Trading at French PEGs EFET workshop on Spanish Gas Hub - 23 July 2008
Agenda GRTgaz project for the French market At the heart of the European market How can TSOs make a difference? The Basics Latest development at the PEG How can TSOs make a difference? Going Further Spanish & French markets mutual benefits EFET Workshop July 23rd 2008 - 2 -
GRTgaz project for the French market GRTgaz objectives • to foster liquidity on our market • to make our hubs an attractive place • to sell more capacity to as many players as North Sea NBP, Zee, TTF possible • to let end consumers benefits from free Russia, EGT, markets LNG (Henry Hub, Baumgarten Asian markets) A good place to take part to gas trading • Geographically speaking, GRTgaz is well positioned in terms of diversity Libya, Algeria, � Various gas sources available for arbitrage Algeria, LNG Russia, PSV � Players from neighbouring countries • Not yet a mature market � Opportunities in power generation A place where NBP/TTF traders can meet Mediterranean utilities, where eastern European energy companies can meet LNG sellers EFET Workshop July 23rd 2008 - 3 -
At the heart of the European market: our shippers Number of Shippers 50 45 40 35 30 25 20 15 10 5 0 EFET Workshop 2 3 3 3 4 4 4 5 5 5 6 6 6 7 7 7 8 8 2 3 4 5 6 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - - - - - - - - - - - l n r l n r l n r l n r l n r l n r u t u t u t u t u t u t c p c p c p c p c p c p a a a a a a J J J J J J O A O A O A O A O A O A J J J J J J July 23rd 2008 - 4 -
At the heart of the European market: major Hubs TTF NBP Zee Platform BEB Mature spot & forward markets VP Significant spot & forward activity PEG Some spot & forward activity Nord Interconnection EGT Transit pipeline VP PEG Baumgarten PEG CEGH SO Sud PSV AOC EFET Workshop July 23rd 2008 - 5 -
How can TSOs make a difference? The Basics 2008 Clear market structure • Unrestricted Entry Exit Zones � Any entry point can be used to supply any consumer in the zone (and the opposite) 4 GRTgaz zones � Volumes once in a zone can be traded without any reference to source or destination 1 TIGF zone • Concentration of liquidity in a limited number of points � in Europe: Hub = Virtual Point (except Zeebrugge & Baumgarten) � Between 2 Hubs : 1 link, 1 capacity price Transparency 2009 • Up to date and public data for all entries, exits and links: � Daily historical flows available as CSV � Total / booked / available capacity 10 years ahead � Maintenance schedule 3 zones « in series » Simplicity of operations • Daily balancing regime • Firmness of the HUB EFET Workshop July 23rd 2008 - 6 -
How can TSOs make a difference? The Basics Stability / Confidence • Regulated tariffs linked to the asset base • Visibility provided by GRTgaz 10-year statement Actual and sizeable access to existing firm capacity • Dynamic capacity marketing: � Periodic sale of large amounts (20% short term) � Ex: Three OSP in 2008 for the new North-South link totalling 143 GWh/day in the N to S direction � Releasable capacity � Ex: Obergailbach: 50 GWh/day sold to 13 shippers for the gas years 2007/08 and 08/09 • Optimisation of existing (short term UIOLI) Providing additional capacity where the markets needs it • Open Seasons, in coordination with adjacent TSOs • Partnership with LNG terminal sponsors • Discussion with market participants through a consultative process (10-year statement) EFET Workshop July 23rd 2008 - 7 -
PEG activity: signs that liquidity is picking up PEG Trading figures published by GRTgaz: Net Nominated Quantities • Net: resulting from all bilateral deals between shippers (spot & forward deals) • Nominated: submitted D-1 / within-day by shippers to GRTgaz through Edig@s or extranet 15,000 4,500 Total Energy Traded (GWh) 4,000 Average Trade Size (MWh) 13,000 Average Trade Size (MWh) Net Energy Traded (GWh) Number of Trades 3,500 Number of Trades 11,000 3,000 9,000 2,500 7,000 2,000 5,000 1,500 3,000 1,000 1,000 500 Jan-06 Mar-06 Jun-06 Jul-06 Nov-06 Jan-07 Mar-07 Jun-07 Jul-07 Nov-07 Jan-08 Mar-08 Jun-08 Feb-06 Apr-06 May-06 Aug-06 Sep-06 Oct-06 Dec-06 Feb-07 Apr-07 May-07 Aug-07 Sep-07 Oct-07 Dec-07 Feb-08 Apr-08 May-08 But we do not see what products are traded • Short term optimisation such as Hub to Hub arbitrage, storage / time value • Oil or gas-to-gas indexed deals, hedging / speculative trading with the forward curve Third party sources of information • Specialized press: price & deals reporting • Brokers screens & content aggregators EFET Workshop July 23rd 2008 - 8 -
Price developments on PEG Nord Day-ahead prices on selected European Hubs • PEG Nord basis to other hubs are tightening • PEG Nord Bid-Ask Narrowing 5,00 4,50 • => Sign of increasing liquidity 4,00 3,50 45,00 3,00 40,00 €/MWh 2,50 35,00 2,00 1,50 30,00 1,00 25,00 €/MWh 0,50 Bid-Ask PEG Nord PEG Nord - NBP Basis 20,00 0,00 PEG Nord - TTF Basis 7 7 7 7 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / 0 0 0 0 0 1 1 1 1 2 2 2 2 2 1 1 1 1 2 2 2 2 3 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 6 7 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / 1 8 5 2 9 5 2 9 6 3 0 7 4 1 7 4 1 8 4 1 8 5 3 0 7 4 1 7 4 1 8 5 2 9 6 2 9 6 3 0 7 PEG Nord - EGT Basis 0 0 1 2 2 0 1 1 2 0 1 1 2 3 0 1 2 2 0 1 1 2 0 1 1 2 3 0 1 2 2 0 1 1 2 0 0 1 2 3 0 15,00 10,00 5,00 0,00 5 6 6 6 6 7 7 7 7 8 8 0 0 0 0 0 0 0 0 0 0 0 / / / / / / / / / / / 2 3 6 9 2 3 6 9 2 3 6 1 0 0 0 1 0 0 0 1 0 0 / / / / / / / / / / / 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 EFET Workshop Note: Basis shown are absolute value of the differential between PEG Nord and other Hubs Midpoints July 23rd 2008 - 9 -
How can TSOs make a difference? Going Further Capacity Marketing • Primary market: � Simple & re-saleable products � Bundled Products with TIGF • Secondary market: New tool with Fluxys (end ‘08) � Commodity world products (DA, Front-month…) � Traders environment (Trayport Globalvision) Gas exchange with Powernext (end ’08) • Transparent & objective market prices • Anonymous and secured transactions (clearing) Market based balancing (May ‘07) • Buying from / selling to the market for balancing purposes 30,00 • Shippers imbalances cashed-out at market 25,00 price 20,00 Market coupling (later on) 15,00 • North <–> South Prix Vente Nord 10,00 Zee_bid_Nord_H • French PEGs <–> other HUBs 5,00 EFET Workshop 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / 4 4 4 5 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 8 9 9 9 9 0 0 0 0 0 1 1 1 1 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 / 8 / 5 / 2 / 9 / 6 / 3 / 0 / 6 / 3 / 0 / 7 / 4 / 1 / 8 / 5 / 1 / 8 / 5 / 2 / 9 / 5 / 2 / 9 / 6 / 3 / 0 / 7 / 4 / 1 / 7 / 4 / 1 / 8 / 5 / 2 / 9 / 6 / 1 1 2 0 0 1 2 3 0 1 2 2 0 1 1 2 0 0 1 2 2 0 1 1 2 0 1 1 2 3 0 1 2 2 0 1 1 2 July 23rd 2008 - 10 -
Spanish & French markets mutual benefits South Gas Regional Initiative • OSP for new capacity (2010) • OS with long term commitments to underpin capacity developments (2013+) Increasingly liquid trading points on each side of the Pyreneans, but markets remain barely linked Infrastructures are essential as these markets are currently isolated. But equally important, short term optimisation requires an appropriate market framework What market structure between hubs in the South Region? • How to enable deals between actively traded points in Spain and in France? • Short term capacity allocation? • Spanish gas exchange? • Coupling (spot), Basis trading (futures)? EFET Workshop July 23rd 2008 - 11 -
Capacities 230GWh/d +35GWh/d in end 2010 2013 to France +165GWh/d in 2013 to France +55GWh/d in 2013 to Spain +87GWh/d in +230GWh/d in 2013 to Spain 2015 to France +180GWh/d in 2015 to Spain EFET Workshop July 23rd 2008 - 12 -
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