Liquidity on Belgium’s virtual ZTP hub surges on border restrictions

After a hiatus of nearly two months, a flurry of brokered over-the-counter (OTC) trade on Belgium’s virtual ZTP hub for natural gas has been recorded in the past nine sessions.

A single front month deal was concluded on 7 April which has been followed by consistent prompt contract trading in each subsequent session to date.

Traders active in France and Belgium have suggested that transport capacity issues at border points may be driving the recent interest at the virtual hub.

Day-ahead at the ZTP traded 44 times between 7-16 April according to data seen by ICIS, with 25 of these deals transacted at the same time that a restriction was imposed at the Blaregnies/Taisnieres border point on 15-16 April. Further cuts to the gas transport capacity at the border point are planned for the end of the month.

“There is some maintenance between Belgium and France so when flows get reduced some people might change position a bit,” a French source said, adding that for players with flows from the Netherlands into France it could make sense to sell more in Belgium, if they see ZTP liquidity picking up.

A Belgian source noted there has been a readjustment in the way capacity is sold at the s-Gravenvoeren point on the Belgium-Netherlands border, in order to align with European regulations. This has led to less exit capacity being available on a longer-term basis on the Dutch side.

Some players active in Belgium may have been left short of capacity in some instances, and might be driven to the ZTP to balance.

“The shorter-term capacities are still available but for most [participants] it doesn’t make sense to book [as they are] too expensive,” the source said.

Most of the gas has traded for day-ahead delivery during the recent spike, typically dealing in clips of 60MWh. But May ’14, Weekend and BOM have all dealt since 7 April in a period of increased liquidity at Belgium’s virtual hub.

Brokered OTC trade on the ZTP was very thin in the first quarter of 2014 with just 5.76GWh dealing. This was far below the 1.68TWh volume of brokered trade seen in the final three months of 2013.

The ZTP operator, Huberator, has confirmed to ICIS that it has been in contact with active participants as part of efforts to improve liquidity at the hub, but said that no new developments had yet been agreed.

“Huberator has been in touch with several hub customers with a view to developing liquidity at ZTP, and some of them have shown an interest in becoming market maker,” he said.

Companies have traded much smaller volumes of gas at the virtual ZTP since its launch in October 2012 than they do at the other Belgian hub, the physical Zee beach, and the current spike is still dwarfed by Zee beach liquidity. Emma Slawinski and Jake Horslen