Daily Natural Gas & Capacity Market (NFKP)

Transcription

1 Daily Natural Gas & Capacity Market (NFKP) Zoltan Gellenyi 4th June 2010

2 Goals and Expectations 2

3 Framework Ideas for Market Based Balancing 3

4 The New Gas Act and Model Design 1. Shippers to keep daily inand offtake in balance. Residual imbalances shall be closed-out after gas day (GET 30. ) 2. TSO is responsible for system balancing (GET 91. ) 3. Trading of imbalances within a day (GET 9. ) 4. Continous, internet based trading (GET (3) & (4) 5. Anonimity (GET (7) 6. Services of clearing house (GET (2) és (7) Standardising Products Offering Transacting Clearing & settlement Guarantees Exchange-like operation 4

5 MGP: Hungarian Gas Balancing Point MGP is a virtual entry and exit point of the high pressure transmission system. Shippers imbalances will be displayed and settled on the virtual point; In case of NFKP transactions, the delivery point will be the MGP, therefore: Potential supply and demand is concentrated into one location, more transaction is possible Easier to develop high liquidity that is needed for broadly accepted settlement (cash-out) price for imbalances MGP is cost-neutral compared to all physical entry and/or exit points of the system MGP has unlimited capacity, no capacity, or volume fee involved 5

6 Products Traded on NFKP Product range Natural Gas Capacity Product MGP natural gas HEG* HEGO* Interruptible and B/H Noninterruptible Instrument MGP Natural gas/ gas day HEG/gas day/ Gas hour/ network point HEG/gas day/ network point KAP/ Interruptibility/ gas day / network point KAP/ gas day / network point Gas flow/delivery On D gas day, 24-hours continuous flow In a given hour of D gas day On D gas day, 24-hours continuous flow On D gas day, 24-hours continuous flow On D gas day, 24-hours continuous flow Transaction On D-1 and D days** On D day*** On D-1 day **** On D-1 day On D-1 day * On one side of the transaction, the TSO is required to be ** Bound transaction on the D-1 day: physical delivery with nominating, Bound transaction on the D day: imbalance correction *** The market of the actual instruments closes three hours before the transfer starts **** On day D-1, shipper grants the option, TSO exercises on day D during allocation 6

7 MGP Gas Contract The subject of trade is a real usage value: MJ. There are no quality issues, neither penalty fees for nomination differences The delivery point is always the MGP Lot size: 43,200 MJ/day, continuous flow Payment: after the conclusion of the given gas month, together with other monthly settlements, incl. settlement of imbalances 7

8 Nomination and Allocation of MGP Gas Transactions Nomination, transaction executed on D-1 On seller s side MGP is automatically nominated as an exit point immediately after the transaction. The seller has to nominate the physical entry point on the TSO IP. On buyer s side MGP is automatically nominated as an entry point immediately after the transaction. The buyer has to nominate the physical exit point on the TSO IP. Nomination, transaction executed on D On the seller s side MGP as an exit point is nominated automatically after the transaction. And it occurs for the seller as an additional consumption in the reckon of the commercial balancing on the gas day. On the buyer s side MGP, as an entry point is automatically nominated after the transaction and it occurs for the buyer as an additional source in the reckon of the commercial balancing on the gas day. Allocated quantity = nominated quantity 8

9 Hydraulic Balancing Gas (HEG) Contract The subject of trade is a real usage value: MJ. Delivery point is always MGP, but an entry (HEG sale) or exit point (HEG purchase) must be assigned in the offer Lot size: 43,200 MJ/day/24 = 1,800 MJ/hour, continuous flow Transaction deadlines: 3 hours before flow starts On one side of the transaction, the TSO is required to be Payment: after the conclusion of the gas month, together with other monthly settlements, incl. settlement of imbalances 9

10 Nomination and Allocation of HEG Contracts Nomination, transaction executed on day D The physical entry point and the MGP as an exit point assigned in the offer is automatically nominated on the seller s account. The physical exit point and the MGP as an entry point assigned in the bid is automatically nominated on the buyer s account. The executed HEG transaction does not effect the shippers imbalance position on the gas day Linepack is increased or decreased by gas quantity bought or sold by TSO in the given HEG transaction Allocated quantity = nominated quantity 10

11 Hydraulic Balancing Gas Option (HEGO) HEGO: TSO s right but not the obligation to modify given shipper s in - or offtake in order to maintain system balance. Shippers can grant optional gas before the actual gas day on both entry and exit points. Positive option: the TSO receives gas from the shipper on MGP Negative option: the shipper receives gas from TSO on MGP. Lot size: 43,200 MJ/day Transaction: exercising the option in allocation phase after the gas day Result of exercised option: HEG transaction 11

12 Positive HEGO: system is short of gas 1. SELLER: SH Entry point: physical entry Exit point: MGP Capacity according to normal flow Expanding resource on the physical point or BUYER: TSO Entry point: MGP Mobile linepack increasing 2. SELLER: SH Entry point: physical exit Exit point: MGP Backhaul capacity Decreasing consumption on the physical point 12

13 Negative HEGO: system is long in gas 1. BUYER: SH Entry point: MGP Exit point: physical exit Capacity according to normal flow Expanding consumption on the physical point or SELLER: TSO Exit point: MGP Mobile linepack decreasing 2. BUYER: SH Entry point:mgp Exit point: physical entry Backhaul capacity Decreasing resource on the physical point 13

14 Secondary CUR (KAP) Transactions Interruptable and non- interruptable (including BH capacities, too) Transferring CUR for a given gas day Lotsize: 43,200 MJ/day Standardised transfer process: Firm CUR transaction: CUR transferred from seller s annual, then seasonal, monthly and last from daily bookings Interruptable CUR transaction: CUR transferred from seller s daily, monthly, seasonal and last from annual bookings Payment: after the conclusion of the gas month, the monthly and balancing account together Secondary CUR transaction does not effect the original owner s contractual obligations towards TSO. 14

15 Transactions could be bound for D gasday 15

16 Dealing on NFKP Clearing and settlement CLEARING HOUSE BUYER Financial limits SELLER Bid ORDER CHECKING Offer Confirmation NFKP ORDER MATCHING Confirmation Automatic nomination: MGP as an entry point REPORTING Capacity limit Automatic nomination: MGP as an exit point Buyer nomination for the physical exit point TSO Seller nomination for the physical entry point 16

17 Settlement of Shippers Residual Imbalance Before After physical entry (incl. option) - physical exit (incl.option) +/ = commercial imbalance + physical entry (incl. HEG HEGO) - physical exit (incl.heg HEGO) +/- NET allocated MGP = commercial imbalance If commercial imbalance > 0: SH sells, FGSZ buys on cash-out price If commercial imbalance > 0: SH sells, Clearing House buys on cashout price If commercial balance < 0: SH buys, FGSZ sells on cash-out price If commercial imbalance < 0: SH buys, Clearing House sells on cashout price 17

18 Cash-out Price for Balancing Cash out (settlement) price: the volume weighted average price of all MGP and HEG transactions executed on NFKP for the given gas day, including: MGP transactions on day D-1 MGP transactions on day D HEG transactions HEG transactions originated from options The last known cash-out price shall remain valid if new one can not be calculated due to lack of liquidity. 18

19 Settlement between Clearing House and TSO 1) The clearing house sells the net surplus gas to FGSZ basis cashout price if IMB SH >0 after having settled all shippers imbalances; 2) The clearing house covers its net short position from FGSZ basis cash-out price if IMB SH <0 after having settled all shippers imbalances;. Linepack change (be it system balancing or residual balancing action) is always priced upon market price 19

20 Expected Improvements There is no market based instrument for managing shippers imbalances The possibility to use options is limited System balancing gas procurement is not transparent enough Cash-out price based on executed options only is not reflecting real market conditions The system is not dealing with any credit risks arising from balancing activities Not using penalties does not support the balancing MGP gas HEG and HEGO Anonim trade & more products Price of multiple products Clearing house Enforcing penalty fees 20

21 Financial Consequences Shippers Residual Imbalance Trades out at market price, or Offsetted by clearing house at market based cash-out price TSO s Balancing Actions System Gas procured/sold at market price or market-based cash-out price Eventual P\L of balancing actions will be settled with shippers after gas month P\L settlement is based on shippers actual imbalances Price for Balancing Service provided to TSO Mark-up/down in HEG or HEGO prices Increased tolerance level for flexibility providers 21

22 Your questions please Zoltan Gellenyi Head of Capacity Sales FGSZ Zrt 22