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    German hubs agree to merge Oct 1


The lengthy process of forming a single German gas hub as reached its end-point.

by: William Powell

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Natural Gas & LNG News, Europe, Corporate, Mergers & Acquisitions, Market News, News By Country, Germany

German hubs agree to merge Oct 1

The merger of the Germany's two remaining gas market areas, Gaspool and NetConnect Germany (NCG), will take effect at the start of the next gas year (October 1), their operators said April 22. The new hub will be known as Trading Hub Europe (THE), with a new entity set up to manage both separately for the four months from June 1. Further information on balancing, invoicing and other operational matters may be read here.

The team said "THE will benefit shippers and end users, network operators and balancing group managers alike. Due to its central location in the heart of Europe, the new Germany-wide market area will act as an international hub linking other European gas markets."

However, consultant Patrick Heather told the NGW European Gas Dialogues in early March that both hubs had performed disappointingly over the past five years. "A grandiose name change will not create liquidity," he said, adding it was "doubtful that THE will live up to its title."

Gaspool and NCG have been working on the creation of a new, nation-wide market area since November 2017, aiming to become "one of the most attractive and liquid gas trading hubs in Europe." The Dutch Title Transfer Facility (TTF) is the most liquid at the moment, having overtaken the UK's National Balancing Point some years ago.

"The signing of the co-operation agreement marks a major milestone in this project. We now have a sound basis for the new joint THE market area, which will start trading on October 1, 2021," the project team said. The high-pressure pipeline network in the new market area will have a total length of around 40,000 km and connect more than 700 downstream networks. Unlike the TTF It will not have any LNG import facilities at the outset although several are planned. There is some gas production in the country and major gas import pipelines from Russia, Norway and the Netherlands.

Work on the merger has included "extensive IT system upgrades, which will undergo thorough testing over the coming weeks," the team said, adding that "continuous and constructive dialogue with the market participants and the Federal Network Agency has also been a key success factor."

GasPool said THE "will ensure the operation of the joint market area and make an important contribution to the security of natural gas supplies in Germany and Europe."