Update on the current legal status of transit of natural gas in Belgium

Following the CREG’s decisions of 15 May 2008 and 6 June 2008 imposing regulated tariffs on transit of natural gas (transit meaning the border-to-border transmission of transport of natural gas), Fluxys, Distrigas and some other shippers instigated legal proceedings before the court of appeal of Brussels requesting the suspension and annulment of these decisions.

At the beginning of the summer 2008 Distrigas sold its transit subsidiary Distrigas & Co to Fluxys.

On 11 November 2008, in the procedure initiated by Fluxys, the court of appeal decided to suspend both decisions. In the court’s view:
(i) there is no legal framework allowing a different set of tariffs for transit and transport; and
(ii) the CREG does not have competence to qualify transit service contracts as regulated or exempted.

On 10 March 2009, the Belgian legislator adopted a new act amending the Belgian Gas Act, establishing a different tariff system for transit activities in Belgium and (ii) interpreting indirectly article 32.1 of the Second Gas Directive by specifying that all contracts concluded before 1 July 2004 between (i) Fluxys, Distrigas or a subsidiary thereof and (ii) transit shippers are exempted contracts in the sense of article 32.1 of the Second Gas Directive and article 15/19 of the Gas Act.

The CREG decides to seek the annulment of the Act of 10 March 2009 by the Constitutional Court. On 2 October 2009 it issues a press release that its decision was motivated by referring to “the need to clarify the legal situation of natural gas transit in the interests of the market and the end consumers".

A week later, on 8 October 2009, the European Commission opened an infringement proceedings against Belgium concerning its gas transit system because Belgian legislation would discriminate between transit and transport of natural gas.

Notwithstanding its own criticism and the arguments of the European Commission, CREG reaches a compromise with Fluxys on the new transport tariffs as from 1 January 2010. In the joint press release of 29 October 2009, CREG and Fluxys state that the new tariffs will be “highly competitive compared to others across Europe and at the same time provide a reasonable return on capital investment made by Fluxys”. In the decision of 22 December 2009, officially approving the tariff proposal by Fluxys, the CREG also approved the maintaining of the difference between border-to-border transport and internal transport.

In the beginning of December 2009, Ms Katrien Partyka, a christian-democrat member of parliament, and a few colleagues, submitted a proposal to amend the Gas Act aiming at the abolition of the Act of 10 March 2009, thus responding to the request of the European Commission. At the same time this proposal aims at lifting all exemptions for historical contracts as from 1 January 2010. This proposal is currently debated in the competent commission of the Parliament.

Update on the current legal status of transit of natural gas in Belgium