Romanian gas hub overhaul misinterprets EFET hub model

18 May 2017 15:28 Source:ICIS

Romanian authorities have misinterpreted guidance by the European Federation of Energy Traders (EFET) to justify an amendment to the natural gas law that could frustrate gas trading, the association said on Thursday.

Iulian Iancu, chair of the parliamentary committee for industries and services said on Wednesday the his commission had followed EFET guidance when voting through amendments to the gas law that would effectively restrict all gas trading to the state-owned bourse, OPCOM.

However, the EFET document referred to by Iancu relates to the creation of virtual trading points and the use of best practise models to promote liquidity, and not the restriction of trading on a single platform.

“While we are pleased that Mr Iancu is looking to the EFET hub model for guidance, we fear that this is being misinterpreted,” Doug Wood, chair of the EFET gas committee told ICIS on Thursday.

“EFET believes that there should be a choice of trading venues, and buyers and sellers should be free to conclude bilateral deals, which can subsequently be registered via a platform. In its current form, it appears that the Romanian proposal would not allow this, and would frustrate trading.”

Davide Rubini, co-chair of the EFET task force for central and south-east European gas said EFET had already written to the Romanian authorities to point out the EFET text had been misconstrued, and to highlight the limitations of the new proposals related to gas trading.

“We remain available to help revise the text to correct this misunderstanding,” Rubini said.

On Wednesday, Iancu quoted several examples of European countries including Britain, France, Germany and Austria, which he claimed have single exchange operators. In fact, contrary to Iancu’s comments, all these European gas hubs allow trading across multiple venues, that include a variety of exchanges and over-the-counter inter-dealer brokers.

Market concerns

On Tuesday the Romanian committee for industries and services voted to bring all gas trade onto the state-owned OPCOM exchange.

The law will still need to be approved by parliament, although a date for the vote has not yet been set.

Under the amendments existing bilateral trading, as well as transactions on the Romanian Commodities Exchange (BRM), will cease.

Trading volumes on the BRM have soared in recent months as more companies started use BRM’s two platforms. On Thursday alone, a record 3.7TWh was traded through BRM.

In April around 30% of the total national consumption was traded on BRM, according to the bourse.

In a letter sent to the Romanian parliament earlier this month, EFET also raised concerns about the impact of a single state-owned bourse on the market.

It pointed out the measure would obstruct cross-border transactions because companies would have to trade volumes on the platform rather than bilaterally.

EFET noted the creation of a platform with monopolistic attributes could expose the market to possible distortions. ( see ESGM 15 May 2017 )

OPCOM has previously insisted that its platforms are designed to suit market needs and are fully prepared to host gas trading.

By Aura Sabadus