Germany launches nationwide gas trading hub THE

European Energy Exchange AG

01/10/2021 10:50

* Trading Hub Europe starts commercial operations
    * Consolidates former two market areas
    * Could speed more cross-border trading links

    By Vera Eckert
    FRANKFURT, Oct 1 (Reuters) - Germany launched a nationwide
gas market trading hub, Trading Hub Europe (THE), on Friday
after merging its two existing hubs to boost liquidity and
simplify administration.
    The existing gas market hubs, Gaspool and NetConnect Germany
(NCG), have renamed their order books to THE to continue spot
and futures trading, in a move the industry has been planning
since 2017 and had been testing ahead of THE's launch.
    The new hub covers 40,000 km of high-pressure pipes
connecting over 700 distribution networks in Germany, Europe's
biggest gas consumer and importer. Previously Gaspool and NCG
operated in separate regions, essentially carving Germany into
two gas markets.
    THE entails IT system upgrades that will offer more security
of supply through standardised services to ensure overall
volumes of gas removed from the network match the volume
entering it, THE said in a statement.
    The online hub will be overseen by Germany's energy
regulator.
    After the Dutch TTF and UK's NBP markets, the two German
hubs were among Europe's biggest. Italy, France, Belgium,
Austria and Spain also have sizeable marketplaces.
    Europe's overall traded gas market was worth 680 billion
euros ($787.37 billion) in 2020, turning over 70,512 terawatt
hours (TWh), UK research firm Prospex said in a July report.
    Some 89% of volumes in NCG and Gaspool, amounting to 4,300
TWh within last year's total, were over-the-counter (OTC) and
the rest were traded on exchanges, Prospex said.
    "THE will be the central starting point for further
cross-border links between individual European gas markets,"
said Sebastian Kemper of Gaspool, one of two managing directors,
the other being Torsten Frank.
    Separately, online energy bourse EEX  DB1Gn.DE , which is
mainly electricity-focused, said it has enabled the alignment of
trading on THE for its existing gas products which, unlike
purely bilaterally settled trades, offer market participants
clearing house services.
    EEX said it will introduce 13 new gas quality-specific
products to cater for energy needs in different regions of
Germany on THE's spot market.
    Both its physical gas futures and new financial gas futures
(EGSI Futures) will also be available. urn:newsml:reuters.com:*:nL8N2MR33D
    EEX hopes to improve liquidity in its gas futures once all
participants are bundled in one space.
    
($1 = 0.8636 euros)

 (Reporting by Vera Eckert, editing by Susan Fenton)
 ((vera.eckert@thomsonreuters.com; +49 30 2201 33654;
@EckertVera;))