EU Rolls Out LNG Reference Value Earlier than TTF Cap Takes Impact

The European Union (EU) has printed the primary LNG reference value to be used in a market management mechanism to cap pure fuel costs underneath rules that take impact later this month. 

The reference value is a mean of a number of liquefied pure fuel indexes and benchmark costs that might be used to set off the cap if costs climb too excessive. It was launched at $17.13/MMBtu on Thursday.

Beneath rules launched final month that may take impact in February, the worth cap is activated if the front-month Title Switch Facility (TTF) contract value exceeds 180 euros/MWh for 3 enterprise days, or roughly $57/MMBtu. TTF would additionally must be 35 euros/MWh, or about $11/MMBtu above the LNG reference value over the identical interval. 

The reference value might be printed every weekday by the EU Company for the Cooperation of Power Regulators (ACER), which might additionally publish a discover on its web site if the market management mechanism is activated. 

Nevertheless, international fuel costs have plummeted in latest weeks amid heat climate throughout the Northern Hemisphere and robust inventories. Amid an inflow of LNG, European costs have hit their lowest level since 2021. TTF has been buying and selling beneath $20, as has the Japan-Korea Marker. 

ACER lately began assessing LNG costs in Northwest and South Europe that had been additionally beneath $20 on Friday. These assessments are for use in a benchmark that’s extra consultant of seaborne LNG transactions on the continent. 

The company was directed to start out publishing a every day benchmark value by the top of March, which the market might then voluntarily undertake. TTF is a digital pipeline buying and selling hub, the place costs usually diverge from these on the continent’s LNG import terminals.