Russia’s SPIMEX to launch new short-term gas contracts

Russia’s St Petersburg International Mercantile Exchange (SPIMEX) will start trading weekend and holiday natural gas delivery products next week, its CEO Alexei Rybnikov told ICIS, which may boost liquidity on short-term contracts on the bourse.

The new products will be launched on 27 October, a year after the day-ahead was introduced and two years after gas trading began at the exchange with the month-ahead product.

It was expected that some liquidity from the month-ahead contract would move to the day-ahead product this year, but the former has remained the most popular. Volumes traded for month-ahead delivery hit a record high last month, with 1.9 billion cubic metres (bcm) sold on this product, while 181 million cubic metres (mcm) was sold for day-ahead delivery.

Together with the launch of the new contracts, the minimum volume for a day-ahead trade will be cut from 100 thousand cubic metres (kcm) to 10kcm from the start of November.

“The decrease is aimed at smaller participants of gas sales on the bourse – consumers and brokers for such consumers,“ said SPIMEX vice-president Anton Karpov. “It will also allow [participants] to plan volumes of gas purchases more accurately and level off daily consumption fluctuations.“

The Russian government intends to increase sales on SPIMEX to up to 3bcm/month, or 35bcm/year, so that exchange volumes represent 10% of all gas sold in Russia. It would make the gas price visible, making the Russian market – where most gas is traded in long-term deals – more transparent.

Market participants were split over whether the weekend and holiday contracts as well as the new minimum volumes for day-ahead delivery may lift volumes sold on SPIMEX.

Ilya Shishkin, deputy director at IES Garant that supplies electricity to customers in several regions across Russia and has been buying gas at SPIMEX since May, said his company was going to take part in weekend and holiday delivery trades. He also welcomed the plan to decrease the day-ahead minimum purchase.

But Igor Golovatik, commercial director for gas broker Merexprof that also buys gas through the bourse for a number of companies across Russia, said none of his clients has bought day-ahead volumes so far and would unlikely be interested in weekend and holiday trades. Merexprof joined SPIMEX in February.

“We have to conduct somewhat of a public awareness campaign among our clients,” he said. “Many of them don’t even know that it is possible to buy gas in Russia for [anything] other than month-ahead delivery.”

Russian consumers are used to month-ahead trading because of a long-term requirement of monthly accounting for gas deliveries. Rybnikov said development of paperwork for day-ahead delivery accounting was yet to be made but added that SPIMEX intends to further develop short-term trading.

“After the weekend and holiday contracts launched, we will start working on introducing a within-day product,” Rybnikov said. “But this is a task for the next year.”

He estimated that in 2016 gas sold via SPIMEX may reach 19bcm, while in 2015 8bcm was sold. “And hopefully we will reach the goal of selling 35bcm next year,” he said. ekaterina.kravtsova@icis.com