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    GGP: European traded gas hubs: an updated analysis on liquidity, maturity and barriers to market integration

Summary

This OIES Energy Insight provides an update on the maturity and development of European traded gas hubs

by: Patrick Heather and Beatrice Petrovich

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Global Gas Perspectives

GGP: European traded gas hubs: an updated analysis on liquidity, maturity and barriers to market integration

The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.

This article was originally published by the OIES, May 2017 

Chapter 1. Introduction

Map 1: European gas regions, markets and hubs in 2016This OIES Energy Insight provides an update on the maturity and development of European traded gas hubs, including both longer-term established hubs and recently emerging ones, both from a liquidity and price perspective, in order to come to an overall assessment of the policy goal of achieving a Single Energy Market for natural gas in Europe. The update considers whether the natural gas market in Europe is working well and functioning in line with policy makers’ ambitions; whether it is providing the competitive and correct price signals to market players, and whether wholesale traders can buy gas at the same price throughout Europe, as they could in a truly interconnected European market for energy. The present short contribution complements substantial research work undertaken in the last few years by the OIES, which has been following the development of European gas hubs since 2010. Publications by Patrick Heather for the OIES have documented the trading liquidity at various hubs and have assessed their stages of development, through a compelling mix of both quantitative and subjective measures: the five Key Elements (number of market participants; traded products; traded volumes; tradability Index; churn rate) and the three Main Indicators (political will, cultural attitude, commercial acceptance). Another parallel and complementary stream of research by Beatrice Petrovich has assessed the maturity of gas wholesale markets by studying the hub price dynamics, and three factors in particular: first, the frequency of the price signal for traded gas; second, the convergence of the price signal between the exchange and OTC market; third, the degree of price correlation between different markets, which is a metric to assess the cross-border trading efficiency and integration of European hubs. The present Energy Insight offers an update on both hub liquidity development and hub price metrics to the end of 2016. 

Full article here

 By Patrick Heather and Beatrice Petrovich 

The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.