Institutional Aspects of Gas Hub Design-Frederick Bernthaler

Central European Gas Hub AGp

Institutional Aspects ofGas Hub DesignGas Hub Design

24 June 2014

1

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

What is a Gas Hub?

Liberalized gas market

Infrastructure:storage, pipelines

Gas supply:diversification

p p

TrustKnowledgeKnowledge

Hub operator/ exchange (IT)exchange (IT)


What is a successful hub?

Goal • Competitiveness• Security of supply

• Transparent and reliable price Instrument signals

• Liquidity

Parameter• Customers• Trade volumes

• Standardised d t tParameter Trade volumes

• Churn rateproducts, etc.


CEGH Markets

Central European Gas Hub

CEGH Gas Exchange ofWiener Boerse CEGH OTC MarketCEGH Czech Futures

Market by PXE

Spot MarketFutures Market Futures Market

(active / passive)Futures Market Futures Market

Front MonthsDay Ahead contracts

Within-Day contracts

1. 2. 3. Front Month

Front Months, Seasons,

Quarters, Years


Agendag

CEGH OTC Market / VTP Operation


Number of Registered Hub Members

Balance Group Resp 80 (+1)Balance Group Resp. 80 (+1)Virtueller Traders 85Registered Members 166

7Central European Gas Hub AG

OTC Trading: Registered Members by Country


OTC Trading: Daily Volumes


Active traders on daily basis


Daily churn rate


Agendag

CEGH Gas Exchange of Wiener Boerse


Registered Members CEGH Gas Exchange

Futures Market 22 Trading Participants9 Clearing

Spot Market11 Clearing

81 Trading Participants

a t c pa tsParticipantsParticipants


Gas Exchange: Monthly Trading Volumei D 2009since Dec 2009


Relation between CEGH, Huberator, NCG, TTF and PSVTTF and PSV


Agendag

Austrian Market Model

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 (storagelocation 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


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 pointto 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.


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


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.

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


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


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 pointt 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.


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 (public g g (plimited company under Austrian law) share capital of at least 2 million EURth 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


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


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


Thank you very muchffor your attention


Economy & Finance

Institutional Aspects of Gas Hub Design-Frederick Bernthaler