Institutional and Organizational Designs of Natural Gas Hubs: An Introduction to the Iberian Gas Hub

1. Central European Gas Hub AGp
Institutional Aspects of
Gas Hub DesignGas Hub Design
24 June 2014
1

2. Agendag
• Aspects of a Gas Hub & Development of CEGH
• Hub & VTP Operation
• CEGH Gas Exchange of Wiener Boerse
Austrian Market Model• Austrian Market Model
Central European Gas Hub AG 2

3. What is a Gas Hub?
Liberalized
gas market
Infrastructure:
storage,
pipelines
Gas supply:
diversification
p p
TrustKnowledgeKnowledge
Hub operator/
exchange (IT)exchange (IT)
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4. What is a successful hub?
Goal
• Competitiveness
• Security of supply
• Transparent and reliable price
Instrument signals
• Liquidity
Parameter
• Customers
• Trade volumes
• Standardised
d t t
Parameter Trade volumes
• Churn rate
products, etc.
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5. CEGH Markets
Central European Gas Hub
CEGH Gas Exchange of
Wiener Boerse CEGH OTC Market
CEGH Czech Futures
Market by PXE
Spot Market
Futures Market Futures Market
(active / passive)
Futures Market Futures Market
Front Months
Day Ahead
contracts
Within-Day
contracts
1. 2. 3.
Front Month
Front Months,
Seasons,
Quarters, Years
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6. Agendag
 CEGH OTC Market / VTP Operation
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7. Number of Registered Hub Members
Balance Group Resp 80 (+1)Balance Group Resp. 80 (+1)
Virtueller Traders 85
Registered Members 166
7Central European Gas Hub AG

8. OTC Trading: Registered Members by Country
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9. OTC Trading: Daily Volumes
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10. Active traders on daily basis
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11. Daily churn rate
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12. Agendag
 CEGH Gas Exchange of Wiener Boerse
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13. Registered Members CEGH Gas Exchange
Futures Market 22 Trading
Participants9 Clearing
Spot Market
11 Clearing
81 Trading
Participants
a t c pa ts
ParticipantsParticipants
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14. Gas Exchange: Monthly Trading Volume
i D 2009since Dec 2009
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15. Relation between CEGH, Huberator, NCG,
TTF and PSVTTF and PSV
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16. Agendag
 Austrian Market Model

17. Gas Market Model
All ti f ibiliti b G A t 2011 (i d ith EU Allocation of responsibilities by Gas Act 2011 (in accordance with EU
Network Codes) - switch to new model by 2013
Entr /E it S stem S stem Di ision in Transit and DSO Zones (storage Entry-/Exit System System: Division in Transit and DSO Zones (storage
location is in DSO zone), System Operators (MAM, VTP Operator, etc)
 Market Area Manager Market Area Manager
• Single Point of Contact for Balance Group-, VTP registration
• Balancing Coordinator
A h i R l i i h NRA• Authority Relations with NRA
 E-Control Austria
• NRA for Energy Market
• Approves Terms and Conditions of System Operators
• Balance Group Responsible Party requires approval of NRAp p y q pp
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18. Balancing by MAM
Energie-Control Austria Executive Board Ordinance on Provisions for
the Gas Market Model (“Gas Market Model Ordinance 2012”)
Section 26 (4): The market area manager shall net the volumes nominated for
each balance group and inform the balance responsible parties of any
imbalances over the day Should the relevant balance responsible party fail toimbalances over the day. Should the relevant balance responsible party fail to
renominate and thereby eliminate any daily imbalances in the balance group
within one hour, gas shall be purchased or sold at the virtual trading point
to ensure that the group is in balance Such exchange transactions at theto ensure that the group is in balance. Such exchange transactions at the
virtual trading point shall be executed on behalf and for account of the
balance responsible party, at the best available purchase/selling price at that
timetime.
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19. From physical Gas Hub to
Operator of Virtual Trading PointOperator of Virtual Trading Point
P i CEGH l ti C t CEGH l tiPrevious CEGH locations Current CEGH location
Baumgarten
Oberkappel
(2 TT points)
Ueberackern
(2 TT points)
g
(13 TT points)
(2 TT points)
Mosonmagyaróvár
CEGH VTP
(1 title transfer point)
Murfeld
(1 TT i t)
Mosonmagyaróvár
(1 TT point)
Weitendorf
(1 TT point)
(1 TT point)
Definition Virtual Trading Point:
Notional point in the market area at which market participants can trade natural gas even without having the right to
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Notional point in the market area at which market participants can trade natural gas even without having the right to
system access for the market area. Access to the Virtual Trading Point shall be subject to the operational rules of the
market area manager and the transmission system operators, in line with the market rules.

20. Appointment of VTP Operatorpp p
• Institutional appointments
– Market Area Manager is appointed by TSOs
M k t A M d i t th O t f th– Market Area Manager designates the Operator of the
Virtual Trading Point
• Gas Hub GT&C´s:
– Subject to public consultation– Subject to public consultation
– Mandatory approval by NRA
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21. Legal Supervision
 Börsegesetz (Austrian Exchange Law)Börsegesetz (Austrian Exchange Law)
Federal Ministry of
Economic Affairs
E – ControlAustrian Financial Market
Authority
Gas derivatives marketGas spot market VTP Operator
Gas Exchange Activities
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22. Responsibilities of VTP Operatorp p
The operator of the Virtual Trading Point has inter alia the followingThe operator of the Virtual Trading Point has inter alia the following
responsibilities:
• to offer commercial hub services including without limitation title tracking• to offer commercial hub services, including, without limitation, title tracking
to prove the transfer of ownership rights in natural gas at the virtual trading
point
t l t i ll d d ttl titi f t d t th i t l• to electronically record and settle energy quantities from trades at the virtual
trading point
• provide 24/7 operations of the virtual trading point
• provide for balancing options
• conduct market consultations.
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23. Independence of VTP Operatorp p
fThe operator of the Virtual Trading Point shall be independent,
• especially from the vertically integrated natural gas• especially from the vertically integrated natural gas
undertaking
• it shall take the legal form of an Aktiengesellschaft (publicg g (p
limited company under Austrian law) share capital of at least 2
million EUR
th ibl f th t h ll h• the persons responsible for the management shall have no
other professional position or responsibility, with any other
part of the vertically integrated natural gas undertakingp y g g g
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24. Non discrimination by VTP Operatory p
Compliance & Non discrimination provisionCompliance & Non discrimination provision
• VTP Operator refrain from discriminating users of its services, in particular if
this would be to the benefit of vertically integrated natural gas undertakingsthis would be to the benefit of vertically integrated natural gas undertakings.
• Appoint a dedicated Compliance Officer
• Implement confidential areas (between OTC & Exchange)
• Shall preserve the confidentiality of any economically sensitive information
(and price information) and of any business or trade secrets of which it
obtains knowledge in the course of carrying out its business
• Shareholders shall refrain from any actions which would endanger the
performance of the obligations of the operator of the virtual trading
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25. Publication by VTP Operatory p
O t f th Vi t l T di P i t h ll bli h i di i i tOperator of the Virtual Trading Point shall publish in a non-discriminatory
manner and without undue delay, in an appropriate format information of which
it obtains knowledge and which might have an impact on the market in an
anon mo s and aggregate general market information on the internetanonymous and aggregate general market information on the internet.
CEGH REMIT
Plattform 
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26. Thank you very much
ffor your attention
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