The Intercontinental Exchange plans to launch a "parallel market" in London for Title Transfer Facility gas trading next month, it said on Jan. 27, providing a way for market participants to avoid the European Union's gas price cap.
ICE hosts trading on the TTF gas hub in Amsterdam and had previously warned it could move the market outside of the EU because of the bloc's looming price cap on gas derivatives.
ICE said it would continue to operate the TTF market on its Amsterdam exchange - the most liquid gas futures market in Europe, which sets the region's benchmark gas price - but alongside this, it was preparing to launch another market for TTF futures and options in London on Feb. 20.
The London market would not be subject to the 27-country bloc's gas price cap, since Britain is no longer an EU member.
Trabue Bland, senior vice president of futures exchanges at ICE, said the second market would provide an "insurance option" for customers in case the EU price cap prevented them from trading or managing their risk exposure.
"ICE's purpose is to create markets to allow our customers to manage their risk and we have a duty to our customers to provide solutions to the problems they face," he said.
EU countries agreed on the gas price cap last year, to attempt to avoid a repeat of the record-high price spikes experienced in 2022 as Russian gas deliveries to Europe dwindled.
A spokesperson for the Dutch Economic Affairs ministry said the news of the London hub was not unexpected.
"This is completely in line with what we expected and also had warned at the EU might happen," the spokesperson said.
Starting from Feb. 15, the EU will cap TTF prices if the front-month contract spikes to above 180 euros ($196) per megawatt-hour (MWh) for three days and is also 35 euros/MWh above a liquefied natural gas reference price.
European gas prices have fallen below 70 euros/MWh this year, more than halving since December amid warm weather and brimming EU storage tanks. Analysts have said the EU cap now appears less likely to be triggered, but that price spikes cannot be ruled out.
The long-debated EU cap split the bloc's member countries, with Belgium and Poland among those calling for the measure to shield consumers from soaring energy bills, while skeptics including Germany and the Netherlands feared it could disrupt markets.
Recommended Reading
CEO: Baker Hughes Lands $3.5B in New Contracts in ‘Age of Gas’
2024-07-26 - Baker Hughes revised down its global upstream spending outlook for the year due to “North American softness” with oil activity recovery in second half unlikely to materialize, President and CEO Lorenzo Simonelli said.
YPF, Petronas Target FID for Argentine LNG Facility in Late 2025
2024-08-16 - Argentina’s long-envisioned LNG export facility is closer to becoming a reality as state-owned YPF SA and Malaysia’s Petronas will look to reach a final investment decision in the second half 2025 on development in Sierra Grande on the country’s Atlantic Coast.
Freeport LNG Parent Receives Junk-level Credit Score From Fitch
2024-07-25 - Credit-rating firm Fitch Ratings cited the 2 Bcf/d Texas plant’s frequent downtimes among the factors leading to lowering Freeport LNG Investments LLLP’s credit grade on July 25.
Cheniere’s Corpus LNG Stage 3 Project on Track for Year-end Start
2024-08-09 - Cheniere Energy., which boasts 45 mtpa of LNG production capacity, is on schedule for first LNG production from its Corpus Christi LNG Stage 3 project by year-end 2024, the company’s CEO Jack Fusco said during a quarterly earnings webcast.
NextDecade Appoints Former Exxon Mobil Executive Tarik Skeik as COO
2024-07-25 - Tarik Skeik will take up NextDecade's COO reins roughly two months after the company disclosed it had doubts about remaining a “going concern.”
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.