![Gas regional initiative countries [source: ACER]](http://gastopower.co.uk/media/k2/items/cache/5e2313ab7cecfc0d743505f47e439273_S.jpg)
Implementation of gas network codes by European countries as part of the gas regional initiative (GRI) showed a disconnect between progress in the south region and the south-southeast region, with the latter showing a somewhat slower progress in 2016.
It emerged from the Gas regional initiative status review report 2016 published in February by the Agency for the cooperation of energy regulators (ACER).
The GRI was created in 2006 to support completion of the internal energy market in Europe.
The south region is formed by France, Portugal and Spain. The south-southeast region comprises of twenty countries, including twelve EU member states (Austria, Bulgaria, Croatia, Cyprus, Czech Republic, Greece, Hungary, Italy, Poland, Romania, Slovakia, Slovenia) and all eight energy community contracting parties (Albania, Bosnia and Herzegovina, Kosovo, former Yugoslav Republic of Macedonia, Moldova, Montenegro, Serbia, and Ukraine).
In 2016, the regulatory compliance of the different member states with the network codes (NCs) was mixed, with a higher level of compliance in the south region.
Specifically, south-southeastern countries “still face very low compliance rates” on capacity allocation mechanism (CAM), congestion management procedures (CMP) and balancing (BAL), ACER said.
On the other hand, in the south region the market integration of the Iberian Peninsula “and possibly in the future with France” has progressed.
Hub liquidity improving
Looking at market dynamics, ACER noted that gas demand in the south region increased by 8.3% in France, 10.5% in Portugal, and 3.7% in Spain in 2015.
In terms of supply diversification, France could rely on ten different sources, Portugal on six, and Spain on eight.
The French gas hub Trading Region South (TRS) showed improved activity and liquidity, whereas the Iberian hub showed improved activity, but low liquidity, since it started working just on the Spanish side on 15 December 2015, ACER said.
Meanwhile, in the south-southeast region gas demand underwent a steady increase in 2015, with the highest rate marked by Slovakia (+21.1%).
Some countries were still mainly dependent on Russian imports (more than 60% of total supplied gas for Bulgaria, Greece and Slovakia).
Hub liquidity also progressed in Austria, the Czech Republic, Italy, Poland, and Romania.
On the other hand, “Croatia and Slovenia do not feature an active transparent trading venue, despite having a VTP” ACER noted, adding “Bulgaria and Greece have not established a national VTP. “
Moreover, taking into account both long-term contracts and hub products, the south-southeast regionI continued to have some of the highest gas prices in the EU, it said. Overall, hub price differences with respect to NW Europe persisted “with the exceptions of Austria and Italy.”