Central European Gas HubCentral European Gas Hub

ERGEG 30th, 2009ERGEG 30th, 2009

How to serve commodity trading

3000 BC

1200 AD

2000 AD

1700 AD

140 000 BC 100 AD

First documented Trading took place in Africa

Trading along the Amber Road

Trading along the Silk Road

Trading along the Hanse Route

PHYSICAL & VIRTUAL TRADING

DEVELOPMENT OF COMMODITY HUBS

1994 AD NBP Gas Hub

1999 AD APX Gas Hub

2005 AD CEGH Gas Hub

2003 AD TTF Gas Hub

1602 AD Exchange in Amsterdam & First Share

1720 AD First Crash

1771 AD Exchange in Vienna

1792 AD Exchange in New York

1200 AD Trading along the Hanse Route

140000 BC First documented Trading

3000 BC Trading along the Amber Road

100 AD Trading along the Silk Road

1409 AD First Exchange in Brugge

1540 AD Exchange in Nürnberg

1554 AD Exchange in London

PHYSICAL TRADING

Hanse - Success

CEGH: one additional trading point

HUB landscape in Europe

CEGHCEGHCEGHCEGH

GUD

TTF

NBPZeebrug

ge

EGT

PEG

PSV

Future potential Hubs

DONG

CDG

Almost 100% of respondents are

currently trading at the

CEGH Hub in Baumgarten:

When it comes to volume of trade, 57% of traders said that the CEGH has the best chance of becoming the most important hub in CEE/SEE and would be best suited as regional trading platform.

Furthermore 75% of respondents would like to have a regional price index where one would be technically and economically viable.

0

10

20

30

40

50

60

70

80

90

100

CEGH PSV EEX (BEB) EEX (EGT)

% t

rad

ers

usa

ge

of

hu

bs

PricewaterhouseCoopers: ordered by ERGEG in the course of the SEE Region Initiative

CEGH - Monthly Title Tracking - Volume

0

500

1.000

1.500

2.000

2.500

10/2

005

11/2

005

12/2

005

01/2

006

02/2

006

03/2

006

04/2

006

05/2

006

06/2

006

07/2

006

08/2

006

09/2

006

10/2

006

11/2

006

12/2

006

01/2

007

02/2

007

03/2

007

04/2

007

05/2

007

06/2

007

07/2

007

08/2

007

09/2

007

10/2

007

11/2

007

12/2

007

01/2

008

02/2

008

03/2

008

04/2

008

05/2

008

06/2

008

07/2

008

08/2

008

09/2

008

10/2

008

11/2

008

12/2

008

Mio

. m³

Development of OTC - Trade

Increasing trading activities:• Increasing churn rate

• Increasing number of customers

• Increasing number of nominations

Number of registered and active customers at CEGH

0102030405060708090

10/2

005

11/2

005

12/2

005

01/2

006

02/2

006

03/2

006

04/2

006

05/2

006

06/2

006

07/2

006

08/2

006

09/2

006

10/2

006

11/2

006

12/2

006

01/2

007

02/2

007

03/2

007

04/2

007

05/2

007

06/2

007

07/2

007

08/2

007

09/2

007

10/2

007

11/2

007

12/2

007

01/2

008

02/2

008

03/2

008

04/2

008

05/2

008

06/2

008

07/2

008

08/2

008

09/2

008

10/2

008

11/2

008

12/2

008

Cus

tom

ers

Active customers - CEGH

Registered customers - CEGH

CEGH - Churn Rate

1,0

1,5

2,0

2,5

3,0

3,5

10/2

005

11/2

005

12/2

005

01/2

006

02/2

006

03/2

006

04/2

006

05/2

006

06/2

006

07/2

006

08/2

006

09/2

006

10/2

006

11/2

006

12/2

006

01/2

007

02/2

007

03/2

007

04/2

007

05/2

007

06/2

007

07/2

007

08/2

007

09/2

007

10/2

007

11/2

007

12/2

007

01/2

008

02/2

008

03/2

008

04/2

008

05/2

008

06/2

008

07/2

008

08/2

008

09/2

008

10/2

008

11/2

008

12/2

008

Basic nominations per gas day

0

100

200

300

400

500

600

700

800

900

1000

20

06

.01

20

06

.03

20

06

.05

20

06

.07

20

06

.09

20

06

.11

20

07

.01

20

07

.03

20

07

.05

20

07

.07

20

07

.09

20

07

.11

20

08

.01

20

08

.03

20

08

.05

20

08

.07

20

08

.09

20

08

.11

20

09

.01

No

min

ati

on

s /

da

y

Appr. 2000 nominations per day

Herfindahl Index

Verlauf Herfindahl Index CEGH

0,0000

0,0500

0,1000

0,1500

0,2000

0,2500

0,3000

0,3500

0,4000

0,4500

0,5000

0,5500

0,6000

2006

/07

2006

/08

2006

/09

2006

/10

2006

/11

2006

/12

2007

/01

2007

/02

2007

/03

2007

/04

2007

/05

2007

/06

2007

/07

2007

/08

2007

/09

2007

/10

2007

/11

2007

/12

2008

/01

2008

/02

2008

/03

2008

/04

2008

/05

2008

/06

2008

/07

2008

/08

2008

/09

2008

/10

2008

/11

2008

/12

Monat

Herfindahl Index

Herfindahl Index Trendline

Broker based trading at CEGH

0

50

100

150

200

250

300

350

08.05.2007 16.08.2007 24.11.2007 03.03.2008 11.06.2008 19.09.2008

MW

h/h

Dimensions of bubbles are indicating volume of trade

PSV

ICAP-Baumgarten Fronth Month

0

10

20

30

40

01

.05

.20

08

01

.06

.20

08

01

.07

.20

08

01

.08

.20

08

01

.09

.20

08

01

.10

.20

08

01

.11

.20

08

01

.12

.20

08

01

.01

.20

09

EU

R /

MW

h

ICAP Baumgarten OTCICAP BMGT Front Month - BidICAP BMGT Front Month - AskBMGT Heren-WeeklyICAP BMGT Front Month - Bid-Ask SpreadItalian PSV Front Month

Bid – Ask spread

0

10

20

30

40

01

.05

.20

08

01

.06

.20

08

01

.07

.20

08

01

.08

.20

08

01

.09

.20

08

01

.10

.20

08

01

.11

.20

08

01

.12

.20

08

01

.01

.20

09

Price quotations in Baumgarten are reflecting the market

environment

OTC Market Making - Baumgarten

• Products:

• Day Ahead

• BOM

• 2-3 Front months

• 2 Quarters

• 2 Seasons

• 1 Yearly contract

• Quantities:

• 10 / 30 MWh/h

• Bid/Ask Spread:

• Maximum: 1,0 EUR / MWh (1,5 for seasons/ yearly contracts)

Development from the physical to the financial services

Serv

ices

2006 2007 2008 2009

Title tracking service

Spot

Futures

Backup / back down service

OTC Clearing

CEGH Multi Trading (CMT) / Dispatching services/Allocation/Invoicing

Physical Balancing Merit order list

Wheeling service

No notice storage service

Web based online gas auctioning

Online bulletin board

Physical balancing via online bulletin board

CEGH Multi Trading (CMT) Dispatching

Exchange project: CEGH - WBAG

Shareholder agreement11/ 2008

Contractual setup11/ 2008

Approval FMA (basic concept)11/ 2008

Pre notification submitted 12/ 2008

Evaluation of IT – Systems 2008

Selection IT – Systems 11/ 2008

Operation agreements

Customer agreementsInterface implementation

OTC dispatching

IT implementation

IT interfaces to WBAG

IT integration customer

Simulation start

Go life 2009

technical legal

AG foundation10/ 2008

GAS EXCHANGE- Spot Trading

- Futures Trading

TRADING

Exchange Trader

Exchange Trader

z.B. Bank Austria

z.B. EconGas, RAG, StGW, Essent Energy Trading, …

OMX System

[€/MWh]

CLEARING & SETTLEMENT

(RISK MANAGEMENT)

Physical Trade - OTC

EXCHANGE TRADING

OTC TRADING

CCP.ACentral

CounterpartyAustria

OeKBSettlementbank

General Clearing Member (GCM)

Non Clearing Member (NCM)

Direct Clearing Member (DCM)

Non Clearing Member (NCM)Non Clearing

Member (NCM)Non Clearing Member (NCM)

Remote Member

Clearing Agent (Bank)

Exchange Trader 1

Exchange Trader 2

€

t

€

t

Day of Delivery -1

Supply & Demand

GasExchange

GAS EXCHANGE- Spot Trading

- Futures Trading

TRADING

Exchange Trader

Exchange Trader

z.B. Bank Austria

z.B. EconGas, RAG, StGW, Essent Energy Trading, …

OMX System

[€/MWh]

CLEARING & SETTLEMENT

(RISK MANAGEMENT)

Physical Transfer - OTC

EXCHANGE TRADING

OTC Transfers

CCP.ACentral

CounterpartyAustria

OeKBSettlementbank

General Clearing Member (GCM)

Non Clearing Member (NCM)

Direct Clearing Member (DCM)

Non Clearing Member (NCM)Non Clearing

Member (NCM)Non Clearing Member (NCM)

Remote Member

Clearing Agent (Bank)

Exchange Trader 1

Exchange Trader 2

€

t

€

t

Day of Delivery -1

Supply & Demand

Contractual frameworks

WAG 2007: Wertpapier Aufsichtsgesetz

Börsegesetz (exchange law)

CEBS Committee of European Banking Supervisors

MiFID Market Infinancial Instrument Directive

Ministry of finance

Department of commerce

Derivative market

Spot market

OTC marketEnergie – Control GmbH

Interconnection Agreement (OBA)

Austrian Financial Markets Supervisory Agency

Three pillars for liquidity

ExchangeOTC

Capacity utilization

Trading

platform

Storage

Use it or lose it interruptible

Flexible services

Harmonized Environment

Sufficient primary capacities

Bricks for Hub construction

Back up/ down in cooperation with

EFET

IT in place legal

Interconnection agreement / OBA

Partnership with GAZPROM, VSE, CENTREX prenotified to DG - Comp

FirmnessStandard-

isation LiquidityTrans-

parency

Gas exchange

Market maker in OTC trade in cooperation

with ICAP

Cooperation with HEREN

& EFET

Thank you for your attention