Eurohub: Last throes or new dawn? The jury is still out
There have been changes at Eurohub this year, but they have so far failed to result in trading. The hub is a virtual trading point linking the Norwegian gas entry points at Dornum and Emden with the Dutch TTF, the Dutch-German border at Bunde/Oude and the BEB and Ruhrgas networks. This year it has a new services contract and has finally incorporated the new Ruhrgas entry-exit system as an offtake point. But so far only four companies have signed up to the hub and it struggled to sell Q2 capacity. It has so far been used for transport rather than trading.
There are five shareholders in the hub: BEB Transport; E.ON Ruhrgas Transport; Gasunie; Statoil Deutschland; and Wingas. Aside from Statoil, all the shareholders are Transmission System Operators and cannot be active on the hub. EGM understands that the companies who have already signed up to use the hub include Statoil, Essent and Total.
The constant delays in firming up a services contract for the hub have resulted in an element of disillusionment and fatigue among interested trading companies. Delays have been blamed by many not on the Eurohub company itself, but on the unwillingness of its shareholders to provide the necessary transport services. The change in network systems in Germany has undoubtedly complicated the issue.
The final services contract was initially due to start up in October 2005, but was not introduced until January this year and failed to provoke a rise in interest in the hub. Since then, the services contract has been fine-tuned by the hub’s reference group.
Andreas Jordan, managing director of Eurohub has admitted that Q1 performance was disappointing. He said the hub is still being used primarily for transport rather than trading, and that all of the Q2 capacity released in Q1 had not been sold immediately. “It wasn’t sold in the release but May and June sold out afterwards,” he said. One explanation may be that no “cheap” gas was available for the period, he added.
But Jordan is hopeful that interest may grow, as companies have more notice than they did in January, when the services contract was agreed only just before implementation. He pointed out that new E.ON Ruhrgas virtual points may stimulate interest. Eurohub has just released its capacity offer for Q3 and Q4. The deadline for the former is Wednesday, 7th June and for the latter Monday, 19th June.
Traders contacted by EGM were divided in their response to the question of whether Eurohub would take off this year. Around half the responses could be paraphrased as “what hub?” and the rest said their companies were looking at it but hadn’t decided whether or not to join.
The development stage could be drawing to a close however as the reference group is set to be disbanded now the revised services agreement has been drawn up. “It’s up to traders now to decide whether to use it,” one member of the group said this week. But the trading community has not yet made up its mind. The European Federation of Energy Traders (EFET) is expected to release its opinion in the next few days.
There is a sense that trading is probably not imminent as several companies active in the region said they had already finalised transport and contract arrangements for the rest of this year, using existing entry and trading points. “There was a certain demand two years ago [for Eurohub], but the market doesn’t wait for ever,” one trader said, citing faster developments at BEB and TTF. “Eurohub may only ever be used to optimise,” one trader predicted.
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