12.11.2011

North West European Natural Gas Hubs

• NBP (GB-1996) – National Balancing Point: Virtual trading point; _ Well established, ‘mature’ market; Third Party Access (TPA)

• ZEE (Belgium-2000): Zeebrugge Hub: Physical trading location; Huge physical throughput volumes; Prices closely linked to NBP (and priced in p/th)
• TTF (Holland-2003) -Title Transfer Facility: Closest of the Continental hubs in concept to NBP; Good TPA and growing number of participants; Successful but still only <1/10th size of NBP

• NCG (Germany-2009) – NetConnect Germany: Virtual trading point; By far the largest natural gas market in Germany; Good prompt liquidity.

• GPL (Germany-2009) – Gaspool Balancing Services Hub: Virtual trading point but operates as physical balancing platform; Aimed at users of the pipeline operators that form the service; • Used by participants as pseudo seasonal storage.

• PSV (Italy-2003) – Punto di Scambio Virtuale: Virtual trading point; Despite much early promise, has never taken off; Trading compromised by poor Italian gas market structure; Non-existant liquidity, few contracts quoted, yet alone traded!

• PEGs (France-2004) – Points d’Echange de Gaz: Virtual trading points in 3 separate zones; Only PEG Nord has any activity; More of a physical balancing tool than real trading.

• CEGH (Austria-2005) – Central European Gas Hub; Similar in construct to Zeebrugge – a physical transit point; Poor TPA and low number of participants

11.11.2011

There are five basic capacity allocation methods for using natural gas storage capacity:

Capacity goes with customer (CGWC)

First come, firt served (FCFS)

Pro rata

Auctions

Open seasons

04.11.2011

The Japan Crude Cocktail price, or the average price for customs-cleared crude oil imports which is used as the benchmark for LNG prices for Japanese buyers.

Price of gas in Japan is not exactly linked to the price of Brent but rather to the JCC namely the Japan Crude Cocktail which is an average of crude oils imported into Japan, and can be the average of at least 20 different crude oils imported into Japan rather than just Brent. The data to calculate JCC is published usually each month by the Government of Japan, and includes also a dollar yen exchange rate. This price is formed more by reaching an average of dozens and dozens of JCC contracts, all of which with a different formula and linkages with crude oil prices and spot cargo deliveries, although one can see that there is a direct, lagged, relationship to Brent.