ENTSOG Gas Regional Investment Plan South 2017 - Main Report

5.3.5 MARKET SPREADS

Focusing on spread for the South Region, it can be observed a disconnection between prices of TTF and PEG Nord on the one hand, and prices of TRS and PVB on the other hand. Prices of TRS and PVB were particularly high for December 2016 and January 2017.

€/MWh

14

12

10

8

6

4

2

0

Aug 14

Oct 14

Jan 15

Mar 15

Jul 15

Oct 15

Jan 16

Mar 16

Jul 16

Oct 16

Jan 17

PEG N vs. TTF

TRS vs. PEG N

PVB vs. TRS

Figure 5.10: Spread in day-ahead European hubs prices (Source: Platts, Bloomberg, ICIS Heren and own elaboration)

The balance between demand and supply in the South Region has been particularly under pressure for the last period of 2016 and beginning of 2017. On the demand side, the high demand recorded for Europe in this period, including a cold period during January, contributed to increase supply-demand imbalance in the South Region. Additionally, the low supply availability for the South Region due to a combination of factors: high demand in Asia and maintenance and some unavailability’s of LNG liquefaction facilities. Indeed, it has to be noted that, in the South Region, some areas are physically dependent on LNG for part of their balancing, due to the limited level of pipelines interconnections: it is the case for TRS area and for the Iberian hub. Therefore, those areas are sensitive to LNG prices.

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Gas Regional Investment Plan of the South Region 2017