. 
Sm – Crisis deliverability (mcm/d) – the sum of maximum rates at which storage facility users 
in the calculated area can withdraw gas from the storage facility ove r at least the 60 days 
period. 
LNGm – Maximum LNG facility ca pacity (mcm/d), taking into account critical elements like 
maximum ships and storage capacities availabili ty and technical send-out capacity to the 
system, providing gas over the 60 days  period to the calculated area.  
Im – Single largest gas infrastructure (mcm/d ) suppling the calculated area with gas.  
 Dmax – Gas demand in mcm/d, related to the lowest temperature in last 20 years
                                                
 
50 Draft Regulation (EC) No …/… of the European Parliament and of the Council on conditions for access to the natural gas trans mission networks and repealing Regulation 
(EC) No 1775/2005 Art.2 (18) "technical capacity" means the maximum firm capacity that the transmission system operator can off er to the network users, taking account of 
system integrity and the operational requirements of the transmission network; 
51 Art.2 (19) "contracted capacity" means capacity that the transmission system operator has allocated to a network user by mea ns of a transportation contract; 
52 Art.2 (20) "available capacity" means the part of the technical capacity that is not allocated and is still available to the  system at that moment; 
 
EN 40   EN Annex 2: MC-GENERCIS model 
The Joint Research Centre has developed a mode l of the European gas network which helps in 
understanding the distribution of flows in any given situation. Startin g from a particular 
situation in a given region, the model distributes the eventual surplus of gas using the Monte-
Carlo approach53. A situation is only defined by the following set of variables: 
1. Production withdrawal capacity 
2. Consumption 
3. Storage withdrawal capacity 
4. LNG send-out capacity 
5. Incoming pipeline capacity, includi ng possible reverse flows. 
The model can handle any modification of the set of variables, for example, the January gas 
crisis or any kind of techni cal problem affecting the above mentioned capacities. MC-
GENERCIS calculates for the gas system of e ach region the likelihood of disruption, the 
mean value of imbalances (supply/demand), as  well as the pipeline utilisation rate. The 
following maps compare the situation of the European gas network during a normal winter 
day with the first day following the outbr eak of the January Ukraine-Russian crisis. 
Even though MC-GENERCIS is already producing pr omising results, it still has potential for 
improvement. The current version is time-independe nt and the spatial resolution is limited to 
country level. In addition, the iteration proces s could be improved to eliminate unrealistic 
dispatching strategies. 
MC-GENERCIS has clear connec tions to the N-1 approach. Both try to evaluate the 
vulnerability of the gas system. The N-1 approach  looks at the vulnerability of each country in 
absolute terms, and provides a benchmark;  MC-GENERCIS estimat es the likelihood of 
disruption deriving from a concrete situation, in  each and every region of the gas network. 
Taking the recent January crisis as an exam ple, we can compare the average value of 
imbalance calculated by MC-GENERCIS with the N-1 results, for each Member State. 
Similarly, we can compare the normal winter day case from GENERCIS to N situation, with 
the supply-demand balance of the system usi ng the N-1 approach and not taking into account 
the removal of the single largest infrastructure.  
                                                 
53 As it is impossible for to predict the behaviour  of TSOs in real time during a disruption, the 
model evaluates the possible set of “dispatching st rategies” the system offers, applying a large 
number of iterations.  
 
 
EN 41   EN 
 
 
EN 42   EN 
 
 
EN 43   EN ANNEX 3:  Extract from European Economic Re covery Plan - Eligible projects 
 
A. INTERCONNECTORS 1. Gas interconnectors 
Project Location of projects 
supported Envisaged 
Community contribution (€ million) 
Southern Gas Corridor 
Nabucco 
  ITGI – Poseidon  
Austria, Hungary, Bulgaria, Germany, Romania Italy, Greece  200
100
Baltic interconnection 
Skanled  
Poland, Denmark, Sweden 150
LNG network 
Liquefied Natural Gas terminal at Polish coast at 
port of Świnoujście   
Poland 80
Central and South East Europe 
Slovakia-Hungary Interconnector 
(Velky Krtis – Vecsés ) 
Gas transmission system in Slovenia between the Austrian Border to Lj ubljana (excluding the 
section Rogatec-Kidri čevo)  
Interconnection Bulgaria-Greece (Stara Zagora - Dimitrovgrad
-Komotini) 
Romania-Hungary gas interconnector Expansion of Gas Storage Capacity in the Czech hub Infrastructure and equipment to permit reverse gas flow in the event of short term supply disruption    Slovakia-Poland interconnection Hungary-Croatia interconnection Bulgaria-Romania interconnection  
Slovakia, Hungary  Slovenia   Bulgaria, Greece  Romania, Hungary Czech Republic  Austria, Bulgaria, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Romania, Slovakia Slovakia, Poland Hungary Bulgaria, Romania 30
40
45
30
35
80 
20
2010
Mediterranean 
Reinforcement of FR ga s network on the Africa-
Spain-France axis   
France 200
 
EN 44   EN GALSI (Gazoduc Algérie-Italie)  
Gas Interconnection Western Axis Larrau Branch 
 Italy 
Spain     120
45
North Sea area 
Germany-Belgium-United Kingdom pipeline 
France-Belgium connection  
Belgium France, Belgium 35
200
TOTAL  1440
 
 
 
EN 45   EN Annex 4:  Main findings of the public consultation on the revision of the 2004/67 
Directive concerning measures to safe guard security of natural gas supply  
General remarks 
As a follow-up of the publication of the S econd Strategic Energy Review package, a 
public consultation was open between Novemb er 2008 and March 2009, in order to seek 
views and proposals on the revision of the 2004/67 Directive concer ning measures to 
safeguard security of natural gas supply. The Commission received 22 feedbacks from 
Member States (5), Regulators (1 individual and 2 umbrella organizations), infrastructure 
operators (1), one member of the electricity indu stry (1) and members of the gas industry (12). 
Apart from the individual companies, the main  associations of gas supplier, trader and 
infrastructure undertakings also expressed their views. 
Questions 
1. How to define comparable security of s upply standards that put equal, reasonable 
burden on market participants while respecting the differences between Member 
States? 
Seven respondents – two Member States, infras tructure operators, and members of the gas 
industry emphasized that differences among Member  States (in supply diversity, demand side 
flexibility, storage position, public  sector obligations, risks to  supply, fuel mix etc.) are 
significant, therefore an indivi dual approach respecting these di fferences is needed. At the 
same time it was considered essential by th ese respondents that a common and comparable 
level of security – which is defined by the EU – is reached so shortages or supply disruptions 
can be managed successfully on European level. Creation of a “toolbox” of security of supply 
measures was considered, to reach th e afore-mentioned level of security. 
The comparable security of supply standards and level of preparedne ss is a precondition to 
prevent "free-riding" when solidarity actions ar e implemented. Standards could also reduce ad 
hoc political intervention in cas e of a crisis. Those Member St ates bearing more risks should 
consequently take additional measures (e.g. de mand side responses, greater storage levels 
etc.) to provide the adeq uate level of security. 
Two Member States and a company suggest ed that the Commission should organize a 
workshop on preparedness in cooperation with IEA. 
Members of industry, a Member Stat e and a regulator organization [ CEER ] emphasized 
that Member States should have autonomy in setting these standards. A Member State and a company fully rejected the idea of having EU-wide standards for security of supply. 
The following ideas were submitted for the proposals of security of supply standards: 
• In case of the  N-1 rule the general idea was supported bu t short-term feasibility was 
questioned – as data is difficult to collect – and a transition time for its introduction was 
recommended. Other contributions asked for further information and more detailed 
definition on the application of the rule.  
Member States submitted proposals to this rule such as:  
- not only the infrastructure but availability of gas shoul d be taken into account  
 
EN 46   EN - demand side measures (fuel switch, interrup tible contracts) and s upply flexibility should 
also be considered  
- only the infrastructure supplying the domes tic market should be taken into account 
(excluding transit and stocks to other markets)  
- “N-1” should be the only standard, no need fo r separate bi-directional- flow or security of 
supply margin standards  
While for some respondents "N-1 " could constitute a robust and single security of supply 
standard, others doubt that  it should be introduced as an EU-wide standard. 
• Bi-directional flows  were seen as a useful tool for e nhancing security of supply. In their 
case the definition of an exact percentage of bi-directional ca pacity, the question regarding 
tariffs, covering of costs (the beneficiary is sometimes differe nt than the investor) and gas 
quality harmonisation are to be further examined. 
 
• The concept of  security of supply margin was challenged. It is yet to be decided upon 
who would cover the costs and how  could unused capacity be uti lized at locati ons where it 
may not be needed under normal market condi tions. One way to solve this problem was 
proposed in the form of using the extra capacity in the form of interruptible contracts. 
Another proposal was to define the margin on country or on regional but not single entry-
point level. Some views supported security of supply margin to be introduced based on its 
practice in the electricity sector.  
One MS proposed new standards: 
• "Expected energy unserved"  - measuring the likelihood of different gas supply 
shortfalls in one probability /weighted measure. Its drawback however is that it is 
complicated to calculate and de pends on many input assumptions. 
• "Supply/demand margin"  - 3 types: 
1. capacity margin  measuring the "spare" capacity  - domestic production, import 
infrastructure, storage vs. peak day demand in a cold winter 
2. de/rated capacity margin  estimating not only the capa city but also the likelihood - 
applying less than 100% probability to each piece of infrastructure based on models 
3. duration-based capacity margin  calculating margin over al l 180 days in the winter 
assuming storage withdr awal and no re-fill 
• Standards measuring two or three key risks  that a Member State could face and 
calculate the likelihood of thos e events and gas shortfall. 
• Supply diversity indicator  showing the rate of diversity for both source and route in the 
supply portfolio. 
Four members of the gas and electricity in dustry, infrastructure operators and two 
Member States recommended conducting ri sk assessments based on a harmonized 
methodology for each Member State about nationa l gas markets, fuel switch opportunities, 
range of protected customers, bottlenecks, co ngestion points, demand in extreme situations 
and other vulnerabilities. Such assessments could provide a solid base for emergency response 
plans. 
 
EN 47   EN Scenarios and disruption models  – preferably coordinated an d developed on regional level 
– would make it easier to assess the impacts of a crisis and may help in identifying critical 
points of investment. Coordina tion with the proposed 10-year  Network Development Plans 
would improve synergy in this aspect. 
The possible need for transition periods was mentioned by two members of the industry. 
A Member State suggested that compliance with  the standards on the medium term could be 
an objective for all European countries. 
2. Should the Directive extend mandatory pr otection beyond households to power 
generators, small and medium sized ent erprises or other vulnerable customers? 
Views on the extension of mandatory protecti on were split. On one hand according to two 
respondents, the importance of security of es sential service provide rs (e.g. hospitals) was 
emphasized and it was noted that certain gas fired power plants and CHP units may be 
considered eligible for protection (residential consumers are likely to switch to electricity in time of a gas crisis, which results in incr eased demand in power generation). However, 
obligatory protection of certain customers (e .g. power plants) may prove unnecessary in 
certain Member States with low share of gas in the fuel mix, representing additional burdens. 
Market-detrimental effects could be minimi zed by setting a time limit for the period of 
protection. 
According to the approach of six other re spondents, market should face the risks and 
market participants should look after their ow n security as alternative means are available 
even in case of a high level of dependenc y. Broadening the scope  would put supply of 
households to a risk and "overprotection" would decrease the ability of the market to handle 
shocks and remove incentives to increase own security of supply. 
There were also more flexible responses stati ng that it should be Member States' privilege 
to define the range of protected consumers, a nd that mandatory protection should be extended 
only to those consumers that have no real altern ative to using gas. Consumers with dual-firing 
capabilities, interruptible contracts or st orage capabilities shou ld not be protected. 
3. What should be the precise actions defi ned in the Community mechanism, in the 
regional and EU emergency plans? 
Contributions were clear and unambiguous that in case of an emergency, market 
mechanisms should be used as long as po ssible and emergency measures, solidarity 
mechanisms and government interven tion should be a last resort.  
Respondents also emphasized that transparency of  data is essential for the market to be 
able to deliver. 
Both these topics are covered in the upcom ing Third Package, therefore they are not 
further discussed in the public consultation. 
Several respondents highlighted  the need for harmonized ro les and responsibilities of 
regulators and market participants. As these ar e also described in the Third Package, any 
further legislation is required only for those ca ses, when these roles and responsibilities are 
changed or expanded. 
 
EN 48   EN Respondents agreed that nationa l emergency plans are needed, to provide mechanisms to 
manage a supply crisis. These plans shoul d be transparent, regularly updated and 
communicated in advance to market participan ts and also to other Member States (peer 
review). They should preferably be based on a harmonized European-level scheme and 
planned on regional level so measures of a Me mber State do not have any unexpected adverse 
effects on another country.54 Regional coordination would in itsel f contribute to a higher level 
of security of supply. 
Regulators invited the Commission to ensure that authorities responsible for defining 
security of supply schemes are the same in all Member States and adequate methods are developed to harmonize national emergency plans. The idea of setting up a network of emergency contact points was proposed by two Member States.  
Cooperation on regional level was supported by  both Member States , regulators and the 
industry. However, views on the scope and field of cooperation varied. The following 
proposals were put forward:  
• regional trading platforms  
• regional emergency plans ,  
• regional solidarity mechanisms,  
• Member States to establish regional em ergency response communication networks  
• declaring emergency and applying measures  should be decided and coordinated on 
regional or EU level. 
The question of emergency levels was also reflected upon. At present, Member States 
define different levels of emer gency with different measures. In  many cases one or more "pre-
emergency" levels exist that re flect a deviation from normal s ituation but which can still be 
managed efficiently and effectively by open market mechanisms. In order to ensure 
comparability and compatibility, it must be discussed to what extent the levels (concerning their scaling and basic characteristics) should  and could be alike on the regional or on a 
Community level. The different structure of gas markets, consumption patterns and public 
service obligations of market participants in th e Member States require careful examination to 
see if such compatibility and co mparability may still be reached. 
The Gas Coordination Group was pr oposed to receive a more serious role of monitoring 
and coordination and information exch ange in the event of a crisis.  
There was no clear view on solidarity mechanis ms. IE proposed that each Member State 
should be required to provide a ssistance to neighbouring countries  to ensure that supply of 
households is provided. 
4. How should the regions for security  of gas supply be best defined? 
The regional approach was supported by respondents. When defining the regions, 
technical issues, such as existing and pla nned interconnections, predominant gas flows, 
location of storage and import facilities an d existing bi- or multilateral agreements for 
                                                
 
54 Regulators [ CEER ] expressed that Member States should have autonomy in defining the measures to to ensure 
security of supply.  
 
 
EN 49   EN emergency situations should be taken into account. ERGEG's Gas Regional Initiatives could 
be a good starting point. Purely admini strative grouping should be avoided. 
5. How can solidarity be economically compensated? 
The answers to this question reflect that soli darity is considered a marginal option, which 
preferably should not be used. However, if it is, then it should be based on pre-agreements 
between the operators and it should be compensa ted by market terms (e xtra tariffs etc.). 
Reservation of capacity rights or  purchase of gas for solidarity reasons is to be compensated 
also in non-emergency situations. In orde r to enhance solidarity through market-based 
measures, regulators consider it should be gua ranteed on governmental level that contractual 
obligations are fulfilled also  in emergency situations. 
Possible solidarity measures should be known to  market participants and conditions must 
be examined how the extra costs of a solidarity action would be covered. 
6. How can security of gas supply be strengthened at lowest cost? 
It is of common understanding among the responde nts  that a transparent, well-integrated, 
fully functional, open and competitive market with supply and demand flexibilities is a first step and a basic guarant ee to prevent and mitigate supply disruptions. (Existing legislation 
and the proposals of the Third Package should be correctly implemented.) In case of a failure, 
market mechanisms should be the first set of tools to be used. Solid arity and government 
intervention may be applied as a last resort only if the market  is unable to cope with the 
problems arisen. (National security of supply measur es should be reviewed to ensure that they 
do not hinder competition in an excessive way.) 
In an open, fully liberalized gas market, where effective gas-to-gas competition exists and 
market participants can access transmission a nd storage infrastructure, both producers and 
consumers can flexibly respond to changing market circumstances. Transparency of 
information should help better capacity allocation and congestion management. 
At the same time, exposing market participants  to the full costs of disruptions, may serve 
as an incentive to take precautionary measures  and provide flexible answers to risks. 
Promotion and transparent operati on of commercial storages, di verse supply interconnections, 
rapid demand reduction through interr uptible contracts are also suit able tools to tackle supply 
problems. 
The idea of setting up ACER (Agency fo r Cooperation of Energy Regulators) and 
enhancing the power of regulators is considered as a step towards greater predictability of 
European energy regulation.