Focus on Trading in Germany
The development of gas trading in Germany remains slow. For traders who know the players, transportation options, and customers there are business opportunities, but this activity is outside what would be called a liquid wholesale market. For those players where business at these “non liquid trading places” is not an option, there are some opportunities at Germany’s only virtual hub – BEB-VP. Trading is taking place at BEB-VP, though its development remains sluggish (see monthly volumes graph below). BEB-VP high cal and low cal trading is possible on the screens of the UK-based broker icap, and since October low-cal trading has been taking place to a limit extent.
In October the low-cal volume was 86 GWh, encompassing prompt and December deals. In August, some market participants that supply end customers in BEB’s network area (or adjacent network system) used BEB-VP to source gas for their customers. However, once this activity ceased, volumes significantly dropped off.
“Curve trading is currently more or less non-existent,” a market participant said. The business is concentrating on the prompt. Since October, traders report, that daily around 150 MW change hands. Not more than five parties are usually involved in these trades. Essent and RWE Trading, which began trading last year, remain active. Danish DONG and from time to time Gaselys are also mentioned as more active traders. Some market participants say that Vitol is involved. German players are still missing, however. The only four German companies that openly showed their willingness to trade in the “list of contacts” published by BEB on its web portal are natGAS, EnBW Trading, 24sieben GmbH (Stadtwerke Kiel) and Stadtwerke Hannover.
Currently German gas companies are still too deeply embedded within their traditional long-term relationships. But market participants say that trading at the BEB-VP – particularly in relation to storage services offered by BEB – itself offers interesting optimisation opportunities.
Meanwhile sources expect the preliminary final version of EuroHub’s new service agreement to be sent out by the end of November, though it remains to be seen whether or not EuroHub will offer the final new services from the beginning of next year. Time is almost running out. And even if the final agreement is in place in time, it is no guarantee that the hub will develop quickly. As long as the German market is almost none existent, there is no need for an intermediate hub between the TTF and the German market. And if the German market develops, it is still questionable whether an intermediate hub is needed. In particular, if EuroHub only releases capacity on a quarterly base activity will be limited. One of the services that EuroHub is now able to offer – wheeling at the Emden flanges – is already offered to third parties by Statoil independently of the hub services.
Lampertheim is a trading point which some market participants seem to want to revive. This interconnection point of Ruhrgas and Wingas pipelines with the regional networks of Gasversorgung Süddeutschland (GVS) and Saar Ferngas was promoted five years ago by Enron as a trading hub. Lampertheim quotations were the first spot market quotations for the German market, but they vanished after the fall of Enron. There are still no quotations at Lampertheim, but some market players in Germany use the location for bilateral trades. Lampertheim is to some extent only the label for a trading region that encompasses in addition Rimpar and Gernsheim. Both are exit points of the MEGAL system and are locations where the two sub-systems of the transportation system of E.ON Ruhrgas Transport Middle and South are interconnected. Gas in this region is either priced based on TTF prices plus transportation or as the lower bound based on the price formula of E.ON Ruhrgas at the Waidhaus auction plus transportation from Waidhaus to the region. The future of Lampertheim will depend on the future German system of network access. Currently at least one party says that it is interested in promoting Lampertheim for short-term optimisation.
At Waidhaus there is still something like a secondary market based on the volume sold by Ruhrgas last year. Market participants say that in November gas for Cal ‘06 was offered at a level of 26.00 Euro/MWh.
The last and final hope for players in South Germany is Baumgarten in Austria and the new service of Central European Gas Hub GmbH, the hub operator at Baumgarten. These services are not only offered at Baumgarten but also at other exit points in the Austrian transportation system like the Austrian-German border points Oberkappel and Burghausen. “With these new services, Baumgarten becomes a very attractive option for us,” a German player with interests in South Germany said. - Heiko Lohmann
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