European traded gas hubs: a decade of change

Following on from the comprehensive study undertaken by the Author in 2015 and the update published in 2017, this OIES Insight provides a further update on the maturity and development of European traded gas hubs, with particular reference to both the liquidity and pricing aspects of the hubs. As well as detailing the progress of all the European traded gas hubs in 2017 and 2018, this Insight will also look back over the past 10 years to see how the hubs have fared, whether there are any ‘winners’ or ‘losers’ and indeed, to see which countries are still to liberalise and which hubs to develop?

In 2008, only 9 European countries had a traded gas hub and the only mature gas hub was the NBP; during the ensuing decade, new trading hubs were gradually formed as Member States started to follow the EU Energy Directives and, in particular, the Network Codes. However, there are still in 2018 7 countries without a traded gas hub.

When comparing the situation in 2008 with 2018, the two most significant changes have been the changes in fortune for the NBP and TTF hubs: NBP finally lost first place to TTF during 2016, when the Dutch hub overtook it in total traded volumes and has continued to grow in the two years since.

In conclusion, a decade of change has resulted in a ‘wider’ European gas market with more countries now implementing the Directives and much more gas trading overall. The rankings have changed, particularly mid-table, but the top two hubs in 2008 are the top two in 2018 but with their positions reversed; together they accounted for 89 per cent of total traded volumes in 2008 and for 87 per cent in 2018.

The final overall conclusion to this Insight is that, after nearly 20 years, most EU Member States do now have a gas hub and it is hoped that the remaining 7 countries will abide by the Directives within the next 2-5 years. It is possible that by 2025 Europe may finally have a single gas market, of sorts.

By: Patrick Heather

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