European traded gas hubs: the supremacy of TTF

This Comment gives the results of the Author’s analysis of the European traded gas hubs in 2019, according to his 5 Key Elements and also introduces a global churn comparison between Henry Hub, TTF, NBP and JKM. Previous publications by this author have shown how the once dominant NBP has started to lose its crown, only to be superseded by the TTF and this is borne out in this Comment. The NBP is still a mature and quite liquid gas hub but the traded volumes have taken a tumble since 2017; however, it is clearly still the reference pricing hub for Great Britain, Northern Ireland and the Republic of Ireland and some LNG cargoes into Europe. The Belgian hubs, especially the Sterling priced ZEE, have struggled in a competitive market and are rapidly losing ground in the European rankings, while the German hubs have shown very slow progress over the decade, especially considering the size of their physical market. The French TRF has followed a similar trajectory and is still classified as a ‘poor’ hub. On a positive note, the Italian PSV is continuing the strong growth trend started in 2014, albeit from a low base, and now is ranked equal 4th alongside the German GPL. It is the hub currently showing the most promise for further development. The emerging hubs are serving a purpose to facilitate balancing in their respective countries but still have very far to go on the path to maturity.

The main message though in this Comment is that TTF has seen phenomenal growth in the last three years, in every metric: TTF is the European hub that has the greatest number of market participants, trading the widest range of products over the entire curve. It traded by far the largest volumes of all the hubs in all the product categories and has by far the highest churn rate. At a global level, TTF and NBP are important benchmarks in their own market areas but they are also benchmark hubs for their regions and for the pricing of LNG cargoes. The final conclusion however is that, in 2019, TTF is now quite simply the supreme traded gas hub in Europe as well as a global price reference.

By: Patrick Heather