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1、 July 2024 OIES PAPER:NG 192 European Traded Gas Hubs:the markets have rebalanced Patrick Heather,Senior Research Fellow,OIES i The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.

2、Acknowledgements I would like to thank all those who helped me in the writing of this Paper and who answered my many questions;in particular:James Brown,Mike Fulwood,Grgory Hloir,Bert Hoven,Rozike Janzen van Rensburg,Sybren de Jong,Ian Lawrie,Richard Pugh,Egbert-Jan Schutte-Hiemstra,Gregor Spilker,J

3、ack Sharples,Jonathan Stern,Doug Wood,and if I have omitted anyone I sincerely apologise but thank you all the same!The task of collecting all the relevant trading data was made easier by the help and assistance I received from several companies,in particular my thanks to:Argus,EFET,ICAP,ICIS,JODI,L

4、EBA,and S&P Global Platts for providing European and Asian markets data as well as background information and news items;thanks to BRM,CME,EEX,ICE,for supplying data files of their exchange trades;thanks to the various market participants who advised,informed and helped me during the writing of this

5、 paper.Lastly,but by no means least,I would like to thank my colleagues at the OIES for their ongoing help,guidance and encouragement,and in particular to Bill Farren-Price for his support on this project.Many thanks also to Kate Teasdale for her help in preparing the paper for publication.ii The co

6、ntents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Executive Summary European gas markets experienced a very turbulent period from 2020 to 2022,starting with a large fall in demand due

7、to the global pandemic,followed by a renewed surge in demand in 2021,especially in Asia,and finally,the rapid fall in Russian pipeline gas supplies to Europe due to the war in Ukraine.All these events led to the lowest ever northwest European gas prices at the end of May 2020,1 then several strong r

8、allies led to four successive highest ever prices,2 the most recent being in August 2022.After each of those rallies,markets retraced back down to around 60/MWh.There was one last smaller but equally steep rally at the end of 2022,resulting in a high on 7th December 2022 when the THE3 closed at 149.

9、11/MWh.The focus of this paper is to review the European traded gas markets during 2023 to see whether they have remained uncertain,volatile and have the potential to revisit those highs or,by contrast,whether they can be said to have rebalanced to any degree.The paper analyses the results of the au

10、thors 5 Key Elements,as well as the effect of large LNG imports,and five long term market trends(traded volumes development,Month Ahead prices and the spreads between hubs,price convergence,correlation and volatility).All of Europe now has a gas hub of sorts,ranging from the very small nascent balan

11、cing and spot trading hubs;to the inactive hubs that might have a little more spot and prompt trading but often very little or no curve trading;to the medium poor hubs in Belgium,Czech Republic,and Spain that do trade more products but still in relatively low volumes;to the larger active hubs in Bri

12、tain,France,and Germany that do trade reasonable volumes and also in more types of products.All of these are dwarfed by the only mature benchmark hub in Europe,the Dutch TTF.In 2023,trading picked up significantly,set against a general fall in physical volumes.When comparing the 2022/23 year on year

13、 difference,Europe as a whole had a 40%rise in traded volumes,whilst physical demand fell by-18%.All countries had higher traded volumes except Belgium,Great Britain and Romania and all had lower physical demand,except Bulgaria,Denmark and Romania.The most important metric is the traded gas hubs chu

14、rn rate since in this one metric all others are necessarily reflected:if there are many participants,trading many different products in large quantities,then the churn rate is likely to be high.The net and gross churn rates for the 10 main hubs were studied in this paper and the results for 2023 sho

15、w that there is only one European benchmark hub,the Dutch TTF,standing far ahead of all the others and the only hub considered as mature,plus one regional sterling marker price,the British NBP.The authors 2022 paper concluded that there was indeed an LNG effect on traded volumes in those countries t

16、hat imported large additional cargoes of LNG.Although the results are less clear for 2023,there was a large increase in traded volumes and churn rate at the Dutch TTF and the Netherlands was the only country with an increase in LNG sendout in 2023 compared to 2022.The urgent need since 2022 to bring

17、 additional volumes of LNG into Europe resulted in an expansion of new LNG terminal and FSRU projects,in particular in the Netherlands and in Germany,and this has already led to greater traded volumes at the Dutch and German hubs.Having examined each of the 5 Key Elements in detail,as well as severa

18、l complimentary analyses,it is clear that the Dutch TTF is far and away the leading European traded gas hub,used by many more market participants than any other hub,has a very high traded products score,with far greater total traded volumes than all the others put together.TTF also accounts for 81.5

19、%of all European gas 1 On 21st May 2020,the lowest ever price was 3.61/MWh at the NBP.2 On 5th October 2021,NBP closed at 119.57/MWh;on 21st December 2021,NCG closed at 180.98/MWh;on 8th March 2022,NCG closed at 218.30MWh;and on 26th August 2022,NCG closed at 320.25.3 Although the German NCG(later T

20、HE)was the highest hub in four of those highs,the other NW European hubs were very close.iii The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.trading,for 56%of all OTC trading,a

21、nd 87%of all exchange trading.TTF also has the highest Tradability Index score,only missing one point on one of the balance of month contracts,and finally,by far the greatest churn rate.This paper also reviewed the longer term trends at eight selected hubs,namely the British NBP,the Dutch TTF,the Be

22、lgian ZEE and ZTP,the German THE,the Austrian VTP,the French TRF,and the Italian PSV,to determine whether or not the traded gas markets have continued to trade erratically into 2023,or whether there is an emerging pattern to suggest that they have rebalanced.Month Ahead spreads are commonly traded i

23、n the European gas markets,principally because it is the MA contract that is most used in pricing underlying physical contracts and therefore,it is the MA contracts,OTC and especially exchange futures,that are most used in the risk management of physical gas portfolios.The graphs in this paper show

24、that it was the French TRF versus Dutch TTF spread that recorded the highest differential during the turbulent trading period of 2022,but the other main European hubs also saw wide variations in their basis prices to TTF.The TTF/TRF spread has over time been marginally negative but in 2022 went posi

25、tive due to the large quantities of LNG imported into France;however,from early October 2022 the TTF premium fell quite sharply,and even went a touch negative in early January 2023,before stabilising over the course of the year.Although there was a brief small increase in Q4-2023,it fell back again

26、in early 2024.With regards to the spreads between TTF and the THE,PSV and VTP hubs,the most extreme of these three hubs was the Austrian VTP and although that hubs spread against TTF has rebalanced from 2023,there have still been some variations,both positive and negative to the benchmark TTF.The TH

27、E and PSV have mostly settled back down to a similar pattern as pre-2022.The actual correlation coefficients of some of the main pairs of hubs show near perfect correlation of the three large NWE LNG importers to the benchmark TTF before and since the extraordinary market conditions in 2022.The thre

28、e other sets of correlation coefficients between TTF and the German THE,Austrian VTP,and Italian PSV,showed greater correlation throughout the whole four year period.The absolute price correlations and the correlation coefficients all show that the markets in these six selected NWE hubs did rebalanc

29、e and have remained pretty much in line to this day with the markets prior to 2022 and before.The volatility graph for the benchmark TTF alone from 2007 to 2023 shows that the average volatility in the two year period before the first big rise in gas prices in the summer of 2021 was 68.28%;the avera

30、ge TTF volatility in the most volatile 13 months from Q4-2021 to Q4-2022,both in terms of extremely high absolute levels and steep rises and sharp dips,was 137.36%;and the average TTF volatility in December 2023 was 73.75%.For now at least it appears that to a large extent the TTF market has also re

31、balanced in terms of volatility.After a period of very high volatility for the whole of 2022,levels have both come back down and stabilised somewhat and with a broad convergence across the four lowest hubs by the end of 2023.This trend is less visible with the Belgian and French hubs.On a global sca

32、le,HH is the North American benchmark hub and remains a leading global gas benchmark,used to price LNG cargoes to Asia and Europe.It is now closely followed by TTF which is not only the benchmark for its immediate sphere of influence but increasingly so for all of Europe and also globally.NBP remain

33、s a regional benchmark hub for the British Isles and some LNG pricing.The JKM is currently the only feasible price marker in Asia,but is very far from being an active and reliable one.The actual results also show that the trading at TTF has rebalanced and indeed,gone from strength to strength.The ot

34、her European hubs can also be said to have rebalanced on the whole,with some exceptions,particularly at some emerging hubs.With regards to the analyses on long term trends,price spreads,price correlation and price volatilities they also show to a large degree that the markets have rebalanced.Finally

35、,Henry Hub and JKM trading has also rebounded.iv The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Contents Acknowledgements.i Executive Summary.ii Contents.iv Figures.iv Tables.

36、v Maps.v 1.Introduction.1 2.An overview of the European traded gas hubs.2 3.Review of the 5 Key Elements in 2023.4 3.1 A note on methodology.5 3.2 Results of the 5 Key Elements in 2023.6 4.The LNG effect on trading activity in 2023.16 5.A summary of traded gas hubs in 2023.18 6.The 3 Main Indicators

37、.19 7.Long term market trends.20 7.1 Development of traded volumes in selected hubs.21 7.2 Month Ahead price spreads.22 7.3 Price convergence and correlations.23 7.4 Price volatility.26 7.5 Markets have rebalanced.29 8.TTF remains a global gas price benchmark.29 9.Summary and Conclusion.31 9.1 Revie

38、w of the 5 Key Elements in 2023.32 9.2 The long term trends.33 9.3 TTF as a global pricing benchmark.34 9.4 Final Conclusion.35 Bibliography.36 Appendices.37 The European traded gas hubs in 2023.37 Churn rates:2021 to 2023 Top 6 Hubs.38 Churn rates:2021 to 2023 the remaining hubs,all under 1.0 gross

39、 churn.39 Global gas hubs:Net market churns:2022,2023.40 Figures Figure 1:Global gas and Brent prices:Jan 2009 Dec 2023.4 Figure 2:Traded product splits(%total volume):2023.8 Figure 3:Traded volume development:Q1-2017 to Q4-2023.11 Figure 4:OTC/Exchange market shares:2023.12 Figure 5:Key Element 4:T

40、radability Index:2023.14 Figure 6:LNG Sendout:BE,FR,NL,UK,ES:January 2017 December 2023.17 Figure 7:Development of traded volumes at selected hubs:20112023.21 Figure 8:ICIS TTF/TRF(and PVB/TRF)MA spreads H2-2020 to Q1-2024.22 Figure 9:ICIS TTF/THE,TTF/PSV,TTF/VTP MA spreads H2-2020 to Q1-2024.23 Fig

41、ure 10:Selected hubs price correlation:2018 to 2023.24 Figure 11:DA Correlation coefficients for TTF/NBP,TTF/TRF,TTF/BE:2020 to Q1-2024.25 Figure 12:DA Correlation coefficients for TTF/THE,TTF/VTP,TTF/PSV:2020 to Q1-2024.26 Figure 13:TTF daily MA volatility*:2007 to 2023.27 Figure 14:Selected hubs d

42、aily MA volatility*:2018 to 2023.28 v The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Tables Table 1:Global gas and Brent price changes(%).5 Table 2:Key Element 1:Market partic

43、ipants:2023.6 Table 3:Key Element 2:Traded products:2023.7 Table 4:Key Element 3:Traded volumes:2023.10 Table 5:Traded volumes-emerging hubs:2023.12 Table 6:Top 4 Hubs Total Traded,OTC,and Exchange volumes and shares:2023.13 Table 7:Key Element 5:Churn rates 2022.15 Table 8:Relative sendout volumes

44、in BE,FR,NL,UK,ES,and percentage changes:2021/2023.16 Table 9:Summary of the 5 Key Elements 2023.18 Table 11:Global Gas Benchmarks Churn Ratios-2023.31 Maps Map 1:European gas regions,markets and hubs:2023.2 1 The contents of this paper are the authors sole responsibility.They do not necessarily rep

45、resent the views of the Oxford Institute for Energy Studies or any of its Members.1.Introduction The author has been following the development of the European traded gas hubs over many years and has already published a number of papers and insights on the subject.4 He is now also following the devel

46、opment of traded gas markets in Asia and the relative importance of global gas pricing benchmarks.In the six years to the end of 2020,there was a gradual convergence of hub prices,including JKM,whilst oil and oil-indexed prices remained mostly dearer.However,in 2020 and 2021,the European traded gas

47、markets experienced two successive years of quite unexpected and extreme external factors which had a pronounced effect on wholesale prices and the whole trading environment generally.This period saw in the last week of May 2020,the lowest ever5 Month Ahead(MA)traded prices.6 There then followed a l

48、ong rally leading to the then highest ever price in December 2021.7 Following a brief period of market readjustment,the unfolding crisis in Ukraine led to more volatile and higher prices in 2022,culminating in the new highest ever price at the end of August 2022.8 Not only were those prices extreme,

49、but the protracted rally leading to the first highest price level in October 2021 was the longest ever seen and the historic high volatility rates,as well as displaying some very sharp peaks and troughs,also recorded the highest ever levels in March 2022.The highest ever European gas volatility rate

50、 was on the French TRF on the 15th and 16th March 2022,with the Belgian ZEE hub just behind,the only two gas hubs to ever have a volatility rate of 300%or more.9 By contrast,the steepest ever fall in prices occurred from the end of August to the end of October 2022,falling about 260/MWh in just two

51、months.There were also some interesting points to note regarding the traded volumes at the gas hubs,with a shift away from over-the-counter(OTC)trading towards more exchange trades,and disparate results from hub to hub,with some falling badly during 2020 and 2021,whilst others maintained or even imp

52、roved their overall traded volumes.During 2022,there was a mixed picture,with six of the main hubs analysed falling in overall traded volumes,including the benchmark TTF,whilst at the remaining four hubs the traded volumes increased.In light of the above,the author believes it is important to review

53、 the longer term trends to see whether or not the traded gas markets have continued to trade erratically into 2023,or whether there is an emerging pattern to suggest that they have rebalanced.The purpose of this paper therefore is to analyse the results of the trading data in 2023 for the European t

54、raded gas hubs,to determine not only their trading activity and their relative ability to be used by shippers to risk manage their portfolios,but also to review the prices and volatilities of the traded markets to assess whether the European traded gas hubs have indeed rebalanced or not.It will look

55、 at the TTF in particular,as this hub has for several years now been the pre-eminent European hub.Was the fall in volumes in 2022 just a temporary set-back,or have they recovered in 2023?This is important as TTF has for several years now10 been the most liquid by far in Europe and has been 4 All of

56、which are listed in the Bibliography and are available to download from the OIES website:https:/www.oxfordenergy.org/authors/patrick-heather/5 Using the Heren/ICIS closing Month Ahead daily prices data series from 1st January 2006.6 TTF Month Ahead closed at 3.54 on 28th May 2020;that same day NBP w

57、as the lowest priced hub,closing at 3.27/MWh.7 On 21st December 2021,TTF Month Ahead closed at 180.31 and the Czech VOB the highest of all,closing at 181.43/MWh.8 On 26th August 2022,Europes highest ever gas prices were reached with NCG closing at 320.25 and VTP closing at 319.74.9 TRF volatility wa

58、s 301%on both days,ZEE was 300%.10 The Dutch TTF hub overtook the British NBP in terms of total traded volumes in 2016 and,in 2022,represented very nearly 76%of all European traded gas volumes.2 The contents of this paper are the authors sole responsibility.They do not necessarily represent the view

59、s of the Oxford Institute for Energy Studies or any of its Members.widely used as the reference price for physical wholesale gas contracts.Furthermore,TTF had started to gain a role as a global benchmark and this paper will analyse if this remained the case in 2023.2.An overview of the European trad

60、ed gas hubs Map 1 shows all European gas hubs11 operational at the end of 2023.The colour scheme indicates which hubs are categorised12 as Mature,Active,Poor and Inactive.There is now just one Mature hub,the Dutch TTF;the British NBP lost its mature status in 2021 and is now classified as Active,alo

61、ngside three other hubs,the German THE,the French TRF,and the Italian PSV;and three Poor hubs,the Austrian VTP,the Spanish PVB,and the Belgian ZTP;all of the remaining hubs are classed as Inactive;the Belgian ZEE ceased trading at the end of September.Map 1:European gas regions,markets and hubs:2023

62、 There is also a change in nomenclature from Planned National to Nascent as there are now officially hubs in Slovenia,Croatia,Serbia,and Moldova.However,as with some of the emerging Inactive hubs,the author does not include these hubs in the analysis as there are insufficient data available.In Croat

63、ia,there is virtually no OTC trading and no exchange trading,although balancing trades are performed on a digital platform operated by the Transmission System Operator(TSO).In Slovenia,a virtual trading point was established in late 2015 to primarily enable balancing operations to conform with the E

64、U directives;13 these are carried out on a web application.However,the author was unable to 11 Appendix 11.1 lists all of the European gas hubs,their name and year of inception.12 As defined by the Author,following his 5 Key Elements analysis;see Chapter 3.1 of this Paper.13 According to the Europea

65、n Federation for Energy Traders(EFET),“Slovenia has nudged ahead of Croatia in terms of market design,though Croatia is more widely traded”(EFET 2023 Press Release:https:/www.efet.org/files/documents/231106%20GC%20PR%20Hub%20Scores%202023.pdf 3 The contents of this paper are the authors sole respons

66、ibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.find any sources referring to actual trading at either hub,whether OTC or Exchange,balancing,spot,or curve trading.Moldova and Serbia are cited in the EFET 2023 Review of Gas Hubs Ass

67、essments and the reports associated press release14 where they are described as having been added,but their scores indicate still only basic hub design,reflecting part-implementation of EU rules,rather than genuine reform that will lead to wholesale trading.Ukraine has continued the process of liber

68、alising its energy markets and does have some limited OTC gas trading,as well as some exchange trading on the UEEx.15 This is remarkable given the substantial challenges the country currently faces but it must be said that there is wide support for creating a competitive gas market,including from th

69、e European Bank for Reconstruction and Development,US Aid,the European Energy Committee and the Ukrainian Ministry of Energy.The Greek gas hub showed strong growth in 2023,albeit from a very low first year start,16 to record a total of 9.03TWh traded on the HEnEx trading platform;however,there were

70、still no OTC trades reported.In Denmark,there has been an almost total drop in trading over the past two years due to the redevelopment of the offshore Tyra gas field,but especially due to the reinforcement works on the Danish transmission system linked to the Baltic Pipe project to carry gas to Pol

71、and.The latter was completed and inaugurated in late 2022,with the Tyra field redevelopment completed in Spring 2024.Despite there being no recorded OTC trades and no exchange futures trades,the exchange spot trades totalled 52.78TWh,higher than the combined OTC and exchange totals in 2021 and 2022.

72、17 Overall,there was a resurgence in gas trading across the European hubs,18 with increased traded volumes,19 despite a fall overall in the underlying physical volumes.20 All countries had higher total traded volumes compared to 2022,except for three(Britain,Belgium,and Romania);all countries had lo

73、wer physical volumes,except for three(Denmark,Romania,and Bulgaria).The increase in total trades against the fall in total physical volumes resulted in the gross churn for all of Europe rising above 10 times,21 the first time this has ever happened.However this is mainly due to the large increase in

74、 trading in the Netherlands and that countrys associated increase in churn rate.22 At a European level,total OTC trading recovered slightly in 2023(9%increase),whereas exchange spot trading fell just 4%.The big difference in 2023 was the very large increase in exchange futures and options trading,up

75、 54%on 2022.However,there were some very wide variations from country to country:apart from the four countries23 that did not report any OTC trades,the rise in OTC trading varied from+10%in the Netherlands and a huge+148%in Slovakia;however,in five countries the OTC trades fell,from-5%in France,to-8

76、0%in Hungary(and as there were no OTC trades reported in Denmark in 2023,that resulted in a fall of-100%).24 All but five countries25 saw an increase in their exchange futures trading,from just+2%in Britain,to+206%in Bulgaria(albeit from a low number);and all but three countries26 saw an increase in

77、 the gross 14 See Footnote 10.15 Ukrainian Energy Exchange:https:/.ua/eng/16 The Hellenic Energy Exchange gas platform finally went live in March 2022 and recorded 2.87TWh of spot trades.17 In 2021 the total was 49.69TWh(32.11 OTC,17.58 Exch)and in 2022 the total was 35.60TWh(17.99 OTC,17.62 Exch).1

78、8 The Author analysed the data for the hubs in 16 countries:Austria,Belgium,Britain,Bulgaria,Czech Republic,Denmark,France,Germany,Hungary,Italy,Netherlands,Poland,Romania,Slovakia,and Spain.19 79,719TWh in 2023,compared to 57,032TWh in 2022,an increase of 40%.20 5,771TWh in 2023,compared to 6,996TW

79、h in 2022,a decrease of 18%.21 The European gross churn in 2023 was 13.81,compared to 8.15 in 2022.22 The detailed breakdown of all the figures can be seen in the Churn Matrices tables in the Appendices.23 Poland,Romania,Bulgaria,and Denmark.24 The other two countries that recorded a fall in OTC tra

80、ding were Brittan with-13%and Belgium with-42%.25 Austria,Belgium,Denmark,Italy,Romania.26 Belgium,Denmark,Romania.4 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.churn rates

81、,with the Netherlands recording the greatest absolute rise,by+37.82(or 60%),resulting in a gross churn of just over 100 times.More detail will be given in Chapter 3.2 below but the Dutch TTF is once again forging ahead of all the other European hubs,in every criterion reviewed in the 5 Key Elements.

82、3.Review of the 5 Key Elements in 2023 Before we review the 5 Key Elements pertaining to European gas trading,it is useful to place European gas in the context of its global equivalents and the crude oil market.This is especially relevant after the turbulent period in energy trading following the Co

83、vid-19 pandemic,the ensuing energy crisis that started in the summer of 2021 and the war in Ukraine in 2022,which all contributed to a disruption to global economies and led to higher commodity prices.Figure 1 shows the relevant global gas and Brent oil prices over a fifteen year period from January

84、 2009 to December 2023,from which the extraordinary period of high and volatile27 energy prices of 2021 and 2022 can clearly be seen.Figure 1:Global gas and Brent prices:Jan 2009 Dec 2023 Sources:S+P Global Platts,EIA,Argus,CME;M.Fulwood,P.Heather It also clearly shows how all of these energy prices

85、 collapsed from Q4-202228 to reach their recent lows in the summer29 of 2023,before slowly consolidating.The four gas benchmark hubs have however eased back a touch in late 2023 or January 2024,although Brent and the oil indexed Japan Average have continued to edge higher.27 See Chapter 7(d).28 Bren

86、t prices started to fall from June 2022.29 Henry Hub as early as April,Brent,JKM and Japan Average in June,NBP in July,and TTF in August.5 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of i

87、ts Members.Table 1:Global gas and Brent price changes(%)Sources:Taken from the data behind the global gas and Brent price figures.The author believes that this does,for now,indicate that the traded gas markets have indeed rebalanced,albeit at a slightly higher level than the long term average,except

88、 for Henry Hub which continues to stay at very low levels and lower than before the price spike.The extreme gas market volatility and the exceptional and unprecedented high gas prices in 2021 and 2022,as well as significantly increased volumes in some of the emerging hubs led the author to rethink l

89、ast year the methodologies used in his analysis of the 5 Key Elements.3.1 A note on methodology The author revised in 2022 the methodologies used in his analysis of the 5 Key Elements;the new methodologies are more precise and should help the reader better understand the variations in maturity and d

90、evelopment across the now many traded gas hubs in Europe,including the emerging hubs.These have continued to be applied in the 2023 analysis presented in this paper.The main difference in the new methodologies is the addition of a new lowest category in each of the elements,represented by a pale bro

91、wn colour,to the previous traffic light Green,Amber,Red colours in the tables:the full methodologies are shown in footnotes to each of the tables.As previously,each Element will have its own scores and then they will be amalgamated in the Summary of the 5 Elements,in order to determine the overall r

92、anking,which will also have a revised lowest banding that will determine the Inactive hubs.For Key Element 1 Active Traders,the new brown category will be where the number of active traders is less than 10,and if the hub score is less than 10.For Key Element 2 Traded Products,the new brown category

93、will be where the hub score out of a total of 56,is less than 8.For Key Element 3 Traded volumes,the new brown category will be where the total traded volumes are less than 100TWh.For the Traded volumes-emerging hubs,the same methodology will now apply.For Key Element 4 Tradability Index,the new bro

94、wn category will be where the score is less than 5/20.For Key Element 5 Churn rates,the new brown category will be where the net or gross churn is less than 1.The Summary of the 5 Key Elements table will show the new colour scheme for each of the elements and there is a slight change to the two lowe

95、st categories:Poor hubs will now be for scores of 4-7/15(previously 5-7/15),shown in amber on the Map;and Inactive hubs will now be for scores of 1-3/15(previously 1-4/15),shown in red on the Map.Although the Belgian ZEE hub ceased trading at the end of September 2023,it has been included in the 5 K

96、ey Elements results,but left out of the final summary table and has been taken off the 2023 hubs map above.6 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.3.2 Results of the

97、5 Key Elements in 2023 Trading activity continued to increase in 2023,after two difficult years in gas trading,which in turn attracted more participants.Table 2 shows the number of active30 participants at each of the selected hubs;the more active participants there are,the more liquidity there will

98、 be in a market.The methodology recognises the importance of curve trading over spot,as it is this that is most often used to risk manage a participants portfolio and to hedge physical contracts.Table 2:31 Key Element 1:Market participants:2023 Sources:2021:based on conversations with 3 market parti

99、cipants(very difficult to get responses given the market conditions);2022:based on survey results from 3 market participants,with 1 broker input;2023:based on survey results from 5 market participants,with 1 broker input.In 2023,the author was fortunate to receive greater input from market participa

100、nts which should result in a more accurate survey and therefore the results should not be directly compared on a like for like basis with the two previous years.The results do indicate however that last years estimates were probably a little on the high side for all the hubs.Although the final hub s

101、cores are in some cases quite different,most of the hubs remain in the same rankings as previously except for the middle three hubs which have changed:the French TRF has overtaken the Italian PSV and the Austrian VTP is now behind both of those,which is an accurate reflection of the traded volumes r

102、esults.Once again,the Dutch TTF is way ahead of all the other hubs with a calculated score of 200,ahead of the British NBP with a score of 135,which is still a very good score and the only other hub with a score above 100.Only four hubs have 20 or more active curve traders.TTF is by far the leading

103、gas 30 The criterion used in the survey is how many traders trade at least once per week;the spot/prompt includes the Month Ahead contract.31 The methodologies used in this table are:(S/P/M):Green:=/60;Amber:60;Red:25;Brown:20;Amber:20;Red:10;Brown:100;Amber:100;Red:45;Brown:42;Amber 42;Red 16;Brown

104、 5000;Amber:5000;Red:1000;Brown:5000;Amber:5000;Red:1000;Brown:5000;Amber:5000;Red:1000;Brown:25;Amber:25;Red:15;Brown:5%.55 This is calculated by ICIS for 13 European hubs plus the Turkish UDN.The methodology consists of assessing the“bid-offer spread typically available every day to all interested

105、 counterparties”,on 10 different contracts and for two bid-offer points of 0.5/MWh and 10;Amber:10;Red:5;Brown:18;Amber:=/16;Red:16;Brown 18;Active/Orange:18;Poor/Amber:15;Inactive/Red:99%for VTP and slightly wider range on the PSV from 84%to 99%.These are all shown in figure 12.All three figures,th

106、e absolute price correlations and the correlation coefficients all show that the markets in these six selected NWE hubs did rebalance and have remained pretty much in line to this day with the markets prior to 2022 and before.80 ICIS recorded the data for ZEE up to September 2023,ZTP thereafter.81 I

107、CIS only show the correlation coefficients for the German THE from 2020.26 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Figure 12:DA Correlation coefficients for TTF/THE,TTF

108、/VTP,TTF/PSV:2020 to Q1-2024 Source:ICIS EGHR Q1-2024;P.Heather NOTE:ICIS have not used the same scales on the VTP and PSV bar charts as each other,or as the other hubs.7.4 Price volatility The final important comparison to make is that of the volatility at the selected hubs and to see how they comp

109、ared over the six year period from 2018 to 2023 and whether they have rebalanced or not after the extreme moves of 2021 and 2022.For the sake of clarity,figure 14 doesnt go further back than 2018 but,in order to show the longer term trend,figure 13 first shows the volatility graph for TTF alone from

110、 2007 to 2023.This figure gives an overview of the long term volatility of what has become Europes benchmark gas hub:the first four years show a range of about 20%to 120%,then gradually declining into and throughout the 2010s in a narrower band of about 5%to 65%.From the summer of 2019,the volatilit

111、y 27 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.became more erratic and at the same time started to show a series of ever greater peaks,followed by sharp falls;this contin

112、ued until May 2023 and a low of 33%,82 then a sharp rise to 166%in June,83 before appearing to stabilise to slightly lower levels thereafter,finishing the year at 33%at the end of November,finally up to 78%at the end of December.The average TTF volatility for the whole period from January 2007 to th

113、e end of December 2023 was 51.38%.Figure 13:TTF daily MA volatility*:2007 to 2023 Source:ICIS;P.Heather*annualised 20 day rolling volatility levels,expressed as a percentage.To put these latter figures into perspective,the average TTF volatility in the two year period84 before the first big rise in

114、gas prices in the summer of 2021 was 68.28%;the average TTF volatility in the most volatile 13 months from Q4-2021 to Q4-2022,85 both in terms of extremely high absolute levels and steep rises and sharp dips,was 137.36%;and the average TTF volatility in December 2023 was 73.75%.For now at least it a

115、ppears that to a large extent the market has also rebalanced in terms of volatility.Looking at the selected hubs as a whole,figure 14 shows that most of the time the eight hubs do follow each other with regards to the timing of the moves,but that there are some significant differences as to the actu

116、al extent of those rises and falls.However,during the last three quarters of 202286 there were some significant opposites with volatility at the British NBP,the Belgian ZEE and ZTP and the French TRF indicated in the figure as the“period of extreme divergence”.These significant opposites of increase

117、d volatility broadly coincide with the large additional volumes of LNG imports and the resultant lower hub prices,especially so at TRF.These opposites are quite staggering:when looking at the four main periods,the relative volatility of the NBP,ZEE/ZTP,TRF,and TTF show how disjointed those markets w

118、ere:on 17th May 2022,TTF volatility was 103%,ZTP 133%,82 On 19th May 2023 TTF volatility was 33.01%.83 On 22nd June 2023 TTF volatility was 165.92%.84 September 2019 to August 2021.85 1st November 2021 to 30th November 2022.86 From mid-April to end-November 2022.28 The contents of this paper are the

119、 authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.TRF 134%,ZEE,179%,and NBP 214%;in July 2022 there were four spikes with the greatest on 29th July when TTF volatility was 96%,ZEE 121%,ZTP 122%,TRF 143%,and NBP 2

120、24%;in early October 2022 the British,Belgian and French hubs saw a rise in volatility,whereas at TTF they fell.On the 12th October TTF volatility was 124%,NBP 208%,ZEE and ZTP 244%,and TRF273%;by November the levels of volatility were starting to ease-with the exception of NBP which had a last spik

121、e of 314%on the 14th so that by the 21st November the last large divergence was the TTF at 207%,Zee 222%,ZTP 223%,TRF 259%,and NBP at 306%.Figure 14:Selected hubs daily MA volatility*:2018 to 2023 Source:ICIS;P.Heather*annualised 20 day rolling volatility levels,expressed as a percentage.The British

122、 NBP had the highest average volatility by far during 2022 but,leaving NBP aside as it is priced in Sterling and serves a slightly different purpose to the continental hubs priced in euros,it is the French TRF that had the highest average volatility in H2-2021,2022,and 2023;and the Belgian hubs also

123、 had very high average volatility,especially the ZEE hub.The actual average volatility for the selected hubs are shown in Table 10,which is colour coded with green,being the lowest volatility and red being the highest.It is apparent that in each of the three periods recorded,the French TRF always ha

124、s the highest continental hub volatility and only in 2022 is that of NBP higher;NBP actually has the lowest average volatility in both H2-2021 and 2023.At the other Continental European hubs,TTF has the lowest volatility in H2-2021 and is middling in both 2022 and 2023,when VTP was lowest.Traders do

125、 not generally mind volatile markets,so long as they are deep and liquid such as the Dutch TTF and this is why that hub has attracted an ever greater number of market participants amid ever greater trading volumes;what they do not like is markets that are difficult or unpredictable to trade,especial

126、ly in the large volumes necessary for hedging and risk management,whether they are volatile or not.However,when looking at the actual percentages,it is clear how much of a difference in the volatility rates there is between TRF and the benchmark TTF.Not only was TRF the most volatile market on 29 Th

127、e contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.average throughout the turbulent period from H2-2021 through 2022 and into early 2023 but it appears to have remained so in the la

128、tter part of 2023 as well.Having fewer market participants than TTF,less deep and liquid products to trade and much lower volumes over a shorter time horizon,means that the French hub is not conducive to effective and efficient risk management.On the other hand,TTF is the most liquid market with the

129、 most market participants,most traded products and highest volumes.As such,liquidity begets liquidity and that in turn helps to generally keep the volatility lower than at less liquid hubs.Table 10:Comparative volatility at selected hubs:H2-2021,2022,2023 Source:Taken from data behind figure 14;P.He

130、ather After a period of very high volatility for the whole of 2022,levels have both come back down and stabilised somewhat with a broad convergence across the four lowest hubs by the end of 2023,albeit less so with the Belgian and French hubs.7.5 Markets have rebalanced This chapter focused on the l

131、ong term market trends at the selected hubs with a view to determining whether the markets had rebalanced or not.From the above analysis of the traded volumes development,the relative spreads between the main trading pairs of hubs,the overall price correlation and convergence of the hubs,and finally

132、 their volatility,it is indeed apparent that the markets have certainly for the most part rebalanced.8.TTF remains a global gas price benchmark The author has been following the development of gas trading activity in the Asia-Pacific region for a number of years and since 2019,has developed a method

133、ology to try to compare the churn rates87 of the main representative gas markets around the world.The Dutch TTF is truly the leading pricing benchmark for North-West Europe and indeed many other European countries also,as well as increasingly being used to price spot LNG cargoes.It has become an inv

134、estment asset class88 in its own right and there are signs that it is becoming a global benchmark too.Not only have the TTF total traded volumes grown to such an extent that they represent 81.5%of total European traded gas volumes,but its churn rate calculated against the much greater physical consu

135、mption figure of the countries including and surrounding the Netherlands,89 and whose shippers are known to be using TTF for their risk management,has now grown to nearly 37 times.This section looks at TTF in the global context,alongside the other European benchmark NBP and against the US Henry Hub(

136、HH).Finally,these are also compared to the nascent LNG pricing 87 Note that these are calculated using consumption as the denominator and so for TTF and NBP the results are different to the gross churn rates in Table 3.For JKM,the denominator is LNG imports.88 Part of the Futures asset class of inve

137、stments.89 See Footnote 67.30 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.benchmark JKM90 using the ICE and CME exchange-traded JKM options and futures contracts as the num

138、erator and the LNG imports into China,Japan,Korea,and Taiwan.Henry Hub is the pricing benchmark in North America,91 with most of the other Market Centers(or hubs)being priced by differential against it.HH is used to price physical gas contracts in North America,and is also used to price some LNG car

139、goes destined for South America,Asia and Europe.It is extensively used for risk management of physical gas portfolios and is an investment asset class in its own right.The British NBP was the North West European(NWE)benchmark hub for over a decade but has since lost that mantle to TTF;it remains the

140、 pricing benchmark for the British Isles and is also used to price most LNG cargoes destined for the British Iles.Finally and although not strictly a hub,the JKM has become the pricing benchmark for some LNG cargoes delivered into Asia,although it has also been used to price LNG cargoes to other par

141、ts of the world.Futures and options contracts based on the S&P Global Platts marker price have increased considerably over the past few years.For the purposes of calculating churn rates,the relevant denominators used are the gas consumption in the United States,Canada and Mexico for HH;the gas consu

142、mption in France,Germany,Austria,Czech Republic,and Benelux for TTF;the gas consumption in the United Kingdom and the Republic of Ireland for NBP;and the LNG imports into China,Japan,Korea,and Taiwan for JKM.Table 11 shows the results of this global comparison and uses a similar colour coding92 to t

143、he authors European hubs analyses.It shows which benchmarks are illiquid,mature,liquid and very liquid.The results clearly show that HH remains the premier global gas benchmark with an impressive churn of 59.6(up from 49.7 times last year)when compared to US consumption alone.This is the first year

144、that the HH churn has risen again after falling for two consecutive years,93 and shows that this market also has rebalanced after the volatile energy markets of 2021 and 2022.There is no doubt that this hub is a very mature and very liquid gas pricing benchmark and remains so even after Mexican cons

145、umption94 is added(the churn is a little lower at 56.9 times)and after including Canadian consumption95(the churn is a little lower still at 50.1 times).TTF,when compared to the consumption in the five countries of its main sphere of influence,has a risen considerably from the previous year(in 2022

146、it was 22.6 times)and is now 36.8 times,just short of becoming a very liquid benchmark hub.There is no doubt that this is a mature and liquid gas pricing benchmark.NBP,when compared to the consumption across the United Kingdom and the Republic of Ireland,has a churn of 8.3 times(up from 7.6 last yea

147、r);this is despite a slight fall in traded volumes,the underlying physical consumption in the UK and Ireland fell more.96 It can still,however,be considered a regional Sterling gas pricing benchmark.There is no doubt that the Asian JKM marker price is gaining support from the LNG industry,with produ

148、cers,aggregators and buyers using it more each year.There are two exchanges offering JKM 90 Japan Korea Marker,a price marker published daily by S&P Global Platts.91 It is the most used benchmark in the US and Mexico,although less so in Canada where AECO(Alberta)is the main pricing hub;see:https:/ww

149、w.capp.ca/wp-content/uploads/2024/03/Natural-Gas-Market-Fundamentals.pdf,slide 3.The Alberta Energy Company(AECO),located in Alberta Canada,is one of the largest gas distribution hubs in North America;its the most widely used Canadian benchmark for natural gas and is quoted in CAD/Gigajoules.92 Dark

150、 Green/Very Liquid:=/40;Mid Green/Liquid:1540;Light Green/Mature:1015;Amber/Poor:510;Red/Illiquid:5.The calorific value conversion factors are those stated by the IEA for each country.93 The HH churn in 2020 was 57.0,in 2021 was 50.1,and in 2022 was 49.7.94 All of Mexicos gas is priced against HH.95

151、 Although realistically,HH is only used to price a proportion of Canadian contracts,the remainder being against Canadian hubs,especially Alberta;see footnote 91.96 Total NBP traded volumes fell by 2.4%year/year;physical consumption in the stated countries fell by 10.5%.31 The contents of this paper

152、are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.futures and options derivative contracts,97 the ICE and CME.Despite the turbulent global energy markets of 2021 and 2022 causing the traded volumes to fall

153、,they rose significantly in 2023,set against slightly lower LNG imports.Table 11:Global Gas Benchmarks Churn Ratios-202398 Sources:JODI,ICE,CME,LEBA,ICIS,ICE,ICE-Endex,EEX;P.Heather Asia has started to liberalise its gas markets but has a long way to go.Increased short term and spot LNG trades and t

154、he use of the JKM are helping the transition.The JKM,when compared to its main sphere of influence,has a churn of 0.69 times in 2023(up from 0.59 in 2022).This is an illiquid market but is clearly showing some signs of growth.9.Summary and Conclusion The main purpose of this paper has been to analys

155、e the results of the trading data in 2023 for the European traded gas hubs,in order to be able to assess whether the traded gas markets have rebalanced after the three very turbulent years in the energy markets.The European gas markets have experienced a rough ride since 2020 when demand for gas was

156、 greatly reduced by the global Covid-19 pandemic.However,more major disruption to the energy markets was to follow in 2021 and 2022 resulting in a severe readjustment of the European traded gas markets.Map 1 showed all the European gas hubs that were operational at the end of 2023.All of Europe now

157、has a gas hub of sorts,ranging from the very small nascent balancing and spot trading hubs;to the inactive hubs that might have a little more spot and prompt trading but often very little or no curve trading;to the medium poor hubs in Belgium,Czech Republic,and Spain that trade more products but 97

158、JKM derivatives trading was launched in 2012.98 All the data behind this table can be seen in Appendices:“Global gas hubs:Net market churns:2022,2023”.32 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Stud

159、ies or any of its Members.still in relatively low volumes;to the larger active hubs in Britain,France,and Germany that trade reasonable volumes and also in more types of products but that are simply dwarfed by the only mature benchmark hub in Europe,the Dutch TTF.Despite the extreme trading conditio

160、ns over the past few years,trading across all the European hubs remained relatively buoyant and very much in line with the underlying physical volumes in each country.However,in 2023 trading picked up significantly,set against a general fall in physical volumes.When comparing the 2022/23 year-on-yea

161、r difference,Europe as a whole had a 40%rise in traded volumes,whilst physical demand fell by-18%.All countries had higher traded volumes except Belgium,Britain,and Romania and all had lower physical demand,except Bulgaria,Denmark and Romania.9.1 Review of the 5 Key Elements in 2023 Trading activity

162、 continued to increase in 2023,attracting more participants and liquidity.The Dutch TTF is by far the leading gas hub in Europe and attracts not only physical traders but financial,institutional and speculative traders also.A good measure of a hubs maturity is the types of products available to trad

163、e and their traded volumes,which are a good indication of whether a given hub is used mainly for balancing purposes,or for hedging and risk management.Here too the Dutch TTF is yet again top of the table,with all but the balancing and spot individual products categories shown as green.It is clear fr

164、om the traded products table and the product splits that the Dutch TTF is the mature risk management hub,with large volumes of MA reflecting LTC hedging and large volumes of curve products reflecting portfolio risk management,including a large volume of options traded.High absolute traded volumes ar

165、e usually indicative of a liquid market with a large number and varied range of participants;here too the Dutch TTF hub has by far the largest traded volumes,including as described above,in all products across the whole curve.A major change in the traded gas markets over the past few years and espec

166、ially since 2021,has been the move away from OTC trading towards more exchange trading.The share of exchange trading now dominates and in 2023 attained a share of 82%of total European trades.The share of exchange trading is highest at TTF,NBP and PVB,but still low at PSV.When adding the share of the

167、 top four hubs,TTF,NBP,THE and TRF,they together account for 96%of total European gas trading,made up of a total 88%of OTC trading and 98%of exchange trading.These data clearly show how much bigger the TTF is compared to even its nearest rivals,with the fourth placed French TRF only registering 2.1%

168、market share.Although the Tradability Index doesnt show the depth of a market,there is still no doubt from the results that the Dutch TTF is far ahead of all the other hubs with a near perfect score of 19/20,indicating that there are tight bid-offer spreads in all but the tightest 0.3/MWh contract.T

169、he most important metric is the traded gas hubs churn rate as,in this one metric all others are,necessarily,reflected:if there are many participants,trading many different products in large quantities,then the churn rate is likely to be high.The net and gross churn rates for the 10 main hubs were st

170、udied in this paper and the results for 2023 show that there is only one European benchmark hub,the Dutch TTF,standing far ahead of all the others and the only hub considered as mature,plus one regional Sterling marker price,the British NBP.The author concluded in the 2022 paper that there was indee

171、d an LNG effect on the traded volumes at those hubs that saw large volumes of extra LNG being imported;in 2023 there was a large increase in traded volumes and churn rate at the Dutch TTF and the Netherlands was the only country with an increase in LNG sendout compared to 2022.The urgent need since

172、2022 to bring additional volumes of LNG into Europe resulted in an expansion of LNG terminals and FSRU projects,in particular in the Netherlands and in Germany,and this has already led to greater traded volumes at the Dutch and German hubs.33 The contents of this paper are the authors sole responsib

173、ility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Having examined each of the 5 Key Elements in detail,as well as several complimentary analyses,it is clear that the Dutch TTF is far and away the leading European traded gas hub,used by

174、 many more market participants than any other hub,has a very high traded products score,with far greater total traded volumes than all the other put together:TTF also accounts for 81.5%of all European gas trading,for 56%of all OTC trading,and 87%of all exchange trading.TTF also has the highest Trada

175、bility Index score,only missing one point on one of the balance of month contracts,and finally,by far the greatest churn rate.9.2 The long term trends This paper reviewed the longer term trends at eight selected hubs,namely the British NBP,the Dutch TTF,the Belgian ZEE and ZTP,the German THE,the Aus

176、trian VTP,the French TRF,and the Italian PSV,to determine whether or not the traded gas markets have continued to trade erratically into 2023,or whether there is an emerging pattern to suggest that they have rebalanced.This comprised looking at the development of traded volumes since 2011,the Month

177、Ahead price spreads,the correlation coefficients and their volatilities.The development of traded volumes shows that the British NBP remained fairly steady(despite quite violent summer/winter variations)all the way through to 2017,since when its traded volumes eased back somewhat,stabilising in 2023

178、;it is still the second largest hub in Europe.Dutch TTF made steady and often strong progress over the whole period,overtaking NBP in 2016.However,as with most of the hubs,it recorded a sharp fall in traded volumes during 2020 and after recovering from that during 2021,a second sharp fall throughout

179、 2022 only to rebound very sharply in every quarter of 2023,attaining new record highs to end the year over 50%up on the previous years trading.The French hub made slow progress over the whole period with a seesaw 5 quarters to the end of 2023 but did eventually finish at slightly higher levels.The

180、Belgian hubs traded volumes had their peak in 2011 since when they have made a long slow decline;despite further falls in the five quarters after Q3-2022,they broadly remained much in line with those levels recorded in the years 2017 to 2020.The German THE made slow progress up to 2019 and the Itali

181、an PSV saw steady progress up to 2019,albeit from a lower start in 2012.Since 2019,both hubs eased back into 2021 although THE then regained its trend of slow but steady upward traded volumes,whereas PSV continued to dip lower,recovering slightly in 2023.After a long slow increase in volumes from 20

182、11 to mid-2020,the Austrian VTP started to ease lower,although this appears to have stabilised in 2023.The graphs in this paper show that it was the French TRF versus Dutch TTF spread that recorded the highest differential during the turbulent trading period of 2022 with TTF at a wide premium.The ot

183、her main European hubs also saw wide variations in their basis prices to TTF.However,from early October 2022 the TTF premium to TRF fell quite sharply,and even went a touch negative against TRF in early January 2023,before stabilising over the course of the year.Although there was a brief small incr

184、ease in Q4-2023,it fell back again in early 2024.This means that French traders who may have had difficulty in managing their gas portfolios during 2022,will no longer in 2024 have any difficulty or any potential additional costs in trading locational TTF/TRF spreads as part of their risk management

185、 strategy.With regards the spreads between TTF and the THE,PSV and VTP hubs,the most extreme of these three hubs was the Austrian VTP and although that hubs spread against TTF has rebalanced from 2023,there have still been some variations,both positive and negative,to the benchmark TTF.The THE and P

186、SV have mostly settled back down to a similar pattern as pre-2022.34 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.For most of the 2010s the markets were well correlated and,

187、increasingly had good price convergence also,with the possible exception of the Italian PSV,which was typically well correlated but at slightly higher prices,mainly due to border capacity limitations.During the very turbulent trading of 2022 both correlation and convergence widened significantly at

188、some of the hubs and there were some large anomalies:in particular the NBP and Belgian hubs lost their otherwise good correlation,along with the French TRF.All three of those hubs diverged to quite a large extent from the other selected hubs.The main reasons for the disjointed markets in 2022 were t

189、he large volumes of additional LNG imports into France,Great Britain and Belgium and the lack of onward transportation and cross border capacities to ship the gas eastwards to where it was needed.The actual correlation coefficients of some of the main pairs of hubs show near perfect correlation of t

190、he three large NWE LNG importers to the benchmark TTF before and since the extraordinary market conditions in 2022.The three other sets of correlation coefficients between TTF and the German THE,Austrian VTP,and Italian PSV,showed greater correlation throughout the whole four year period.The absolut

191、e price correlations and the correlation coefficients all show that the markets in these six selected NWE hubs did rebalance and have remained pretty much in line to this day with the markets prior to 2022 and before.The volatility graph for the benchmark TTF alone from 2007 to 2023 shows that durin

192、g the most extreme 13 months from Q4-2021 to Q4-2022,both in terms of extremely high absolute levels and steep rises and sharp dips,average volatility was 137.36%.this dropped sharply and in December 2023 average volatility was 73.75%.For now at least it appears that to a large extent the TTF market

193、 has also rebalanced in terms of volatility.For the selected hubs as a whole,most of the time the eight hubs do follow each other with regards to the timing of the moves but there were some significant differences as to the actual extent of those rises and falls,especially in the last three quarters

194、 of 2022,when there were some significant opposites with the volatilities at the British NBP,the Belgian ZEE and ZTP and the French TRF.NBP aside,volatility at the continental hubs was always highest at the French TRF,whereas the TTF had the lowest volatility in H2-2021 and was middling in both 2022

195、 and 2023,when VTP was lowest.Not only was the TRF the most volatile market on average throughout the turbulent period from H2-2021 through 2022 and into early 2023 but it appears to have remained so in the latter part of 2023 as well.Having fewer market participants than TTF,less deep and liquid pr

196、oducts to trade and much lower volumes over a shorter time horizon means that the French hub is not conducive to effective and efficient risk management.On the other hand,TTF is the most liquid market with the most market participants,most traded products,and highest volumes:liquidity begets liquidi

197、ty and that in turn helps to generally keep the volatility lower than at less liquid hubs.After a period of very high volatility for the whole of 2022,levels have both come back down and stabilised somewhat and with a broad convergence across the four lowest hubs by the end of 2023,but less so with

198、the Belgian and French hubs.9.3 TTF as a global pricing benchmark On a global level,the analysis shows that the TTF is truly the leading pricing benchmark for North-West Europe and indeed many other European countries also,as well as being used to price some LNG cargoes destined for Europe.It has be

199、come an investment asset class in its own right and there are signs that it has become a global benchmark too.Henry Hub is the pricing benchmark in North America,with most of the other Market Centers(or hubs)being priced by differential against it.HH is used to price physical gas contracts in North

200、America,and is also used to price some LNG cargoes destined for South America,Asia and Europe.It is extensively used for risk management of physical gas portfolios and is an investment asset class in its own right.35 The contents of this paper are the authors sole responsibility.They do not necessar

201、ily represent the views of the Oxford Institute for Energy Studies or any of its Members.The British NBP was the North West European benchmark hub for over a decade but has since lost that mantle to TTF;it remains the pricing benchmark for the British Isles and is also used to price most LNG cargoes

202、 destined for the British Iles.Finally,and although not strictly a hub,the JKM has become the pricing benchmark for LNG cargoes delivered into Asia,although it has also been used to price LNG cargoes to other parts of the world.9.4 Final Conclusion This paper set out to determine whether the traded

203、European gas hubs had rebalanced after the turbulent years from 2020 to 2022.Having reviewed each of the 5 Key Elements in detail,as well as several complimentary analyses,it is clear that the benchmark Dutch TTF is far and away the leading European traded gas hub,used by many more market participan

204、ts than any other hub,has a very high traded products score,with far greater total traded volumes than all the other put together;it also has the highest Tradability Index score and finally,by far the greatest churn rate.On a global scale,HH is the North American benchmark hub and remains a leading

205、global gas benchmark,used to price LNG cargoes to Asia and Europe.It is now closely followed by TTF which is not only the benchmark for its immediate sphere of influence but increasingly so for all of Europe and globally and NBP remains a regional benchmark hub for the British Isles and some LNG pri

206、cing.The JKM is currently the only feasible price marker in Asia,but is very far from being an active and reliable one.The actual results also show that the trading at TTF has rebalanced and indeed,gone from strength to strength.The other European hubs can also be said to have rebalanced on the whol

207、e,with some exceptions,particularly at some emerging hubs.With regards the analysis on the long term trends,the price spreads,price correlation,and prices volatilities these also show to a large degree that the markets have rebalanced.Finally,Henry Hub and JKM trading has also rebounded.36 The conte

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215、-in-2021-the-role-of-the-traded-gas-hubs/Heather(2023):Heather,Patrick:“European Traded Gas Hubs:European Traded Gas Hubs:their continued relevance”:OIES Paper NG183,June 2023:https:/www.oxfordenergy.org/publications/european-traded-gas-hubs-their-continued-relevance/37 The contents of this paper ar

216、e the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Appendices The European traded gas hubs in 2023 NBP -National Balancing Point;GB;1996 ZEE and ZTP -Zeebrugge Hub/Zeebrugge Trading Point;BE;2000/2012 PSV -Pu

217、nto di Scambio Virtuale;IT;2003 TTF -Title Transfer Facility;NL;2003(AOC)PVB -Almacenamiento Operativo Comercial/Punto Virtual de Balance;ES;2004/2015 GTF and ETF -Gas Transfer Facility and Exchange Transfer Facility;DK;2004 and 2008(PEGs)TRF -Points dchange de Gaz(Nord,Ouest,Est,Sud,TIGF)/PEG Nord(

218、merger of PEGs N,O,E);FR;2004/2009 -Trading Region South(merger of PEGs S,TIGF);FR;2015 -Trading Region France(merger of PEG N,TRS);FR;2018(CEGH)VTP -(Central European Gas Hub;AT;2005)Virtual Trading Point;AT;2013(GPL/NCG)THE -Gaspool and NetConnect Germany;DE;2009 to September 2021 -Trading Hub Eur

219、ope;DE;2021 MGP -Magyar Gzkiegyenltsi Ponton;HU;2010 UDN -Ulusal Dengeleme Noktas;TR;2011 VOB -Virtuln Obchodn Bod;CZ;2011 VPGS -Virtual Point Gaz-System;PL;2014 NIBP -Northern Ireland Balancing Point;NI;2015 SVOB -Slovenskom Virtulnom Obchodnom Bode;SK;2016 IBP -Irish Balancing Point;IE;2017 HTP -H

220、ellenic Trading Point;GR;2018 PVT -Punctul Virtual de Tranzactionare;RO;2020 VTT -Virtualna Trgovska Tochka;BG;2020 PVN -Ponto Virtual de Negociao;PT;2021 Croatia,Serbia,and Slovenia -nascent hubs with little or no trading 38 The contents of this paper are the authors sole responsibility.They do not

221、 necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Churn rates:2021 to 2023 Top 6 Hubs 39 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Churn rates:2021 to 2023 the remaining hubs,all under 1.0 gross churn 40 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Global gas hubs:Net market churns:2022,2023