EEX considers introduction of German THE products by 4Q

: Natural gas
20/06/18

The Germany-based European Energy Exchange (EEX) is considering launching gas futures for the joint German market area — Trading Hub Europe (THE) — by the fourth quarter, and is consulting on two different approaches.

Launching the new products by the fourth quarter could result in the "fastest possible increase" in liquidity for THE futures, EEX said.

Germany's NCG and Gaspool areas are to be merged by 1 October 2021, but the date is not binding. German law only stipulates the merger would have to be completed by the start of April 2022.

EEX suggested two options for introducing the new products.

Under the first option, the NCG order book would be renamed THE. THE products with delivery before October 2021 would still be delivered in the NCG, with no changes applied for Gaspool. THE and Gaspool products for delivery from October 2021 would be delivered in the joint market area. Trading of Gaspool products for delivery after the planned merger date would be retained until a launch date for the integrated market is made binding.

As an alternative option, EEX proposed creating a supplementary order book for THE products, while retaining the existing NCG and Gaspool order books. THE products could only be traded for the period after the scheduled merger in October 2021. NCG and Gaspool products could still be traded for periods from October 2021 onwards as well — again until a binding date for the merger is set — but would be for delivery in the joint market area.

Should the merger be delayed, the exchange suggests a back-up delivery of THE products into the NCG market area as almost all its registered participants active in Gaspool also trade in the NCG, EEX said today.

The results of the consultation will be announced shortly, EEX said.

During an EEX workshop today, market participants voiced concerns about the non-binding character of the merger date. The potential benefits of trading THE futures products might not outweigh insecurity regarding the merger completion date, they said.

EEX has also asked for views on other issues, including potential introduction of a market maker service to support forward liquidity for THE futures.

It has also proposed introducing a spark spread product when THE products become available.

These measures would "enable direct hedging... for power plant operators in Germany", by procuring gas in Germany and selling electricity, EEX said. EEX proposes assuming a plant efficiency of 50pc for this purpose.

By Julian Mayr

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25/12/17

Australia coal, Fe prices to fall; LNG up: Treasury

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US House clears hurdle to pass permitting bill

25/12/16

US House clears hurdle to pass permitting bill

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Workers at Australia’s Pluto LNG set to strike

25/12/16

Workers at Australia’s Pluto LNG set to strike

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Trinidad to host US aircraft, Venezuela ends gas deal

25/12/16

Trinidad to host US aircraft, Venezuela ends gas deal

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Viewpoint: UK offshore faces deeper consolidation

25/12/15

Viewpoint: UK offshore faces deeper consolidation

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