Germany's new merged gas hub, the Trading Hub Europe (THE), has failed to fulfill Berlin's aspirations of becoming Europe's benchmark hub, according to an analysis of trading data by the Oxford Institute for Energy Studies released on Thursday
MOSCOW (Pakistan Point News / Sputnik - 09th December, 2021) Germany's new merged gas hub, the Trading Hub Europe (THE), has failed to fulfill Berlin's aspirations of becoming Europe's benchmark hub, according to an analysis of trading data by the Oxford Institute for Energy Studies released on Thursday.
In October, Germany launched a nationwide gas market trading hub after merging its two existing hubs, the NCG and GPL, in a bid to boost liquidity and simplify administration. THE was hailed as "one of the most attractive and liquid gas trading hubs in Europe (...), providing excellent opportunities for future growth," according to the report.
However, it has so far failed to deliver on those expectations, just as its predecessors did over the past decade, despite Germany having Europe's highest physical gas demand and developed infrastructure, the report said.
"If the NCG and GPL hubs had not developed more than they had due to there being two hubs in Germany rather than one, simply merging them was unlikely to succeed in creating a more liquid market," the analysis said.
The goal of the merger was to rival top European hubs such as the UK's NBP and Dutch TTF, and boost Germany's position on the international market. So far, though, THE churn rates do not reflect a mature liquid market and its total traded volumes, while being reasonable, are nearly eighteen times smaller than its rival TTF, the analysis showed.
The authors concluded that "given all the statistical trading data, there is no reason to believe at this stage that the new German THE hub could ever challenge TTF to become the European benchmark hub."
The report comes amid renewed calls from Brussels to stop Europe's dependency on natural gas and accelerate the transition to green energy.
"Rising energy prices concern all of us. They tell us that we are way too dependent on gas... We just have to realize that 90% of our gas is imported. So Europe's energy security depends on clean home grown energy," European Commission President Ursula Von der Leyen said during her opening remarks at the European Economic and Social Committee plenary session on Thursday.
