Trading Points, Hubs, and Market Areas in the European Union are key concepts within the gas market framework that facilitate the efficient trading and transportation of natural gas. These terms refer to specific locations or regions where gas is bought, sold, and transported, and they help in establishing a competitive and transparent gas market.
Trading Points are locations where natural gas is bought and sold, either directly between market participants or through market exchanges. These points typically represent places where gas can be exchanged or priced. The Title Transfer Facility (TTF) in the Netherlands is one of the most important gas trading points in Europe, where the price of gas is determined by market trading.
Gas hubs are more centralized points or marketplaces where multiple parties can trade gas, usually facilitated by a gas exchange or market platform. The NBP (National Balancing Point) in the UK is a key gas hub, serving as the price reference for gas trading in the UK market.
Market areas refer to broader geographic regions in the gas market where gas is traded, and pricing is based on the aggregation of multiple trading points or hubs. Market areas are often defined by the transmission system operators (TSOs) and may include one or more trading points or hubs. The German market area (which includes hubs such as Gaspool and NetConnect Germany) is one of the largest in Europe, where gas flows from different sources can be balanced and traded.
All of Europe now has a gas hub of sorts, ranging from the very small ‘nascent’ balancing and spot trading hubs; to the ‘inactive’ hubs that might have a little more spot and prompt trading but often very little or no curve trading; to the medium ‘poor’ hubs in Belgium, Czech Republic, and Spain that do trade more products but still in relatively low volumes; to the larger ‘active’ hubs in Britain, France, and Germany that do trade reasonable volumes and also in more types of products. These are dwarfed by the only ‘mature’ benchmark hub in Europe, the Dutch TTF. The below map reveals the updated status of the hubs in Europe.
European gas regions, markets, and hubs: 2023 (Source: OIES)
Title Transfer Facility (Netherlands): TTF, is a virtual trading point for natural gas in the Netherlands. This trading point provides a facility for many traders in Netherlands to trade futures, physical, and exchange trades. Set up by Gasunie in 2003, it is almost identical to the National Balancing Point (NBP) in the UK and allows gas to be traded within the Dutch Gas network. The TTF is operated by an independent subsidiary of Gasunie, Gasunie Transport Services B.V., which is the Gas Transmission System Operator in the Netherlands. Wholesale gas trading at the TTF is predominantly conducted OTC via interdealer brokers. Physical short-term gas and gas futures contracts are also traded and handled by the ICE-Endex Exchange (Amsterdam) and via the PEGAS exchange. Gas at TTF trades in Euro/MWh. TTF accounts for 81.5% of all European gas trading, 56% of all OTC trading, and 87% of all exchange trading. TTF also has the highest Tradability Index score, only missing one point on one of the ‘balance of month’ contracts, and finally, the greatest churn rate.
National Balancing Point (UK) is a virtual trading location for the sale purchase and exchange of natural gas in the United Kingdom. Established in 1996, it has become a key benchmark for gas prices in the UK and significantly influences domestic gas pricing. It is the pricing and delivery point for the ICE Futures Europe natural gas futures contract. Gas at the NBP trades in pence per therm.
Irish Balancing Point (Ireland): IBP is the primary trading hub for natural gas in Ireland, serving as a reference point for gas prices and facilitating market liquidity. Established in 2015, the IBP enables wholesale buyers and sellers to engage in gas transactions, promoting transparency and efficiency in the Irish gas market. In 2019, Marex Spectron acquired Energy Brokers Ireland (EBI), a company established in 2015 to offer OTC broking services at the IBP. This acquisition aimed to enhance trading capabilities and market access for participants. The IBP's pricing often aligns closely with the UK's National Balancing Point (NBP), reflecting the interconnectedness of the Irish and UK gas markets. However, factors such as Brexit and changes in supply and demand can influence price differentials between the two hubs.
Zeebrugge Hub (Belgium): Like Europe’s other gas markets, the Belgian and Luxembourg markets were based on national entry/exit systems, with access fees applied between the two countries. In other words, to be able to transmit gas from Belgium to Luxembourg, network users had to pay an exit fee for gas to leave Belgium and an entry fee for it to enter Luxembourg. With the creation of an integrated Belgian/Luxembourg market, these entry-exit access fees between Belgium and Luxembourg fall away and the Zeebrugge Trading Point (ZTP) will become the gas trading point for the integrated market. ZTP offers various trading services, including title tracking, nomination, matching, balance check, confirmation, and imbalance transfer services, to support market participants in their trading activities. The hub is connected to multiple interconnection points, such as the Zeepipe Terminal (ZPT), which links to Norway, and the Zeebrugge LNG Terminal, providing access to liquefied natural gas supplies.
Point d'Échange de Gaz (France): PEG translates to Gas Exchange Point in English. In France, PEG refers to virtual trading points where natural gas is bought, sold, and exchanged. These points serve as central hubs for gas trading, facilitating market liquidity and price discovery. Purchases and sales on the gas wholesale market in France result in the physical delivery of gas at two virtual Gas Trading Points which are attached to the three balancing zones on the French transmission network: PEG Nord, GRTgaz Sud, and TIGF.
TRS was created by the merger of PEG Sud and TIGF on 1 April 2015, to improve the operation of the gas market in southern France and promote its development. TRS represents a crucial step towards the creation of a single trading area in November 2018, Trading Region France (TRF), when TRS merges with PEG Nord. Trading Region France (TRF) will form a single entry/exit zone, divided into two balancing zones: TIGF and GRTgaz. All purchases and sales of gas for the whole of TRF will be concentrated at a single virtual gas trading point, PEG.
Punto Virtual de Balance (Spain): PVB or Spanish Virtual Balancing Point, is a virtual trading hub for natural gas in Spain. It encompasses the entire Spanish gas transportation system, facilitating the trading of gas title transfer products with unrestricted physical delivery. The hub offers various products, including spot and prompt products, as well as futures contracts, allowing participants to manage their gas portfolios effectively. PVB is operated by MIBGAS, the Iberian Gas Market, PVB ensures compliance with market regulations and standards, contributing to a fair and competitive trading environment.
Punto di Scambio Virtuale (Italy): The PSV or Virtual Trading Point, is the primary natural gas trading hub in Italy. Established in 2003, it serves as a central point for the sale, purchase, and exchange of natural gas within the Italian market. PSV is managed by the Transmission System Operator (TSO), PSV ensures compliance with market regulations and standards, contributing to a fair and competitive trading environment.
VHP-THE (Germany): Virtual Trading Point (VHP) and Trading Hub Europe (THE) are integral components of Germany's natural gas market, facilitating efficient trading and balancing of gas supplies. It was started with the founding of GASPOOL a natural gas market area in Germany, operating from 2011. It merged with NetConnect Germany (NCG) on October 1, 2021. This integration led to the formation of Trading Hub Europe (THE), a unified German gas market area. This consolidation aims to enhance market efficiency and liquidity. As a single market area, THE provides a centralized platform for gas trading, balancing, and transmission, promoting transparency and competitiveness in the German gas market. The VHP is a notional point within the gas transmission network where gas is traded without physical delivery. It represents the entire market area, allowing for the buying and selling of gas in a virtual space.
ETF-GTF (Denmark): The Danish delivery points ETF and GTF are small markets compared to the German (THE) and Dutch (TTF) markets.
OTE( Czech Republic): Itis the Czech Republic's designated market operator for electricity and gas, playing a pivotal role in the nation's energy sector. Established in 2001, OTE is wholly owned by the Czech government, with the Ministry of Industry and Trade exercising shareholder rights. OTE manages the short-term gas markets, including day-ahead and intraday trading, in collaboration with the transmission system operator.
Central European Gas Hub (Austria): CEGH is a leading natural gas trading platform based in Vienna, Austria. Established in 2005, CEGH has evolved into a pivotal hub for gas trading in Central and Eastern Europe, facilitating the exchange of natural gas between Eastern and Western Europe. CEGH collaborates with the European Energy Exchange (EEX) to offer a comprehensive range of gas products, including spot and futures contracts.
MGO(Hungary): Itrefers to the Hungarian Virtual Trading Point, a central hub in the country's natural gas market. Operated by the Hungarian Transmission System Operator (TSO), FGSZ Ltd., MGP facilitates the trading and balancing of natural gas within Hungary's high-pressure gas network. It is managed by FGSZ Ltd., MGP ensures compliance with market regulations and standards, contributing to a fair and competitive trading environment.
VTP-Gaz System (Poland): Itis a notional point within the gas transmission system where gas ownership can be transferred without physical delivery. This mechanism facilitates efficient trading and balancing of natural gas within the country. The VTP operates under the oversight of the Polish Energy Regulatory Office (URE), ensuring compliance with national regulations and EU directives.
Baltic Virtual Trading Point (Estonia): Baltic VTP is a notional hub within the natural gas transmission systems of the Baltic States—Estonia, Latvia, and Lithuania—where gas ownership can be transferred without physical delivery.
Hellenic Trading Point (Greece): HTP serves as the primary natural gas trading hub, facilitating the buying and selling of natural gas within the country. Established in 2011, HTP has become a central component of Greece's energy market, promoting transparency, competition, and efficiency. HTP operates as a virtual trading point, allowing market participants to trade gas without the need for physical delivery. The market is regulated by the Greek Energy Regulatory Authority (RAE), ensuring compliance with national and European Union energy regulations. The Greek gas hub showed strong growth in 2023, albeit from a very low first year start,16 to record a total of 9.03TWh traded on the HEnEx trading platform; however, there were still no OTC trades reported.
There is now just one mature hub, the Dutch TTF; the British NBP lost it’s ‘mature’ status in 2021 and is now classified as Active, alongside three other hubs, the German THE, the French TRF, and the Italian PSV; and three Poor hubs, the Austrian VTP, the Spanish PVB, and the Belgian ZTP; all of the remaining hubs are classed as Inactive; the Belgian ZEE ceased trading at the end of September.
The figure below shows the relevant global gas and Brent oil prices over a fifteen year period from January 2009 to December 2023, from which the extraordinary period of high and volatile27 energy prices of 2021 and 2022 can clearly be seen.
: S+P Global Platts, EIA, Argus, CME; M. Fulwood, P. Heather
In conclusion, the European gas market is characterized by a diverse range of trading points, hubs, and market areas that facilitate the efficient exchange, pricing, and transportation of natural gas.
By following Sustainable Energy Analytics, you can stay ahead of the curve in understanding the latest trends and innovations that are shaping a cleaner, more sustainable energy future.
