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 EU network codes will further enhance cross border trade

Gas trading in the European markets is a dynamic and evolving business that offers both unprecedented opportunities and significant risks. The ‘Third Package’ on energy regulation aims to promote a more transparent and harmonised single EU trading market.

Bernhard Schaefer, head of Energy Regulation Germany & EU at E.ON Ruhrgas AG, will chair the marcus evans 2nd Annual European Cross Border Gas Trading Conference in Vienna, on 15-17 November.

He explains how the Third Package of legislation on the internal gas market will facilitate and enhance cross border trade.

What we currently see is that volumes and liquidities at the most important European hubs are continuing to increase strongly. There are a number of reasons for that – in particular the increased production of unconventional gas in the US and additional LNG supplies that have reached the EU market. This development is enhanced by regulatory measures like efficient capacity allocation, flexible balancing systems and the introduction of entry/exit systems in many EU countries.

“We are observing a continuing enlargement of existing market areas, which means that balancing a gas portfolio is facilitated – thereby advancing hub trading in these market areas.”

Schaefer says that the implementation of the Third Package into national law in March next year will not lead to a sudden dramatic change in the European gas trading market – market development is more a continuous process.

“The directive itself is not that important for gas trading. Essential to the further integration of the EU gas market is rather the new system of framework guidelines and network codes which has been established by the 3rd package. This regime will produce detailed and binding European rules on all aspects of gas grid access. However, these network codes are still to be written. The first network code will become binding in 2012 – at the earliest," he explains.

“Despite this lengthy and laborious process there is no doubt that the forthcoming EU network codes have a significant potential to further facilitate and enhance cross border trade. To really create a level playing field in Europe it is of utmost importance that these rules are as detailed and binding as possible in order to lead to a synchronized market opening in all Member States.”

The marcus evans 2nd Annual European Cross-Border Gas Trading Conference will take place in Vienna, 15-17 November.

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