Institutional and Organizational Designs of Natural Gas Hubs: An Introduction to the Iberian Gas Hub

1. June 25, 2014

2. THE IBERIAN GAS MARKET MODEL1.
omi
MARKET OPERATION3.
CHARACTERISTICS OF AN ORGANISED
MARKET WITH PHYSICAL DELIVERY
2.

3. THE IBERIAN GAS MARKET
1

4. There is one market operator which
manages a market where several
products are negotiated : Natural Gas is delivered in a Virtual
Trading Point (AOC)
Traders are free to trade in the Trading
Virtual Point without physical limitations
All market transactions are firm and are
notified to the TSO (GTS)
TSO (GTS) is responsible of ensuring
system security, using several regulated
alternatives
TSO (GTS) gives priority to all market-
based alternatives, using products as
standardized and short-term as
possible
• Natural Gas
•Other products (capacities, storage,
GNL,…)

5. PA= CA - VA
PT= CT - VT
PM= CM - VM
PD= CD - VD
PI= CI - VI
Net Position day D = PI + PD + PM + PT + PA
Annual Q A Q Tot = QA x 365
Quarter Q T Q Tot = QT x 91
Month Q M Q Tot = QM x 30
Day Q D ... ...Q Tot = QD
Intraday Q I Q Tot = QI
C - Buy
V - Sell

6. sistema
Nomination
and TSO
confirmation
User B
User C
Notification
and GTS
registering
Notification
and GTS
registering
Daily Metered or
assigned values
Daily imbalance quantity is the difference between
inputs and off-takes
Portfolio
User A Nomination and TSO
confirmation
Nomination and TSO
confirmation
Market Transactions at
the Virtual Trading Point
v
c
c
v
Nomination
and TSO
confirmation
Nomination
and TSO
confirmation

7. CHARACTERISTICS OF AN ORGANISED GAS
EXCHANGE WITH PHYSICAL DELIVERY
2

8. Proposal to the Regulators of the market Rules in collaboration
with market participants
Market Members
management
Market and Products
management
Market Sessions and
offers reception and
validations
Matching processes
Trading services to TSOs
for acquiring or selling
gas for system balance
Settlement, billing and
payment processes
Collaterals management
Coordination processes
with TSOs
Results publication and
reference prices
calculation

9. Daily Market with a physical product with physical delivery
Intraday Market for final adjustments
Use of the Daily and Intraday Market by the TSOs to balance the gas
system
Natural Gas negotiated in a Virtual Trading Point with a daily balance
Additional longer term products (month, week, weekend, …) with physical
delivery
Use of Continuous market and, potential, opening and closing session
auctions
Each product and transaction has a different price
Each seller/buyer is responsible od injecting/extracting from the network the
transacted gas complying with the TSO’s operation procedures

10. Basic Regulation:
 Spanish & Portuguese Regulation
Market Processes: Market Rules:
 Proposed by Market Operator with Members Committee report
 Reviewed by the CNMC (Regulators Council)
 Approved by the Industry Ministry
Spanish Operation Processes: NGTS
 Proposal by TSO (GTS)
 Reviewed by the CNMC
 Approved by the Industry Ministry

11. In order to participate in the market you must comply with several requirements
Types of participants:
Shippers
Consumers
Transport companies
TSOs
Traders
Conditions:
Sign of Market Contract accepting Market Rules
Fulfillment of administrative requisites
Collaterals
Being a Network User
 Fulfillment of TSO’s requirements
 Collaterals for potential imbalances

12. Markets Position
GTS
GNL & Interconnectors
Planning
Capacities Management
Logistics
PRICES
ORDERS
O
R
D
E
R
B
O
O
K
MARKET
MATCHER
TRANSACTIONS
Programs
¿Notifications?

13. Markets Position
GTS
PRICES
ORDERS
Last days Information System Information
Nominations
Gasification Modifications
Interconnectors Modifications
Storage Modifications
Capacities
Management
O
R
D
E
R
B
O
O
K
MARKET
MATCHER
TRANSACTIONS
Notification

14. Markets Position
GTS
Gasification Modifications
Interconnectors Modifications
Storage Modifications
PRICES
ORDERS
O
R
D
E
R
B
O
O
K
MARKET
MATCHER
Current consumption
Information
System
Information
System Meter data
Renominations
Capacities
Management
TRANSACTIONS
Notifications

15. GTS
Contratación
capacidades
MERCADO
CAPACIDADES
Modificaciones Regasificación
Modificaciones Interconexiones
Modificaciones Almacenamientos
O
R
D
E
R
B
O
O
K
MARKET
MATCHER
PRECIOS
Balance
Action
Imbalance
System
Situation
ORDER
RESULTS
POSICIÓN
MERCADOS AOC
INFORMACIONES
CONSUMOS ACTUALES
INFORMACIÓN
SISTEMA
ACTUALIZACIONES
MEDIDAS DEL
SISTEMA
OFERTAS
TRANSACTIONS
Notifications
Renominations

16. MARKET OPERATION
3

17. Negotiation is done through Negotiation Sessions :
 Opening Auction
 Continuous Market
 Closing Auction
On each Session, several products are negotiated :
 NG VTP products
 NG localised products
 LNG, Capacities, Storage, …
For each product, several offers may be introduced :
 Simple Offers
 Offers with special conditions
All transactions are firm and notified to TSO
Session non-confidential information is published

18. VERIFICATION
ORDER BOOK
MATCHER
FIRM TRANSACTIONS
1
5 5 5
2
3 4
6
7
TRADER
SCREEN
TRADER
SCREEN
TRADER
SCREEN
1
GTS
MARKET IT SYSTEMS
5
PROCESS STEPS
1 Presentation of Orders
2 Verification and integration in Order
Book
3 Continuous Matching process
4 Automatic actualization of Order
Book
5 Participant’s information refreshing
6 Transactions storage
7 TSO transactions communications

19. VERIFICATION
ORDER BOOK
MATCHER
PROGRAMS
1
6 6 6
2
3
5
7
TRADER
SCREEN
TRADER
SCREEN
TRADER
SCREEN
1
GTS
MARKET IT SYSTEMS
64
PROCESS STEPS
1 Presentation of Orders during session
2 Verification and integration in Order Book
3 After Session end, packing and sending
to the Matcher
4 Matching of all received offers: Marginal
Price
5 Programs Generation
6 Participant`s’ access to Programs
7 TSO programs notification

20. Concept Value
Underlying commodity Natural Gas
Place of Delivery VTP-E
Delivery Period Gas day in Spanish System
Unit 1 MWh/day
Minimum Size 1
Size increments allowed 1
Price Unit €/MWh with 2 decimals
Price Tick 0,01
Product Volume 1MWh/day
Negotiation Session Monday to Sunday
Negotiation days From 7 days before delivery
Negotiation hours From 9 to 17h
Opening Auction Everyday

21. Días de Gas negociados
SEMANA 1 SEMANA 2 SEMANA 3
L M X J V S D L M X J V S D L M X J
Días de
negociación
SEMANA 1
L
M
X
J
V
S
D
SEMANA 2
L
M
X
J
First day on which the product is negotiated
Rest of days where product is negotiated

22. Concept Value
Underlying commodity Natural Gas
Place of Delivery VTP-E
Delivery Period Gas day in Spanish System
Unit 1 MWh/day
Minimum Size 1
Size increments allowed 1
Price Unit €/MWh with 2 decimals
Price Tick 0,01
Product Volume 1MWh/day
Negotiation Session Monday to Sunday
Negotiation days From 7 days before delivery
Negotiation hours From 0 to 24h
Opening Auction Everyday

23. Negotiation Period for Day D Product
Within-day Market
. . .
Día D-1Día D-2 D Day 6:006:00
t
3:00
GAS Day
19:00
Día D-7
8:00
17:00
D+1

24. Concept Value
Underlying commodity Natural Gas
Place of Delivery VTP-E
Delivery Period Two Gas days of the weekend in
Spanish System
Unit 1 MWh/day
Minimum Size 1
Size increments allowed 1
Price Unit €/MWh with 2 decimals
Price Tick 0,01
Product Volume 2 MWh/day
Negotiation Session Monday to Friday
Negotiation days Labour days previous to weekend
Negotiation hours From 9 to 17h
Opening Auction Everyday

25. Fin de semana negociado
SEMANA 1 SEMANA 2 SEMANA 3
L M X J V S D L M X J V S D L M X J
Días de
negociación
SEMANA 1
L
M
X
J
V
S
D
SEMANA 2
L
M
X
J
First day on which the product is negotiated
Rest of days where product is negotiated

26. LNG
Network Capacities
(secondary market)
Storage Capacities
(secondary market)