E.ON Ruhrgas AG, Germany's largest importer of natural gas, Thursday said it intends to invest EUR400 million for the creation of new gas pipelines and the expansion of existing capacities by 2012.
The unit of E.ON AG (EOAN.XE) said this is the outcome of the open season procedure, a market analysis of network expansion requirements.
"With the envisaged investments we are making an important contribution to security of supply for Germany and Europe," said Stephan Kamphues, chief executive of E.ON Gastransport GmbH.
E.ON Gastransport will shortly inform its customers of the open season results.
Apart from numerous minor expansion measures, the aim is above all to eliminate a north-south bottleneck and significantly improve the possibilities of transporting large gas volumes through the network via Austria to southeastern Europe.
To be specific, the pipelines are to be extended from Sannerz in Hesse to Rimpar in Lower Franconia, and the MEGAL pipeline system is to be continued to Austria.
E.ON Gastransport is thus also drawing important conclusions from the supply disruption earlier this year.
During the gas dispute between Russia and Ukraine E.ON Gastransport was faced with the challenge of moving additional gas volumes from northern to southern Germany.
The envisaged expansion measures as a result of the open season will now create considerable additional transmission capacity and eliminate bottlenecks.
This will further enhance Germany's and Europe's security of supply.
"It is all the harder to understand why, even for major construction projects, the Federal Network Agency does not allow network operators to recoup the specified cost of capital," Kamphues said.
E.ON Gastransport had demanded planning certainty from the Federal Network Agency, insisting inter alia that the 9.29% return on equity officially laid down in the Gas Network Fees Ordinance must actually be achievable when making expansion investments.
However, this would not be possible in practice because of an inappropriate reduction of the necessary investment budget. As a result, network operators making investments would be systematically placed at a disadvantage in relation to network operators not making any investments.
If the Federal Network Agency were actually to decide on the requested investment budgets in this manner, E.ON Gastransport would reserve the right to take legal action.
To determine the concrete expansion requirements of customers, E.ON Gastransport launched an open season procedure at the beginning of 2008.
Due to the heavy demand the company prioritized conceivable expansion measures, taking account of such factors as network efficiency, enhancement of the national and European pipeline system and hence European security of supply as well as promotion of competition.
An open season serves to ascertain additional customer needs in a transparent and nondiscriminatory manner and to organize pipeline expansion as efficiently as possible.