There are two opposing trends currently at work in the North West European gas market.
一个被封装在一起the ascent of the Dutch Title-Transfer Facility, which has since 2015 been Europe’s most liquid pricing benchmark.
Low LNG prices over the course of the year have driven traded volumes on TTF up by 42% in 2019 compared to the same period last year. Over the last three years, volumes on the ICE Endex, which facilitates TTF trading, increased 13-fold.
Interest in the benchmark has been gaining momentum globally, with buyers including CNOOC and CNPC exploring TTF price indexation options, and US suppliers gradually shifting away from Henry Hub.
More trading interest and more physical indexation creates a virtuous cycle, in which an increasingly liquid hub better reflects regional fundamentals and enables smoother risk transfer for market participants. The more LNG is traded on TTF, the more appealing it is for new players to enter the market.
The implication of the rise of TTF is that North West Europe (NWE), for a variety of reasons, is assuming a pivotal position in an increasingly globalised natural gas trade.
在平衡天然气供应g考虑欧洲的作用lobally. Mature hubs, ample storage, and the option to meet domestic demand through indigenous production, pipeline imports or LNG have allowed buyers in Europe to profitably step-up or step-down their LNG purchases in response to the global availability of LNG.
当市场在今年上半年随着额外的货物被淹没时，欧洲灵活增加其LNG购买的能力充分展示。欧洲消费者受益于低价，而供应商在亚洲的价格下获得了产品和地板的市场。
欧洲的气体中心是由硬煤，褐煤，碳和电力的液体市场补充，所有这些都是在达到正确的价格点时促进电力扇形燃料切换。
但是，随着天然气开始赢得燃料切换战斗，这种元素开始侵蚀。根据IEA的说法，NWE中核和燃煤发电的45岁的核和燃煤发电量计划于未来五到六年退休。
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This brings us on to the second of the two trends mentioned at the outset: an ongoing shift in the way that North West Europe sources and uses its gas, which has broader consequences for the energy system as whole. The effects of this change were highlighted in the IEA’sGlobal Gas Security Review 2019, released last week.
The review argues that Europe’s increasing dependence on natural gas imports (which accounted for 54% of European gas supply in 2018), combined with growing reliance on natural gas to stabilise the power grid at higher penetrations of variable renewables, are undermining the flexibility of the gas system.
With the additional load devolving onto renewables – an inflexible resource – and natural gas, there are some causes for concern. If the power system leans on the gas system for flexibility, what happens when gas supplies are tight – particularly during periods when gas demand for other end-uses, such as heating, is high?
Flexibility mechanisms
传统上，满足高需求的答案已经是三倍：将国内天然气生产驶向消费升高的季节，吸引储气设施，提高进口水平。但这三种灵活机制中的每一个都证明越来越有问题。
第一个是最不可思议的所以。2008/2009年，荷兰巨人格荣的气田的季节性生产挥杆超过30 bcm。十年后，根据IEA的说法，这已减少到4 bcm以下。
An added complication is the fact that the gas imported to replace supplies from Groningen is high-cal rather than low-cal gas, which means that it needs to be converted before it can be used in parts of the Dutch, Belgian, German and French gas networks.
根据IEA报道的GTS图，根据高峰期需求，转换设施的利用率在去年冬季非常高 - 93％。对转换的需求使得容纳变化的气体流动模式甚至更大的头痛。
Storage is also problematic. Seasonal spreads on TTF, which are instrumental to profits from gas storage facilities, have more than halved since 2012. In the absence of clear economic incentives or a standardised regulatory framework, North West European storage capacity has spent the last few years in retreat (although there are somepositive indicationsthat a recovery may be on the cards).
最后有方本所有的进口，这在暴露于较高价格方面以及可用的管道能力方面都具有挑战性。在最后两个加热季节，几乎没有挪威和俄罗斯管道上没有备用进口能力，直接在西北欧洲。
Of course, NWE can also rely indirectly on imports through Ukraine (itself a question mark, as Gazprom’s gas transit agreement has yet to be renewed), or on LNG. The continent’s ample, expanding and consistently underutilised regasification infrastructure could allow it to rely more heavily on this last option if the market demanded it.
However, the more NWE chooses to go down this route, the less it retains its ability to choose between different sources of supply. The outcome of overreliance on a single flexibility mechanism would be a reciprocal reduction in the flexibility Europe itself lends to global gas markets.
Grounds for comparison
It is interesting to contrast the threats to flexibility in Europe with the efforts currently being made by the traditional Asian buyers, particularly Japan, to develop their own flexibility mechanisms. These include downstream infrastructural investments in emerging LNG markets in the region, building out reloading capabilities at home and partnering with buyers elsewhere in the world.
The goal for these players is to develop their role as secondary suppliers, offsetting their risk during periods of low domestic demand. This strategy has been enabled by the growth in destination free supply contracts, which accounted for 89% of newly contracted volumes in 2018.
The difference in psychology between the two regions is discernible. For the traditional buyers, who have historically suffered from very little flexibility, improving their options is about mitigating the effects of supply dependence.
For Europe, still growing accustomed to its increasing reliance on imports, the true value of the midstream infrastructure that supports a flexible gas system may not be so apparent. The inevitable politicisation of new gas infrastructure projects is also an important differentiator.
This may change over time as domestic gas production continues to decline, renewables continue their steady march forward, and gas and power system integration becomes a more widely accepted characteristic of the energy transition.
