Gastech News had the pleasure to ask Andree Stracke, Chief Commercial Officer Origination and Gas Supply at RWE Supply & Trading GmbH for his thoughts on the main challenges facing today’s European gas trading hubs.
Andree Stracke: Since the first European gas trading hub, the NBP, was established in 1996, the European gas markets as well as its corresponding virtual trading hubs have overcome diverse challenges and undergone profound transformations within only a few years.
Sources for diverse challenges were developments on the physical markets (e.g. emergence of LNG), technological progresses (e.g. real time trading platforms) or regulatory interventions (e.g. Capacity Booking on PRISMA platform). Accepting and successfully adopting such challenges has led to the establishment of effective and efficient gas trading hubs as the NBP or the TTF. However, to further build on the reached accomplishments, it will be essential to look ahead and to identify and to tackle the challenges that lie ahead.
One of the major challenges nowadays is definitely market liquidity. When most banks retreated from commodity markets in recent years, they have left quite a gap amongst the group of tradable counterparties, which became particularly eminent in liquidity in the forward markets.
Another challenging aspect that hubs have to face is growing re-nationalization, especially in eastern European countries. Instead of opening up markets to accomplish efficient and transparent pricing for the benefit of security of supply many countries protect their national incumbents especially via national regulation with the excuse to protect the end customer.
An additional challenge that gas hubs and markets have to face is financial regulation like MiFID. The first majors have already made clear to the European Union that further tightening of financial regulation would lead them to also retreat from European commodity markets like banks did before.
Do you agree with Andree? What are the main challenges moving forward? Leave your comments below.
To discuss more about gas trading in Europe, join Andree Stracke and over 300 high-level gas industry executives at the EAGC taking place 17-19 November in Geneva.
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