The Dutch gas trading exchange, the TTF, has grown over the past five years to become one of the two leading liquid gas hubs in Europe, comparable to the English National Balancing Point (NBP). The NBP was by far the largest trading exchange in the European Union for years and served as a model for many other European countries in their efforts to create smooth-running liberalised gas markets. On the European continent, the TTF had already occupied a leading position compared with gas trading exchanges in other European countries for a couple of years, but can now hold its own with the NBP.

More than 14 times the gas consumption of the Netherlands is currently traded on the TTF. The gas prices on the Dutch wholesale platform have become important reference prices in Europe.

This emerged from the publication, Transport Insight 2012, published today by Gas Transport Services BV (GTS), a subsidiary of gas infrastructure company Gasunie. GTS publishes Transport Insight annually to give its clients and other stakeholders in gas transport insight into the current background to the operation of the network and developments in the gas market.

Gas roundabout strengthens position of gas consumers

The remarkable growth in trade on the TTF can be seen as an important indicator of the success of the gas roundabout. The ambition of the Netherlands is to become the gas roundabout of Europe, because this will ensure the supply of sufficient gas from diverse sources and directions, which is important for security of supply and good competitive pricing. A good gas infrastructure is a condition for growth of the TTF, so that sufficient capacity is available to purchase gas at a competitive price.

Paul van Gelder, Gasunie CEO: ‘A smooth-running TTF is in the interests of the gas consumers in the region. It attracts traders, allowing the law of supply and demand to do its work properly and exert downward pressure on prices. Analysts have calculated its benefits for gas consumers in this market area at 100 million euro per year.’

Successful hubs are similar

The GTS analysis presents a picture of the scale and intensity of current trade on the TTF. The volume of gas traded in 2011 was 645 billion m3, while physical gas supplied amounted to 38 billion m3. That indicates a high level of trading activity by domestic and foreign traders. It illustrates also the importance of the TTF for the European gas market. The large number of transactions and participants at the TTF create optimum conditions for optimal pricing under the influence of competition.

Looking at the products available on the north-west European gas trading hubs, it is striking that successful liquid gas markets, such as the NBP and TTF, have similar product portfolios with a high percentage of trade ‘on the curve’ (long-term contracts) and a large proportion of financial transactions. On the smaller marketplaces, such as in Germany, the proportion of short-term products is relatively large.