Powernext announces the launch of an organised gas market in France

Powernext announces the launch of an organised gas market in France
Powernext undertook a study pertaining to the creation of an organised gas market in France. The study confirmed the potential of the French gas market and the relevance of an exchange to conduct its development. The market players showed a strong interest for this Powernext initiative which will promote the emergence of an efficient, liquid and transparent market, as requested by the French energy regulatory body (Commission de Régulation de l’Energie) and the European Commission. 

This new facility will allow the matching of supply and demand in transparent and non-discriminatory conditions, and the creation of reliable price references for the French market.

Gaz de France Group and the gas transmission system operators GRTgaz have expressed their strong support for the project. In this respect, Gaz de France Group and GRTgaz will respectively acquire 6.6% and 5% of Powernext capital and become Board members. 

The gas transmission system operator TIGF is also partner of the project and will implement the appropriate operating conditions to facilitate it.

Jean-François Conil-Lacoste, Powernext’s CEO, said: “Powernext, with the full support of its shareholders which include strong actors in the European energy sector, is fully determined to create in the very near future a liquid and transparent national gas market, a necessary step prior to the creation of a truly European gas market”.

“Gaz de France is fully involved in this initiative. The creation of a gas trading exchange in France will make it possible to increase the liquidity and efficiency of the markets, benefiting all of the various players, who will be able to have more relevant market signals. This project follows on naturally from the actions already taken by the Group, such as the creation of the trading subsidiary Gaselys with Société Générale, the active participation in transactions on the PEG managed by GRTgaz, and the rollout of short-term transactions”, confirms Jean-François Cirelli, the Chairman and Chief Executive Officer of Gaz de France.

For Jacques Laurelut, GRTgaz’s CEO, ‘the creation of a gas Exchange opens the perspective of increased market liquidity and the constitution of a price reference in France. The Exchange will also bring additional opportunities for GRTgaz, a definite market facilitator, to improve the balancing mechanism and to create market coupling possibilities in the future, contributing to the construction of a single European natural gas market’.

Marc Hiégel, CEO of TIGF, comments: “Thanks to synergies between our transportation and storage activities and thanks to our privileged situation at the Spain – France interconnection, TIGF is undoubtedly positioned toward European shippers to provide them with efficient logistic services. Our participation to the French gas exchange project in partnership with Powernext is in full line with our strategy to develop gas trading.”

The results of the study and a preliminary market model will soon be disclosed to the market players. These players will then be involved in an expert group in order to finalise the specifications of the products and service offered. At this stage, the launch of a spot market is expected by the end of 2008 on all French balancing zones (which will be reduced to a total number of 3 on 1st January 2009), as well as the launch of a futures market with physical delivery in the North zone. Several companies (EDF Trading, ENOI, Essent Trading, Gaselys, Poweo, Total) have already shown an interest in supporting this initiative and in studying the conditions to become quotation providers on this market. 

This project is part of Powernext’s diversification strategy in natural gas. In April 2007, Powernext launched the Powernext - Balancing GRTgaz platform in cooperation with GRTgaz for its daily balancing needs.

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