Most PRISMA annual gas capacity auctions to attract limited interest

Source: Heren

2018/06/29

LONDON (ICIS)--Much of the annual natural gas transport capacity due to be auctioned on pan-European platform PRISMA will not be purchased, but there are a number of points which should attract interest.

PRISMA will hold auctions for annual firm transport capacity at border points across Europe beginning at 08:00 London time on Monday 2 July. The capacity will be auctioned as gas years, which run from 1 October-30 September each year.

There will be auctions for five gas years up to 2022-23.

Annual capacity auctions often do not attract much interest as shippers prefer to purchase on a shorter-term basis. However the most congested points are likely to attract interest.

Congested points

Many of the habitually congested points are on the German border.

These include Oberkappel and Uberrackern between Germany and Austria and Deutschneudorf on the German-Czech border. Previous auctions at these points have resulted in bidding wars requiring multiple auction rounds.

If more shippers bid for capacity on PRISMA than is available, the price increases until bidders have dropped out or reduced demand.

The French north-south link is another regularly congested point that may attract strong interest during Monday’s auctions.

In May, European watchdog the Agency for the Cooperation of Energy Regulators (ACER) published a report on congestion in Europe.

The most-oversubscribed points identified included Oberkappel, Uberrackern and the north-south link, as well as Eynatten on the Belgian-German border, Tarvisio on the Austrian-Italian border and Kulata on the Bulgarian-Greek border.

Ellund auctions

German transmission system operator (TSO) Gasunie Deutschland is offering an additional 1GW of fixed freely allocable capacity at the Ellund point for the 2019, 2020 and 2021 gas years. This can be provided by temporary allocation methods.

This capacity is being offered to ensure security of supply in Denmark during a planned shutdown at Tyra, Denmark’s largest gas field, between 1 November 2019-1 July 2022.

Shippers will have to book the capacity at auction in order for Gasunie to take the necessary steps to make it available.

Danish TSO Energinet and regulator DERA have urged shippers to take advantage of the capacity offering.

Reverse flows

Reverse flow capacity will be available for the first time from Italy’s Passo Gries to Switzerland, from Switzerland to Germany at Wallbach, from Germany to the Netherlands at Eynatten and from Germany to Belgium at Bocholtz.

The capacities offered are on the EU side of the Italian-Swiss, Swiss-German and Swiss-French borders as Transitgas operator Fluxswiss does not have to comply with EU legislation.

Market participants were first offered capacity on the Swiss side of the border on 18 May 2018.

Despite these new products, Italy is unlikely to begin exporting to northern Europe as imports from the region currently have a key role in balancing the system as the marginal source of supply.

PSV contracts with delivery after summer 2018 also remain at a significant premium to the Dutch TTF, indicating it would not be financially viable for Italy to export even after the reverse flow project is online.

Shippers are only likely to show interest in capacity with delivery in the first quarter, which will be offered in quarterly auctions if not all annual capacity is unsold.

This is typically the period supply margins in northern Europe are tighter than in Italy and PSV prices can drop below northern European ones.

Photo: A gas storage facility in the UK (source: Global Warming Images/REX/Shutterstock)