The National Gas System (Sistema Nacional de Gás - SNG) is essentially organized around the operation of the public natural gas network, comprising the National Transmission Network, Storage Facilities and LNG Terminals and the National Natural Gas Distribution Network.

The National Gas System (SNG) has no local production, i.e. Portugal has no exploitable natural gas fields. The supply of natural gas to the Portuguese market is carried out through entries into the system via cross-border pipeline interconnections and the Sines LNG (liquefied natural gas) port terminal.

Supply through interconnections is mainly based on contracts that provide for the obligation to take and pay for amounts regardless of whether they are consumed or not (take or pay clause). Supply through the LNG terminal is mostly based on LNG contracts with Nigeria.

The take or pay requirement in contracts implies the purchase of a pre-agreed amount of natural gas during the contract period. These agreements generally run for 20 years or more, with the option of renegotiation.

As transactions take place through bilateral contracts of a confidential nature, there is no public information on this market. Market participants can exchange stocks at the LNG terminal, at underground storage infrastructures or at the so-called Virtual Trading Point, this latter point being the place where the greatest liquidity of transactions is concentrated.

The wholesale market for natural gas in Portugal didn’t had, until 2021, a pricing reference based on an organised and regulated market, similar to the one in place for electricity. In that year, MIBGAS, S.A. - the managing entity of the organised Iberian quoted gas market - recognised by the Portuguese government as the managing entity of the organised spot gas market, initiated the trading of products delivered in Portugal on its platform.

The liberalisation process of the natural gas sector gas led to the opening of supply to the market, whereby any consumer is free to choose his supplier. Regarding the price, the retail market conditions are affected by the evolution of the wholesale market, since the latter determines a substantial part of costs related to the supply of natural gas. Thus, the creation and development of the Iberian natural gas market is of the utmost importance for consumers and suppliers in both countries.

The establishment and development of the Iberian natural gas market, with the resulting consequent of the Spanish and Portuguese gas systems, is of particular importance for consumers and suppliers of both countries. Given the importance of the Iberian Peninsula’s liquefied natural gas (LNG) receiving capacity in the European and world contexts, it is possible to envisage the affirmation of the Iberian Natural Gas Market as an international reference market.

MIBGAS should ensure access for all operators under conditions of equal treatment, transparency and objectivity. The legal framework for its development must be stable and in line with current European legislation and regulations.

MIBGAS was established for the following purposes:

• Increasing the security of supply, through market integration coordinating both systems in the natural gas sector and by enhancing interconnections;
• Increasing competition, resulting into a larger market size and number of participants;
• Simplifying and harmonising the regulatory framework of both countries;
• Encouraging efficiency in regulated and liberalised activities, as well as market transparency.

The process of harmonising and establishing MIBGAS has been developed gradually and by mutual agreement between Spain and Portugal, underlying an active contribution of both countries in its implementation.

The development of MIBGAS requires the application of best transparency practices, seeking the involvement of all stakeholders through the systematic use of public consultation processes.

In this context, the Directive No 14/2020 of 30 September was published, approving the rules and procedures for trading products with delivery in the VTP on the MIBGAS platform, allowing the trade of gas products with delivery in Portugal in the organised natural gas market.

The start of these negotiations, on the same platform used in Spain and with rules very similar to those applicable to products supplied in that country, is an important step for the development of the national natural gas market and its integration with the neighbouring country’s market, with a view to the future development of additional market integration mechanisms, namely of the implicit allocation of interconnection capacity, in a context of common rules for both countries, which will contribute to more solid and transparent price formation.

Organisation and operating principles

Following the commitment undertaken in the scope of the “Compatibility Plan between Spain and Portugal for the Regulation of the Energy Sector”, signed by the Portuguese and Spanish governments on March 8, 2007, ERSE and its Spanish counterpart (then CNE - Comisión Nacional de Energía, now CNMC - Comisión Nacional de los Mercados y la Competencia) held a public consultation on the Organization Model and Operating Principles for MIBGAS, in order to receive opinions from market agents and other stakeholders, prior to taking a decision. Following this process, ERSE and the then CNE drafted a proposal for MIBGAS’s operating model.

On  January 18, 2012, ERSE and CNE presented a joint study on access tariffs to the interconnections of natural gas transmission networks between Spain and Portugal, with the aim of identifying measures to promote tariff harmonisation and remove other obstacles to gas trading.

In July 2014, ERSE and CNMC conducted a coordinated new public consultation on integration models for the Portuguese and Spanish natural gas markets suitable for the establishment of an organised market, with a view to ensure the necessary liquidity and competitiveness of the Iberian region on the basis of (i) a Market Area, (ii) a Regional Market and (iii) an integrated market with implicit capacity allocation, which resulted in an implicit cross-border capacity allocation model.

Coordinated allocation of interconnection capacity

The European network code on capacity allocation mechanisms (CAM) in gas transmission systems, published by Regulation EU 984/2013 and amended by Commission Regulation EU 2017/459, sets out common rules for the allocation of capacity rights on gas interconnectors in the European internal market.

The CAM network code determines the standard capacity products (annual, quarterly, monthly, daily and within-day) and the allocation mechanisms, through auctions held on an electronic platform. The transmission network operators in Portugal and Spain have joined the PRISMA platform, through which suppliers book capacity.

Capacity on the Portugal-Spain interconnection is allocated at the virtual interconnection point (Iberian VIP). Capacity rights allocated to market agents may be traded with other agents (secondary market of capacity rights).

The allocated capacity on the interconnector is published by the Technical Overall Manager, in addition to the allocation at the other relevant points of the gas system.

To find out more about this, visit the MIBGAS website