ICE to launch European LNG futures for North-West and South-West Europe

The contracts are designed to assist market contributors commerce and hedge the differ-ence in value between LNG for supply in North-West and South-West Europe, ver-sus pure fuel offered by pipeline to Europe, in addition to LNG throughout the remainder of the world.

The contracts will probably be money settled based mostly on Spark Commodities’ value assessments for LNG cargos and priced in US$/million Btu in step with ICE’s present LNG con-tracts. The contracts are attributable to launch on 5 December 2022, topic to regulatory approval.

“Reflecting the vitality scenario which exists inside Europe right now, clients want a futures contract to cost LNG imports into Europe, and supply a method to handle the distinction with the value of pure fuel delivered by way of pipeline,” mentioned Gor-don Bennett, Managing Director of Utility Markets at ICE. “The value of pure fuel in Europe stays excessive due to an imbalance between provide and demand, brought on by the numerous discount within the provide of pure fuel into Europe from Russia and the downstream influence of bodily capability constraints throughout the Euro-pean pure fuel community.

“Futures markets are offering necessary value indicators to establish the placement of those bottlenecks, permitting for capital to be allotted effectively to handle them by including, for instance, regasification capability to import extra LNG,” continued Ben-nett. “Futures markets are additionally a key threat switch mechanism to cut back publicity to identify markets and thus a important avenue for vitality companies to handle their threat to allow them to keep a secure supply of vitality to European societies. We proceed to work carefully with our clients, regulators and governments to seek out market-based solu-tions to the pressures brought on by the vitality disaster and ICE is able to help with de-veloping an EU futures market based mostly on the complementary LNG benchmark to be developed by the EU Company for the Cooperation of Vitality Regulators (ACER).”

Moreover, ICE plans to launch three supporting French PEG, German THE and Italian PSV Pure Gasoline 1st Line contracts on 5 December 2022, topic to regu-latory approval. The money settled contracts will commerce and settle in US$/million Btu and supply market contributors with further flexibility to handle their LNG im-port publicity. ICE already affords bodily delivered PEG, THE and PSV futures that are priced in €/MWh.

ICE is residence to the pure fuel benchmark TTF, a bodily delivered contract which upon expiry ends in pure fuel being added to, or taken from, the TTF nat-ural fuel hub by way of title switch. TTF trades from ICE in Amsterdam, producing a day by day settlement value based mostly on transactions of consumers bodily shopping for and promoting pure fuel and is the world’s second most liquid pure fuel contract after the US-based Henry Hub.

TTF and the brand new North-West Europe LNG futures are complemented by ICE’s present German, Italian, French and Austrian pure fuel futures and along with the brand new South-West Europe LNG futures, which add protection of Iberia and the Mediterranean, will enhance the selection of pricing and threat administration instruments availa-ble to market contributors.

The 5 futures contracts will commerce from ICE Futures Europe and clear at ICE Clear Europe alongside world vitality benchmarks together with Brent Crude, TTF natu-ral fuel, European Carbon Allowances, coal and electrical energy, providing significant mar-gin offsets throughout vitality portfolios to maximise liquidity and capital effectivity.

The brand new contracts will type a part of ICE’s world pure fuel portfolio alongside the prevailing TTF, NBP, Henry Hub, JKM LNG (Platts), WIM LNG (Platts) futures, and the Spark30S Atlantic and Spark25S Pacific LNG freight futures.

Learn the article on-line at: https://www.lngindustry.com/liquid-natural-gas/28102022/ice-to-launch-european-lng-futures-for-north-west-and-south-west-europe/