Lampertheim deal revives prospect of inland German trade
A Calendar 2005 gas trade towards the end of November at Lampertheim, southwest of Frankfurt, has revived prospects of trading at the pipeline hub originally chosen by Enron as the place to kickstart short term gas trading in Germany.
However, attractive as Lampertheim looks on paper — it is close to the intersection of the Megal, Midal and Tenp pipelines, as well as Ruhrgas’ major trunkline that runs south from Werne — some observers feel that it has limited potential as a German trading hub. One probable driver of the current interest is that
“Most of the transport capacity there, is in the hands of a few incumbents who don’t encourage a liquid market”
successful purchasers of E.On Ruhrgas’ auction gas need to offload some of these volumes at a point more convenient to potential buyers than the auction delivery point of Waidhaus, some 345 km east of Lampertheim on the Czech border.
One trader who spoke to EGM said he hoped that reporting the deal would show the market that it was still possible to trade at Lampertheim. Since Enron — which acted as market maker at Lampertheim — withdrew from the European gas market in late 2001, there have been no deals publicly reported at Lampertheim, although a source close to the situation said some trading had taken place, albeit on an extremely small scale. One major German energy utility, which had been active at Lampertheim in the past, said it would certainly like to trade there again.
Others say that nobody has been willing or able to encourage trading at Lampertheim since Enron’s departure. One ex-Enron trader said that during Enron’s time, the average number of daily trades done at Lampertheim was between 10 and 11, and he didn’t believe that liquidity could ever kick off there again. He pointed out that in 2001, Europe as a whole had over 150 traders in the gas market, with several willing to trade speculatively and spreading liquidity as widely as possible, including at Lampertheim. He added that now there were a maximum of 50 traders in the European gas market.
Many agreed that Lampertheim was a difficult place to make a profit, because of the complexities involved in gaining access to physical capacity, as well as the lack of counterparties. One trader said “most of the transport capacity there is in the hands of a few incumbents who don’t encourage a liquid market”.
However, Christian Mehl, head of trading at MVV, told EGM that he had seen deals being done at Lampertheim. He said liquidity has been poor, but pointed out that liquidity in European gas trading as a whole has been poor, and hence small trading places like Lampertheim have been pushed to the very back of the order of preferred trading points.
One of the traders involved in the reported Cal ’05 deal said that discussion at Lampertheim has been ongoing for several months. He said many non-German players were willing to trade at Lampertheim, but suffer the same hurdles as German companies who struggle to gain access to transport capacity at competitive and fair prices.
Several traders said that Lampertheim was the most natural place for a German gas trading hub in a liberalised market. One trader said that to say that Lampertheim would never be revived is effectively to say that Germany would never have a liberalised spot market. The major pipelines that intersect at or near Lampertheim carry big flows and are predominantly in the hands of E.On Ruhrgas, Gaz de France, Wingas and Eni Gas & Power. There are also entry points into the regional networks of GVS, Saarferngas, Ferngas NordBayern, MVV and EnBW.
E.On Ruhrgas classifies the gas available at its Lampertheim delivery points as H-Gas South, which means essentially that it is sourced from Russian contracts delivered at Waidhaus. Gas delivered from the north, either via the big Ruhrgas line from the Werne blending station, or through Wingas’ Midal pipeline, is classified as H-Gas Middle, which has a slightly higher CV.
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