Dutch Virtual Storage Auction Sells Out
The Dutch virtual gas storage capacity auction sold out at an average weighted price of €7.22/MWh, the national gas marketer GasTerra said February 6. The auction was carried out by Intercontinental Exchange on January 29 on GasTerra's behalf.
A total of 3,392,168 Standard Bundled Units (SBUs) for the contract period 2020/2021 were offered to the market and after five auction rounds, all SBUs were allocated, it said. ICE Endex has operated auctions for virtual gas storage services in the Netherlands since 2011, with auctions taking place twice a year.
An SBU has a capacity of 1,440 kWh and participants may withdraw between 0.6 and 1.0 kWh/hr and inject up to 0.3333 kWh/hr. The total annual gas storage space is almost 10 billion kWh of natural gas or 6,784,336 SBUs. The natural gas from this virtual storage is delivered at the Dutch hub, the title transfer facility (TTF).
Some of GasTerra's flexibility comes from the Groningen gas field, whose output it markets on an exclusive basis, and the field is to be closed in 2022 according to current government thinking.
Seasonality returns
Seasonal spreads, a determining factor in value traders put on storage, have risen sharply in past weeks, with TTF summer 2020 contract being €4.75/MWh cheaper than the following winter. This is a ten-year record, and several bearish factors have pushed summer 20 prices down, said consultancy Timera Energy: renewal of the gas transit agreement between Ukraine and Russia, high LNG deliveries in Europe and record high stock levels, meaning less need to inject in summer as winter draw-downs have been relatively low (owing to high LNG deliveries instead). "This is increasing the value of storage capacity at a time where storage system operators are usually starting to market capacity for the upcoming storage year," it said.
A recovery in TTF seasonal price spreads in 2019 saw capacity prices more than double over the last year and GasTerra's late 2019 auction cleared at €4.9/MWh, a price not seen since 2012, it said.