Gas Marketing

The Dutch gas market has some unique characteristics. The Dutch small field policy ensures a guaranteed offtake of gas produced offshore in the Dutch sector of the North Sea. Pricing on the Dutch natural gas market has changed considerably over recent years, with a break from traditional oil-indexation, being replaced by spot-index traded gas (TTF).

gas marketingThe price that Gasterra offered the offshore natural gas producers used to be the resultant of a complicated formula commonly known as NIP (Norm Inkoop Prijs). The formula attempted to mirror the price conditions of Gasterra's domestic- and export gas sales portfolio. The formula contained several oil- and gas indexes of which some are lagging averages, which had a smoothing effect on the resultant price. Mainly due to the oil indexes, the NIP proved to be a favourable price compared to spot traded indexes. However, in recent years, the Dutch spot index traded gas price (TTF or Title Transfer Facility) has matured. Gasterra has adapted its price-conditions such that it is now fully TTF-based. TTF is traded forward for four years and shows a seasonal pattern with higher prices in the winter months when demand is high. Over recent years, the spread between summer and winter has narrowed due to seasonal gas-storage facilities such as Bergermeer coming onstream. Dutch natural gas market dynamics have further changed due to improved interconnectivity of European gas markets through various pipelines such as BBL (Balgzand to Bacton) and Nord Stream, the Gate LNG terminal and the imposed cap on the Groningen gas field.

Gas prices assumptions are a key input to any economic assessment of the viability of developing and sustaining Dutch offshore gas-production. A sound understanding of the gas price development will provide you with a competitive advantage. In order to achieve such sound understanding, Cor Leonis can provide you with a relevant, accurate, in depth and independent subscription-based monthly gas price analysis. A sample-analysis can be downloaded in the right hand column.