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Market Dynamics Report

SEPTEMBER 12 2013

August 2013

Spotlight on Euro Gas

There have been stirrings in the Euro Gas markets for some months now. The key exchanges in the Euro Gas markets are positioning themselves to take advantage of the current and expected growth of these markets: TTF has grown to two thirds the size of the largest European Commodity market, NBP, up from half the size this time last year. TTF has recorded growth YTD 2013 vs YTD 2012 while NBP volumes have dropped over the same period. NCG and Gaspool, the German Gas hubs, have also recorded YTD 2013 vs YTD 2012 growth in volumes. Gaspool is one to watch out for, with significant volume growth of vs. December 2012. Gaspool is now almost the same size as NCG, up from half the size year end 2012.

The completion of an exchange acquisition kicked things off back in March 2013. Then we had the launch of the PEGAS platform, the Pan-European Gas Cooperation, in April 2013. The summer months have seen further development of both initiatives. PEGAS completed the transition of all natural gas spot and derivatives products during August, with the final push of TTF, NCG and Gaspool spot markets migrating successfully on 28 August, to round out the full offering of TTF, PEG, NCG and Gaspool spot and derivatives markets tradable all on one platform. The Euro Gas market is largely brokered, but with the impending implementation of regulation, this could shift to clearing and the exchanges. The competition between exchanges looks like it will only intensify. Who will win? We'll be keeping an eye on the shifting dynamics of these markets as events unfold over the next few months.