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Overview
In September 2013, a private wholesale gas trading mechanism was established. Called emsTradePoint and operated by Transpower, it is a blind, centrally-cleared market that has attracted a number of trading participants. Information on that market, including its rules, can be found at www.emstradepoint.co.nz.
As part of its ongoing attention to wholesale market developments, Gas Industry Co commissioned a paper, Essentials of Efficient Natural Gas Trading in New Zealand, from United States-based energy trader Beverly Beaty, that provides an overview of how gas markets operate and outlines the features of the two industry-led initiatives (NZX also offered a market based on the New Zealand Gas Exchange (NZGE) design in 2013, but did not attract support). It is intended to assist any parties who would like to be more active in gas trading, but who lack experience with trading on a centralised platform.
Related documents
Background
In undertaking the original policy work on this issue, Gas Industry Co considered how best to meet the Government’s desire for a transparent, short-term wholesale gas market. One of the distinguishing features between the gas and electricity markets in New Zealand is that there is no transparent price signal for wholesale gas. Indeed, there is a good deal of information asymmetry, with producers and wholesalers knowledgeable about the deals to which they are party and little or no publicly available information.
However, because the vast majority of gas is sold under long-term arrangements and there are sound reasons for this, it was thought that a trading market should be low cost to participants and cater for short-term trades, while fostering public and transparent market outcomes. Gas Industry Co accordingly developed a wholesale market platform and governance arrangements. This market, called the New Zealand Gas Exchange (NZGE), went live in June 2010. However, there was insufficient interest in the NZGE from market participants and the initiative was discontinued in December 2010. Further details about this initiative can be found in the Presentations and Market Administration Tabs on the left-hand navigation of this page.
Key Areas
Between 2006 and 2010, Gas Industry Co consulted with the industry on options for a wholesale market. Documents relevant to those Discussion Papers are set out below.
Previous correspondence with the Minister of Energy on the matter can also be found below.
Related Information
Discussion Paper - Gas Wholesale Market Design (Dec 2006)Discussion Paper - Wholesale Market Design (Sep 2006)
Discussion Paper - Concept Design for Wholesale Gas Market (Mar 2006)
Related documents
These presentations relate to the development of the NZGE by Gas Industry Co.
Hub options presentation - February 2008
These presentation slides provide a status report on the development of the wholesale market with particular focus on the options and motivation for locating trading at a hub. Two options were proposed: a virtual hub and a trading hub. The advantages, disadvantages and operational aspects of each option are explored and the conclusion is drawn that the trading hub option provides the best long-term solution.
Gas Market Design Presentation - December 2005
These presentation slides give an introduction to the policy framework and conceptual issues for a wholesale gas market. It looks at the size, structure and characteristics of the New Zealand gas market in relation to other international markets and presents some high-level options available for the operation and governance of a trading market.
Related documents
These documents relate to the NZGE, in operation from June 2010 to December 2010
Related Information
Trading System OperatorWholesale Market Governance Documents
Application Process
Ministerial Consent
Standard Trading Contract