Yearly auction: more demand for long-term GTS capacity because of the reduction in Dutch gas production

19 Jul 2018

The demand for longer-term GTS transport capacity was much higher this year than last year. At the PRISMA yearly capacity auctions at the start of this month, GTS sold around €20 million worth of transport capacity at the interconnection points for the gas years to come. This is a significant increase on the previous year’s annual auction in 2017, where the value of capacity sold was around €12 million. Demand for entry capacity at the Emden interconnection point was particularly high this year.

Decline in domestic gas production

Although the trend in energy trading is increasingly shifting towards the short term, we are seeing a substantial increase in interest in the longer-term products offered by GTS. The rising demand for long-term capacity is due mainly to the fall in gas production in Groningen and in production by the small fields in the North Sea. This is reflected mainly in bookings for entry capacity, which have risen significantly: the value of entry capacity sales in 2017 was only €1.5 million, while the equivalent figure in the 2018 auction was over €12 million, mainly at the Emden interconnection point.

The GTS network is attractive

As households and industries in the Netherlands are still largely reliant on natural gas, as there has not yet been any substantial fall in demand for gas and as production from gas fields in the Netherlands is falling, there is an attraction to transporting foreign gas to the Netherlands. The GTS network is also ideal for handling transit gas, including gas from Norway or Russia that passes through the GTS network on its way to adjacent markets such as Belgium,  France and (southern) Germany.