Slovakia’s Nafta offers new option on natural gas storage capacity
Slovakian natural gas storage operator Nafta has launched a new product offering companies the option to acquire storage capacity, it said on Thursday.
The option product will be allocated in the form of 100 standard bundled units (SBU) of 1 million cubic metres (Mm³) working gas volume each, rendering a total storage volume of 100Mm³.
Each SBU will have a withdrawal and injection rate of 10,000 cubic metres (m³)/day. On a flat injection and withdrawal curve the capacity would take 100 days to fill and empty.
Companies will have the right to exercise a call option for storage capacity at Nafta's facility, in the southwest of the country. If exercised, capacity will be available for one year. Customers will pay approximately €4.88/MWh for storage capacity, according to Nafta.
The option is linked to the expectations of future values of gas storage and is the first of its kind to be offered by a European storage operator. The product will be flexible, allowing capacity holders to nominate injections or withdrawals irrespective of the season.
"The option will act as an insurance policy against volatility in winter/summer spreads. Every capacity holder will have to calculate the probability of volatility in spreads and consequent risk to its revenues," said Nafta's head of marketing, Martin Mikoláš.
"It will allow holders to avail of cheaper means of storing gas."
The call option will allow the customer to exercise the right to call storage capacity by notifying Nafta between 1 May 2012 and 31 December 2012.
It will be subject to a Use-It-Or-Lose-It condition if the spread between the Q3 '13 and Q1 '14 contracts at NCG, settled by EEX, reaches the barrier level of €6.20/MWh. If this barrier is hit, the customer will need to decide on whether they wish to exercise the option or not.
The price for this product is composed of two components. The first is a premium (bid) component that will be proposed by each bidding party. The second is a fixed component, due only if the option is exercised, which will be paid in 12 instalments during the provision of service.
Nafta's storage facility could appeal to traders active at Baumgarten in Austria owing to its location. The facility is just 12km from the Baumgarten hub.
Interested parties must submit their applications before 26 April, when the storage auction takes place. JE
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