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energate Gasmarkt Issue 11|2019

Topic of the month: natGAS insolvency

Dr. Heiko Lohmann Dr. Heiko Lohmann

The topic of the month in this edition is the natGAS insolvency. I had many discussions about natGAS in October, many of which came about more by chance. It made me aware again of how concerned the whole industry was. NatGAS is not a tiny player but a sales and trading company with many customers and sales partners. What where new takeaways from that discussions? One was that some natGAS traders left the company and joined the Polish PGE Group which has established a power trading desk in Berlin. Another is that natGAS is committed to finding a way to continue its business. The focus is mainly on the sales part and therefore the company is currently trying to keep its customers. Because natGAS is one of the pioneers in the liberalised gas market, I did not only write about why natGAS went bust and what the consequences are, but also a bit of company history.

The chapter with the news on gas transportation is – as is often the case – long. If my analysis is correct, the new KAP+ consultation is a major breakthrough. I think that BNetzA is making a substantial move towards the TSOs and other stakeholders. Therefore, a reasonable solution for capacity determination and provision in the new market area may be on the horizon. Whether this is also the case regarding recognition of associated cost is not clear. However, rumours say that the responsible ruling chamber is also moving towards the TSOs.

Topic of the month: NatGAS insolvency

On September 26, natGAS filed for insolvency. In the last edition, it was pointed out that the Potsdam- based gas supplier may go bust. The characterisation “gas supplier” is chosen on purpose. NatGAS has over the last years tried to reduce the dependency on gas sales and trading. Of course, power was offered as a sales product and the company did its best to develop a service business. The emphasis was on direct marketing of renewable energies, the integration of decentralised production plants into a virtual power plant and the development of flexibility management. That did not really produce results.

ener|gate Gasmarkt has since December last year been reporting about the intention of the three largest shareholders S.E.T.Energy Trading (34.4 %), Marquard & Bahls (Mabanaft) (29.7 %), and Petrogem (Vitol) (25.01 %) of finding a buyer for their share. This has not been unsuccessful. Surprisingly for many observers, Friedrich Scharr KG (6 %) partly executed a preemption right and bought the Marquard & Bahls share (ener|gate Gasmarkt 09/19). Almost simultaneously to the sales process, the long-time CEO Jörg Bauth was sacked in June and the president of the supervisory board Hans Beyer was replaced by Friedrich Scharr.

However, many sources report that already some time ago, problems of natGAS became visible. In 2018, the company bid very aggressively for new customers for Direktvermarktung and seized them from competitors. “We were not willing or able to match the prices natGAS offered as service fees”, the representative of one supplier told ener|gate Gasmarkt . A second manager used almost exactly the same words to describe natGAS’ aggressive behaviour in that segment. The consequence was in 2018 a loss of five million euros in the Direktvermarktung, several say independently. And in gas trading a loss of a similar magnitude allegedly occurred too.

Market developmentKAP+ ruling procedure

From the perspective of this publication, the responsible Ruling Chamber (BK) 7 gave the ruling procedure KAP+ a twist. The ruling chamber can in future imagine regulating the capacity allocation for the new joint market area “Trading Hub Europe” on the basis of Section 9 (3) of the ordinance provision on the Access to the Gas Networks (GasNZV). The market-based instruments (MBIs) the TSOs propose may get the same status as the flow guarantees that are explicitly mentioned in Section 9 (3) as an instrument to safeguard capacity provision. These new BK 7 reflections are part of its second consultation on KAP+ published on October 11.

ener|gate Gasmarkt thinks that the second consultation is a big step forward. The prospect for a capacity allocation mechanism for the new market area based on Section 9 (3) of the GasNZV is good news for the new market area. It would have been a strange signal for the international gas trading community to regulate capacity allocation lastingly on the basis of European regulation that was clearly not designed for that purpose. Furthermore, the willingness of BK 7 to accept the buyback as an instrument of a lower order than MBIs is positive. The approach of the ruling chamber to enable a testing phase for the system sounds plausible.