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Zone merger with NCG gas hub unlikely – GASPOOL MD

06 Feb 2013 23:21:42 | esgm

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A zone merger of the two remaining German natural gas market areas is currently highly unlikely, GASPOOL's managing director Dirk Bessau said at the E-World conference in Essen.

"The question of the creation of one single German market zone does currently not arise. The German gas market can very well take two market zones. The existence of two separate market zones even boosts trading and matches market needs," Bessau said.

This view was backed by Stefan Müller-Reinisch, second managing director at GASPOOL: "Neither one of the German hubs needs to fear comparison with its European neighbours," he said.

The statement comes as the German regulator, Federal Network Agency (BNetzA), has just conducted a market consultation on the matter, the results of which are expected to be published soon (see ESGM 8 November 2012).

Germany's transmission system operators (TSOs) - some of which are GASPOOL shareholders - have recently claimed that the costs of an NCG-GASPOOL merger would by far outweigh the expected benefits.

According to a study conducted by the companies, the financial benefit for the market would amount to a maximum of €57.3m/year, while the additional minimum costs would amount to €395m in the first year after the merger. In total, the gas grid would need investments of €3bn in order to keep functioning at the current level, should the two market zones merge, the TSOs said.

"The analysis conducted by the TSOs shows very clear results. We therefore currently don't see the need for action or even dialogue," Bessau added.

Market participants in Germany are divided over the value of a possible merger of the country's gas market zones NCG and GASPOOL.

While the figures provided by the TSOs have convinced some participants to step back from the idea of a further merger, others are still in favour of the move.

According to the recently published ICIS buyer study, conducted among 37 German gas buyers, 27% of the interviewees believe that a further zone merger is the single most needed measure to further improve competition in the German gas market.

Last year, CEO of RWE Supply & Trading Stefan Judisch told ICIS that he considered a possible NCG-GASPOOL merger the next logical step for the German market.

"The logic of the market hints at the fact that NCG and GASPOOL might merge somewhere in the future. As traders, of course we benefit from different market zones.

But the arbitrage opportunities between the two market areas are quite limited, so there's basically no reason to keep up the system of two separate zones in Germany," he said. Johanna Blackader

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