Republic of Ireland gas market liquidity surges

27 April 2018 19:38 Source:ICIS

LONDON (ICIS)--Liquidity on a new natural gas trading venue in the Republic of Ireland has climbed in April, ahead of the start of market-based balancing in May.

After the first transaction was concluded on 5 October 2017, Irish participants have been using the electronic platform to balance physical positions on the Irish Balancing Point (IBP).

Trayport, a near ubiquitous platform for wholesale gas and power traders in Europe, provides the software for EBI, which acts as the broker for IBP-executed deals.

Within-day transactions seen by ICIS show the IBP tracking the equivalent British NBP product closely in April, often trading at a discount to its British peer.

IBP Within-day dealt at 51.80p/th on Thursday afternoon, around 0.05p/th below with the NBP.

In April to date over 250,000 therms (th)/day has traded on average, EBI said. Counterparties have been using the platform for both marketing and procurement requirements, but also balancing their physical position. Most trade is conducted during business hours but 20% of transactions are done before 08:30 and after 17:30 London time and a third over the weekend.

EBI expects two “large gas shippers” already signed up to trade on the platform to become active users over the next few weeks.

Balancing

GNI told ICIS it remains “on track to commence utilising the EBI platform for its balancing requirements in late May 2018.”

The contractual framework for trading balancing gas with shippers on the platform has been finalised, GNI said.

As balancing platform operator, EBI will be obliged to be publish a daily price for within-day transactions at the IBP. EBI and GNI are yet to agree the methodology for the daily price, which would form the basis of imbalance charges.

The current balancing regime, where GNI uses balancing contracts awarded to shippers through a tender, will remain in place as a backup.

An Irish basis

One Irish shipper said that EBI was looking to get involved in the NBP, with the goal of eventually offering a basis product similar to the Belgian Zeebrugge-NBP.

“Moffat can only physically flow NBP to IBP, so if you can buy IBP gas at the right price then you can sell back NBP volume and save on the capacity. It’s pretty much a play around the Corrib gas – physically stranded gas,” he said.

Gas is physically flowed from Britain to Ireland via the Moffat interconnector. NBP volumes used to meet the bulk of Irish demand but the start of the Corrib field in December 2015 means that Moffat now tops up Irish production.

Shippers are able to nominate virtual reverse flows on the pipeline. Backhauled gas is not physically delivered, but subtracted from the ‘forward’ gas flows from Britain-to-Ireland. Virtual reverse flows are only possible when sufficient gas is flowing in the forward direction.

EBI said that while their platform does provide scope for offering IBP-NBP basis contracts, they are assessing market interest in trading other products. thomas.rodgers@icis.com

By Thomas Rodgers