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Trading and distribution
How are oil and gas resources traded in your jurisdiction and what (if any) regulations and procedures apply to oil and gas sales, distribution and marketing activities, both nationally and internationally?
Gas trading is completely liberalised. The Title Transfer Facility (TTF) is a virtual market place on which gas on the Dutch network can be traded. There are different gas exchanges active on the TTF.
Pursuant to the Gas Act, the exchanges offering spot gas trading (day ahead and intra-day) are subject the Authority for Consumers and Markets’ supervision. Exchanges for derivatives fall under the Financial Markets Authority’s supervision, as derivatives are considered ‘financial products’ within the meaning set out in the EU Markets in Financial Instruments Directive. Until 2011 only two exchanges had been designated by the minister of economic affairs as gas exchanges: APX Gas NL BV (spot) and ENDEX NV. In 2009 the parties merged into APX-ENDEX. In 2012 Intercontinental Exchange Inc acquired the gas spot and future activities of APX-ENDEX. In 2011 the European Energy Exchange AG obtained a designation for spot trades. In October 2012 Paris-based Powernext SA was awarded a ministerial designation as an exchange for spot, derivatives, spread products and over-the-counter clearing.
Oil trading in the Netherlands is fully liberalised. Other than general competition law, no regulated third-party access regime applies to oil and natural gas transport pipelines and gas storage. Any abuses of a (joint) dominant position and foreclosure are punishable under Dutch and European competition law.
Is oil and gas pricing regulated in your jurisdiction?
The Gas Act contains the statutory obligation for GasTerra to purchase gas produced from small fields at a market-conforming price when gas is offered to it, except where the minister of economic affairs has released GasTerra from this obligation for economic and financial reasons.
While no rules determine the market-conforming price, GasTerra has applied a ‘net-back’ pricing system for many years. The net-back system basically means that small field producers are paid a price (the normative purchase price) linked to the average sale price realised by GasTerra’s in all the market sectors in which it trades. The purchase price is indexed to heavy fuel oil (reflecting pricing in the power and heavy industries market sectors) and gas oil prices (reflecting pricing in the household and small and medium-sized enterprise market) with the indexes regularly updated. With the growing importance and liquidity of spot markets, spot prices – notably at the TTF and the UK National Balancing Point – have now been included the pricing formula. Pricing will differ in the various contracts contingent on, among other things, carbon dioxide content (calorific value) and field load.
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