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All about procurement

Switzerland has no natural gas of its own and has to import its entire supply. It also currently lacks the capability to store natural gas which means that demand is met through very flexible procurement abroad. “Flexible” means that natural gas procurement is structured to meet demand consistent with customer load profiles. It also means that the security of supply is always fully accounted for. It is advantageous that Switzerland is embedded in the tightly knit European natural gas network. Physical procurement is possible via the neighbouring countries of Germany, France and, starting in 2017, via Italy.

Share Producing Countries 2017

On behalf of its shareholder customers (the regional companies), Swissgas procures bundled gas quantities and services from European suppliers, producers or hubs. Swissgas is by far the largest importer of natural gas in Switzerland, accounting for over 50% of the gas procured. Swissgas’ size creates a broad range of diversification opportunities for customers in terms of time, supplier/producer, geography and contract terms, thus improving the security of supply.

In terms of portfolio balance, Swissgas and the regional companies attach great importance to procuring most of its natural gas from gas fields in the EU or close by (Norway). The key to balanced procurement is diversification of origin, suppliers, contract terms and transport routes along with other elements.

Procurement and optimisation

Swissgas buys and sells natural gas, i.e. the associated energy/service as well as the transport capacities needed for transport in Switzerland on behalf of the regional companies. This can occur on a within-day, daily, weekly, monthly, annual or multi-year basis. All purchases and sales always take place back-to-back and are directly commissioned by one or more regional companies which eliminates the sales and price risk for Swissgas.

The key factor in competitive procurement and the security of supply is a well-balanced portfolio.

In recent years, procurement has increasingly shifted to short-term transactions with smaller quantities and countless individual transactions. The number of longer term contracts in the procurement portfolio has been gradually decreasing for several years as a result of market conditions. With a view to the security of supply, it remains essential to maintain some of these contracts because, in contrast to transactions on spot markets, they guarantee ongoing physical availability by the supplier. Aside from this, longer term contracts are not just “statically” administered, but continue to be negotiated on an ongoing basis and in this respect undergo dynamic development and adaptation.

Development long and short term procurement

Due to its standing (name recognition, size, reliability, etc.) on the European procurement market, Swissgas is also able to maintain business ties with major European suppliers such as E.ON, Uniper, GasTerra, Eni, Engie, RWE, EDF and others. Depending on the needs of the regional companies, the transactions are carried out at international hubs or right at the border crossing point.

Purchase and sales transactions

Once the contract has been signed, Swissgas processes each individual transaction on behalf of the regional companies:

  • Nominations for the supplier and transporter
  • Measures for ordinary and extraordinary events
  • Management of the scope of consolidation, invoicing, assuring contract stipulations
  • Fulfilments/support of regulatory requirements

The demand for gas fluctuates depending on the season and time of day, which is why it must be ensured that the individual transactions can be carried out 24/7, 365 days a year. This is the responsibility of dispatch.

Portfolio optimisation consulting services

Swissgas initiates optimisation and hedging concepts for its shareholder customers and implements them on request. The range of services spans price analyses and market observations as well as general energy management consulting.