Off-market gas capacity purchase could pressure German NCG prices

Jennifer Sanin


LONDON (ICIS)–An off-market capacity booking suggests the German NCG gas market area could get extra supply in November, which would narrow its average Day-ahead premium to GASPOOL.

On Monday 20 October, 5.1MWh/h (11 million cubic metres (mcm)/day) of firm front-month capacity on the Drohne-NOWAL pipe, which connects the two German hubs in the direction of the NCG, was sold out on the PRISMA platform at €0.96/MWh.

The NCG Day-ahead usually trades above GASPOOL, but doesn’t typically trade at a premium higher than €0.96/MWh. The premium was only higher than this once in Gas Year 2018.

So far this month, NCG November ’19 has settled at an average €0.48/MWh above the same contract on GASPOOL. The spread never widened beyond €0.55/MWh.

No front-month capacity was bought on Drohne-NOWAL for November ’18 last year.

These factors indicate the booking was made by a company who needed to meet contractual obligations, rather than shippers betting on a widening spread.

“I don’t think multiple players bought it. Risk reward is very bad on that bet,” a gas transport head from a large energy supplier told ICIS.

Another market expert said it looked like “someone must satisfy his contract obligations and thinks it’s more beneficial to pay the capacity than to trade 5.1MW of the spread”.


A trader active in the German markets told ICIS that if it was one player’s purchase rather than multiple shippers betting on a widening NCG-GASPOOL spread, then GASPOOL prices would probably narrow in towards those of its southwest neighbour.

This would be because the NCG market area would receive the gas supplied from the booked capacity.

Two other traders agreed with the view. “Once the capacity is bought they will flow it,” said one from a multinational utility.


Drohne-NOWAL is linked to OPAL, which was used to transport around 87mcm/day to the Czech Republic – until a mid-September EU ruling cut off principal shareholder Gazprom’s access to around 35mcm/day of this transit capacity.

This booking, despite being off-market, could be one way to solve the problem of oversupply in the GASPOOL hub.

GASPOOL, Europe’s primary transit hub for Russian gas, has been under significant pressure since the EU ruling as the supplies originally destined to the Czech Republic got held up in the northeast German region.


By rerouting the extra supply arriving in GASPOOL, the gas could be sent on from the NCG area further south.

Market players said some of the gas heading towards NCG could go towards France or Italy.

Meanwhile, the OPAL-related shortfall in the Czech Republic has the option of being compensated via the Ukrainian route. Altered flow patterns between Czech and Slovak markets have already shown this.


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