Logistics management in gas commercialization

The completion of the natural gas market liberalization process in Spain, characterized by the ability of consumers to choose their supplier, has set a new framework for action for companies in the industry.

On the one hand, companies engaged in the transportation and distribution of natural gas must face regulatory changes and investments that have an impact on business returns. On the other, gas marketing companies, which traditionally served the markets in their historical areas of distribution, are striving to expand their scope of action, leading to the entry of new competition.

Natural gas logistics management, the subject of study in this document, is one of the functions of gas marketing companies and affects the planning and scheduling of different activities such as the supply of Natural Gas (NG) in gaseous state and Liquefied Natural Gas (LNG), regasification, transportation, storage, distribution and delivery to the customer.

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This document contains some of the keys to the logistics management function, and examines opportunities for gas marketing companies to act in this area of activity:

• This is a broad-ranging and complex process that requires coordination between different areas within the gas marketing company itself and with third parties (Technical Systems Manager –TSM, Enagas in the Spanish market, and other companies involved in the gas marketing business as well as in gas transportation, distribution, etc.). For this reason, logistics management has significant internal costs in terms of human resources and systems as well as operational risks associated with programming error, which has economic consequences in terms of both penalties and opportunity cost.
• The process has substantial related costs in terms of tolls and storage, regasification and transport charges, which could amount to around 50% of the price of the energy supplied and which are capable of being optimized.
• It is a regulated activity as it applies to a natural monopoly – the gas transportation and distribution network, where it is reasonable to anticipate changes that will cause the Spanish model to converge towards models in other European countries where there is a gas market – a hub, which provides a reference price for gas and a capacity market that optimizes the use of this network.

After a general analysis of the gas value chain, the document discusses the main characteristics of the Spanish market and those of other reference countries. It then goes on to describe the possibilities for systematizing the logistic processes and optimizing process costs (a practical example is provided to illustrate the latter), and ends with a summary of the opportunities and advantages that these measures may represent for gas marketing companies.

For more information, click here to access the full document in pdf (only available in Spanish).