June 25, 2014

THE IBERIAN GAS MARKET MODEL 1.

omi

MARKET OPERATION 3.

CHARACTERISTICS OF AN ORGANISED

MARKET WITH PHYSICAL DELIVERY

2.

THE IBERIAN GAS MARKET 1

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,…)

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

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

CHARACTERISTICS OF AN ORGANISED GAS

EXCHANGE WITH PHYSICAL DELIVERY 2

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

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

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

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

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?

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

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

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

MARKET OPERATION 3

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

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

VERIFICATION

ORDER BOOK

MATCHER

PROGRAMS

1 6 6 6

2

3

5

7

TRADER

SCREEN

TRADER

SCREEN

TRADER

SCREEN

1

GTS

MARKET IT SYSTEMS

6 4

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

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

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

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

Negotiation Period for Day D Product

Within-day Market

. . .

Día D-1 Día D-2 D Day 6:00 6:00

t

3:00

GAS Day

19:00

Día D-7 8:00

17:00

D+1

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

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

LNG

Network Capacities (secondary market)

Storage Capacities (secondary market)