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.
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.