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First signs of OTC natural gas trade appear at Polish hub

06 Jun 2013 11:00:13 | esgm


Polish independent natural gas shipper DUON has conducted a Day-ahead deal which ICIS believes could be the country's first over-the-counter (OTC) transaction delivered to the virtual point.

On Tuesday, 28 May DUON bought an undisclosed volume of Day-ahead gas at zlotych (Zl) 116.10/MWh - equivalent to €27.64/MWh when applying exchange rates from that day. The seller of the gas was not disclosed, although the company involved is based outside Poland. The deal was conducted bilaterally.

The price of Polish wholesale gas typically tracks the direction of the German hubs. On 28 May, ICIS assessed German hub GASPOOL Day-ahead at €26.95/MWh, putting the Polish hub at a €0.69/MWh premium to its peer.

ICIS believes the deal could be the first of its kind, as most other Polish shippers polled have yet to even formalise standard contract agreements with their counterparties.

But Lukasz Mordasiewicz, director of gas at DUON, said that with the seller in question the contract was largely based on the standard agreement the two counterparties had previously used when trading within Germany.

He added that like many of the other Polish shippers DUON was also still working on a more formal contract that was country-specific.

Poland's Association of Energy Trading (TOE) is known to be working with the European Energy Traders Association (EFET) to produce a nationwide standard agreement, although this is still a few months away. It is expected that once this EFET contract is ready OTC trade will really begin to take place.

Wholesale trade of Polish gas has only been possible since the end of last year, and initially was only permissible through the country's energy bourse. DOUN was the first company to purchase gas on the POLPX exchange (see ESGM 20 December 2012).

On 28 May, the POLPX exchange Day-ahead gas out-turned at Zl116.62/MWh, in a total volume of 61MW.

After a quiet start to trade on the exchange, traded volumes have started to increase. But sources have said the ongoing reluctance of incumbent PGNiG to actively participate has meant development has been slower than some had hoped.

The start of OTC trade is expected to aid the further growth of the Polish hub. Most sources expect that like many other European gas markets, OTC trading will ultimately outstrip volumes dealt on the bourse. Tom Marzec-Manser

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