According to Article 9(3) and (5) of the REMIT Implementing Regulation (EU) No 1348/2014 LNG system operators (LSO) as defined in Article 2(12) of Directive 2009/73/EC musi report to the ACER for each LNG facility the following information:
a) the technical, contracted and available capacity of the LNG facility in daily resolution;
b) send-out and inventory of the LNG facility in a daily resolution,
c) planned and unplanned unavailability announcements of the LNG facility including the time of announcement and the capacities concerned.
Article 9(5) of the REMIT Implementing Regulation stipulates that market participants or LNG system operators on their behalf are required to report to the ACER for each LNG facility the following information:
a) in relation to unloading and reloading of cargoes:
- data of unloading and reloading,
- volumes unloaded or reloaded pre ship,
- the name of the terminal customer,
- name and size of the ship using the facility;
b) the planned unloading or reloading at the LNG facilities in a daily resolution for the next month specifying the market participant and name of the terminal customer (if different from the market participant).
In case of the importation or offloading of liquefied natural gas in any LNG facility (including flanges that connect the LNG vessel to the LNG terminal) as far as the delivery of the product takes place in the European Union:
- both parties to the contract are required to register for REMIT purposes with the relevant EU National Regulatory Authority.
Reload-contracts at a regasification terminal or at a vessel where the delivery of the product is not the European Union are not reportable.
Manual of Procedures on transaction data, fundamental data and inside information reporting (MoP on data reporting, point 6.2.5) indicates that the ACER currently understands each LSO will provide the Agency with its own data converted in "Mm3(n)/day" in the meaning that each LSO will indicate to the Agency its definition and conversion method.
Article 2(12) of Directive 2009/73/EC defines ‘LNG system operator’ as a natural or legal person who carries out the function of liquefaction of natural gas, or the importation, offloading, and re-gasification of LNG and is responsible for operating a LNG facility.
In turn, Article 2(11) of Directive 2009/73/EC defines ‘LNG facility’ as a terminal, which is used for the liquefaction of natural gas or the importation, offloading, and re-gasification of LNG, and includes ancillary services and temporary storage necessary for the re-gasification process and subsequent delivery to the transmission system, but does not include any part of LNG terminals used for storage.
The list of LNG facilities and operators that fulfil the above definitions and, consequently, must report the LNG data about the facilities according to Article 9(3) and 9(5) of the REMIT Implementing Regulation (EU) No 1348/2014, is available on the ACER’s website.
The said List of Liquefied Natural Gas (LNG) facilities subject to reporting according to the REMIT Implementing Regulation has been included in the Annex IX to the fifth edition of the Manual of Procedures (MoP) on data reporting published by the ACER on 12 July 2018.
In the REMIT Quarterly Issue No. 14 / Q3 2018 ACER explained that the Agency had conducted quality analyses on the LNG REMIT data reported in accordance with Article 9(3) and 9(5) of the REMIT Implementing Regulation (EU) No 1348/2014.
The findings have demonstrated that a number of existing LNG facilities in the EU do not report LNG data to the Agency.
The Agency believes that the issue might be related to an incorrect understanding of the definition of LNG facility and LNG system operator under Directive 2009/73/ EC (‘the Gas Directive’), and has therefore provided a List of LNG facilities and their operators that, in the Agency’s view, fit the definitions stated in the Gas Directive.
In addition, the List provides an overview of EIC that shall be used for the identification of LNG facilities and their operators when reporting data according to Articles 9(3) and 9(5) of Implementing Regulation (EU) No 1348/2014.
ACER’s Second Open Letter of 19 July 2018 on REMIT data quality (ACER-VZ-MS-tl-2018-389) lists the following examples of non-compliance with the rules on REMIT LNG data reporting:
1. Inaccurate Gas day duration reporting
Variety of gas day duration (date + time) reporting are encountered when LSOs/MPs report events in gas day resolution causing difficulties to uniquely interpret the time period to which reported data refers to.
Reporting parties are not respecting gas day definition and/or are applying different offsets (+) in regard to the same time zone for summer/winter period.
‘Gas day’ means the period from 5.00 to 5.00 UTC the following day for winter time and from 4.00 to 4.00 UTC the following day when daylight saving is applied.
The reported gas day shall be the gas day of the country where the facility is located.
Thus, if a MP is located in e.g. Spain and reports LNG data about a facility located in Portugal the gas day of Portugal shall be used.
2. Noncompliance of gas day resolution reporting
LSOs/MPs report events not respecting a daily resolution of reported events that has been defined in the MoP on data reporting and are reporting a status of a facility or its planned usage for a period of several gas days within one record.
3. Duplication of reported LNG data records
It was noticed that the same record content has been reported several times.
Once reported the record should be re-submitted only if there was an error reported in the original record or other changes occurred (such as for example modification/cancelation of unavailability announcement or change of the available capacity and similar).
4. Frequency of providing LNG reports is not compliant with REMIT Implementing Regulation (EU) No 1348/2014
The Agency is observing that frequency i.e. number of records expected and submitted is not in line with provision from Implementing Regulation.
The Agency expects reports from all LNG facilities for each gas day.
5. Wrong codes used for “lngFacilityIdentifier”
For lngFacilityIdentifier EIC W and Z codes are the only acceptable (i.e. compliant with MoP on data reporting) codes. The Agency has noticed that however also other types of codes have been reported, i.e. EIC X, Y and ACER codes. EIC Z codes shall be used only in lngUnavailabilityReport when reporting unavailability of a connection point and not the facility. The Agency has prepared a List of LNG facilities and operators to be used for the LNG REMIT reporting.
6. Inconsistent notifications of LNG unavailability publicly available and reported to the Agency
The Agency is observing inconsistent notifications of LNG facility unavailability published at publicly available web sites (for example LSOs’ webpage) and provided through REMIT reporting.
Details of LNG facility unavailability reported under REMIT and publicly available have to be the same.
This is a major data quality issue resulting in the fact that the Agency has a completely different picture about the same event compared to public and mainly those using publicly available data to make their trading decisions.
7. Timeliness of providing LNG reports not compliant with REMIT Implementing Regulation provisions
The Agency is observing timeliness issue of reporting LNG data. The information referred to the LNG reporting is not made available following working day.
As regards REMIT reporting ACER also explained (answer to a Question 3.1.51, Frequently Asked Questions (FAQs) on REMIT transaction reporting - see below) that a contract for the LNG delivery for gasification purposes or emergency delivery should be classified as a contract for the supply of gas for a period of maintenance, and not for a balancing service.
Hence, such a contract, as opposite to contracts for balancing services, must be reported under REMIT (contracts for balancing services, unless concluded on organised market places, are reportable only upon reasoned request of the ACER and on an ad-hoc basis).
ACER's Questions and Answers on REMIT
What constitutes delivery of LNG into the European Union?
Article 3(1) of the Commission Implementing Regulation (EU) No 1348/2014 provides a list of reportable contracts, according to which contracts in relation to the supply of electricity or natural gas with delivery in the European Union shall be reported to the Agency.
As far as liquefied natural gas (LNG) contracts are concerned, the Agency considers any importation or offloading of liquefied natural gas in any LNG facility (including flanges that connect the LNG vessel to the LNG terminal) as 'delivery in the Union' as far as the delivery of the product takes place in the European Union.
In the situation described above, assuming the delivery of the liquefied natural gas is in the European Union, both parties to the contract will need to register with the relevant National Regulatory Authority/ies as the contract is reportable to the Agency.
Reload-contracts at a regasification terminal or at a vessel where the delivery of the product is not the European Union are not reportable.
Frequently Asked Questions (FAQs) on REMIT transaction reporting
XXX is considering to supply (i.e. sell) liquefied natural gas (LNG) to wholesale customers by means of LNG trucks. For this purpose, XXX will enter into one or more LNG sales agreements with one or more wholesale customers.
Do the above-mentioned LNG sales agreements between XXX and its wholesale customers qualify as transactions which are required to be reported to ACER in accordance with Article 8(1) of REMIT in conjunction with Article 3 of REMIT Implementing Regulation (EU) No 1348/2014?
Example: XXX will transport and deliver the LNG sold under such agreements to these wholesale customers by means of LNG trucks (i.e. in trucks that are suitable for the transportation of certain volumes of LNG).
Please note that the delivery point is neither the truck loading facility nor the fuelling station but it is potentially any physical point between the truck loading facility and the flange of the unloading facility where the LNG has to be delivered (and possibly re- gasified) on behalf of the wholesale customer.
As already expressed by ACER in the FAQs on fundamental data and inside information document (Q. 3.2.2) “LNG truck loading is out of scope for reporting fundamental data reporting. For the same reason, the Agency believes that transaction for the supply to LNG trucks are non-reportable.”
Given that, in our opinion it is not entirely clear, reason for which we are asking a further clarification, what “supply to LNG trucks” means exactly in this context (supply to trucks might mean from storage to truck or from a fuelling station to an LNG powered truck).
In our opinion any transaction where LNG is delivered either “to truck” or “by truck” or “in truck” has not to be reported.
In the FAQs on transaction reporting document (Question II.3.1.26) it is written:
“The Agency has already clarified in the FAQs on fundamental data and inside information document (Q. 3.2.2) that LNG truck loading is out of scope for reporting fundamental data reporting.
For the same reason, the Agency believes that transaction for the supply to LNG trucks are non-reportable.”
Please note that this answer only addresses the “loading” of LNG trucks issue raised in Question 3.1.26:
“Downstream LNG transactions, for example LNG truck loading and LNG marine fuel deliveries. These transactions are in scope as they are understood to take place at or after the entry flange of an EU LNG regasification terminal. Similar guidance to pipeline gas applies for reporting.”
However, the case described in Question II.3.1.26 is different than the one described in the above question.
In general, if the LNG is sold to a truck, it may not be reportable – see Question II.3.1.26. However, if the LNG is sold from the truck to any system connected to the network (e.g. National Transmission System, Distribution Network, LNG facility, storage etc.), then the contract would be reportable.
In any case when the contract counterparties are already REMIT market participants and if there are any doubts regarding the reporting, we would recommend to report the transaction, even if the other counterparty would not do so.
In this case the reporting market participant(s) would not take the risk of not reporting a reportable contract according to REMIT. The EIC for the destination delivery point (or the National Transmission System, Distribution Network, LNG facility, storage etc. connected to) can be reported in this case.
What constitutes "delivery" for the purposes of REMIT? We are particularly interested in what constitutes the delivery in the context of LNG supplies.
According to ACER's Q&A (III.3.36), "ACER considers any importation or offloading of LNG in any LNG facility (including flanges that connect the LNG vessel to the LNG terminal) in the EU as delivery in the Union as far as the delivery of the product takes place in the European Union". This suggests that "delivery" means the physical delivery of the product.
However, in FAQ #3.1.21, ACER states that "in the Agency's view contracts for the supply of LNG before the entry flange of an EU LNG regasification terminal, for example an exchange of title on the high seas outside the EU, are not subject to transaction reporting". This suggests that title transfer constitutes delivery of the product.
We note that Incoterms definitions, which are commonly used in the LNG sector, of delivery relate to the physical delivery / transfer of risk and are silent on transfer of title, separating the concept of delivery into two.
For example, In a DES transaction "delivery" occurs at the time when the goods are placed at the disposal of the buyer on board the vessel at the named port of destination in such a way as to enable them to be removed from the vessel by the buyer.
At the point of delivery, the risks transfer from the seller to the buyer.
In a DES scenario, delivery is tied to the physical delivery / transfer of risk, and not to the transfer of title; and In an FOB transaction, "delivery" occurs at the time when the goods are on board the vessel at the named port of shipment (i.e. the location where the LNG is passed over the ship's rail). At the point of delivery, the risks transfer from the seller to the buyer.
Again, in an FOB scenario, delivery is tied to the physical delivery / transfer of risk, and not to the transfer of title. Does REMIT distinguish between the physical delivery of LNG into the EU and the transfer of title to the LNG?
A contract for the supply of LNG has the following characteristics:transfer of title between the buyer and the seller happens in international waters; and after the title is transferred to the buyer, the seller delivers on a DES basis to the flange of an EU regasification terminal. Is this contract subject to REMIT?
Does the seller have to register as a market participant / report this transaction?
A contract for the supply of LNG has the following characteristics:the seller delivers the goods on an FOB basis; the named port of shipment is outside of the EU; and transfer of title to the goods happens in the EU. Is this contract subject to REMIT? Does the seller have to register as a market participant / report this transaction?
In the Agency’s view, REMIT does not distinguish between the physical delivery of LNG into the EU and the transfer of title to the LNG.
We believe that market participants know where the delivery takes place and they should be able to derive their own conclusions. In addition, whenever market participants (MP) may have any doubts about the delivery point, we would recommend (MP A) to report the transaction in any case, even if the other counterparty (MP B) would not agree with (MP A).
In this case (MP A) would not take the risk of not reporting a reportable contract according to REMIT. The EIC for the destination delivery point can be reported in this case.
We also recommend market participants to read Questions 3.1.21, 3.1.22, 3.1.23 and 3.1.24 of the FAQs on transaction reporting document which, in the Agency’s view, would help to understand the scope of LNG contracts under REMIT.
Does technical delivery of natural gas for gasification purposes or emergency delivery has to be reported under REMIT?
A “service company” has been asked by TSO or DSO to provide natural gas in case of network failure/damage. This action can take up to 2-3 days of delivery realized for a relatively small group of final consumers within specific area of the network, where regular delivery is not possible due to supply failure. Sometimes such delivery is not direct, but one service company sells natural gas to another service company. Does such contract have to be reported under REMIT?
As volumes are very small, transaction has no influence on the market and this delivery has semi-balancing purpose, it does not have to be reported.
A “service company" is a firm which repairs a transmission or distribution network in case of its damage. Let’s say that there is a small village supplied with gas by a single pipe. This pipe has been damaged due to some construction works. A service company has been called to repair the pipe. The repair work has been scheduled for two business days. During this time the village is without gas supply. To avoid such gas supply interruption (especially during the winter), the service company provides gas to the village, usually using LNG cistern and small regasification station (short time emergency delivery).
In such situation a service company does not sell gas to the final customers, it just provides gas to the network and sells it to the operator (in our understanding this is for balancing purposes). Sometimes there are two service companies due to technical specifics of repair works and it happens that one service company (main contractor of repair works) sells gas to another service company (subcontractor of repair works).
Our question is whether such contracts should be subject to REMIT reporting. In our view this is balancing (or filling the network) so it is not subject to REMIT reporting.
In the Agency’s view, based on the information provided above, this contract seems to be a contract for the supply of gas for a period of maintenance, and not for a balancing service.
In the Agency’s view, balancing trades are well defined in Articles (2)9 to (2)11 of COMMISSION IMPLEMENTING REGULATION (EU) No 1348/2014, in the sense that they are related to balancing energy and services:
(9) ‘balancing energy’ means energy used by TSOs to perform balancing; (10) ‘balancing capacity (reserves)’ means the contracted reserve capacity; (11) ‘balancing services’ means,
- for electricity: either or both balancing capacity and balancing energy;
- for natural gas: a service provided to a TSO via a contract for gas required to meet short term fluctuations in gas demand or supply.
In case an LNG Storage Operator (LSO) does not offer the reporting service, there is uncertainty as to who the responsible Market Participant responsible for reporting the unloading/reloading information to ACER should be, given the LNG could change ownership several times between the ship and the flange of LNG plant.
Title to LNG can change several times before it is discharged. Therefore, for the purposes of reporting LNG unloading/re-loading data it is questionable who the market participant responsible for reporting the unloading/reloading information to ACER is.
MP1 sells its LNG cargo to MP2 before the ship starts unloading. MP2 also owns the terminal capacity. Who is responsible for reporting?
In the Agency’s view it is the last person in the chain who will report unloading and reloading data. Where exchange of title has occurred before unloading/reloading commences at the flange, MP2 in the above example is responsible for reporting the loading/unloading data.
Where title is retained by MP1 but MP1 does not own the terminal capacity, the Agency understands that the LSO may not be able to report on their behalf. Therefore it is the Agency’s understanding that the capacity holder (MP2) is responsible for the reporting and this can identify the MP1 in its report when MP2 reports the information. MP2’s ID will be reported in the terminalCustomerIdentifier field, and MP1’s ID in the marketParticipantIdentifier field.
However, the LSO might report on behalf of the capacity holder (MP2) and should identify (if possible) MP1 in the marketParticipantIdentifier field. The Agency understands that, where the LSO reports on behalf of the capacity holder MP2 and has no information on MP1, the LSO may report MP2 in both marketParticipantIdentifier and terminalCustomerIdentifier fields if the LSO has no information on MP1.
Commission Implementing Regulation (EU) No 1348/2014, Article 3(1)
ACER's Questions and Answers on REMIT, Question III.3.36
Frequently Asked Questions (FAQs) on REMIT transaction reporting, Question 3.1.48, 3.1.49, 3.1.51