The current Government Policy Statement on Gas Governance invites Gas Industry Co to recommend efficient arrangements for the short-term trading of gas. It is expected that Gas Industry Co will develop protocols and standards applying to wholesale gas trading, including quality standards, balancing and reconciliation.
With these objectives in mind, Gas Industry Co established the New Zealand Gas Exchange (NZGE), an electronic platform on which short-term quantities of gas can be bought and sold on a bilateral basis between participants. Gas is physically traded at the Trading Hub, a pair of notional welded points on the
The NZGE went live at the end of June 2010, following amendments to the Maui Pipeline Operating Code that allowed the Trading Hub to be established. The NZGE was offered as a short-term trial. However, there was not sufficient interest in the NZGE to sustain a trial and it was halted in December 2010. For a copy of the letter to the Minister regarding the termination of the wholesale market trial and the Minister's response, click HERE. The advice to the Minister noted that MDL is in the process of extending the Balancing Gas Exchange for wholesale gas trades, and Gas Industry Co will report to the Minister by the end of 2011 on the success, or otherwise, of this endeavour.
Previous consultation on the concept and design of the wholesale market occurred in March, September and December 2006. Analysis of submissions on these papers highlighted a suitable way forward and following an interim recommendation to the Minister of Energy in December 2006, Gas Industry Co progressed with the publication of a standard short-term trading contract in April 2007 and the development of a functional specification for a simple matching platform.
In August 2007 M-Co was selected as the service provider for the trading platform. A further recommendation was made to the Minister of Energy to proceed with a market trial.Governance documents for trading on the market and operational aspects of the market design were finalised in the first half of 2010.
Following receipt of submissions on its September discussion paper on Wholesale Market Design, Gas Industry Co has issued a further discussion paper which reports on the analysis of the submissions, provides Gas Industry Co's view on the issues raised and requests further input on a specific range of matters. This work stream is now focused on advancing the preparation of a standard gas sales agreement for shorter-term trades and investigating the feasibility of a matching platform as a basis for low-cost, electronic trading. Each of these initiatives is aimed at increasing transactional efficiency in gas trading.
This discussion paper builds on the feedback received from stakeholders earlier in the year. Gas Industry Co has undertaken both quantitative and qualitative analyses of options for development of a wholesale market and this discussion paper recommends a modular approach to implementation. In the first instance, it is proposed to issue a standard gas trading agreement as a means to achieving common standards for gas trading and to reduce transaction costs for market participants. The paper also recommends that a simple matching platform could be put in place for modest cost and would be expected to achieve additional transactional efficiencies. Gas Industry Co will take into account feedback received on the paper when undertaking the detailed design of wholesale market arrangements.
This discussion paper gives stakeholders the opportunity to review and
comment on options for a wholesale gas market in New Zealand. A series of
options are described at a conceptual level and evaluated according to criteria
agreed between Gas Industry Co and the Wholesale Market Working Group.
Submissions on this document will be used to assist in selecting an option for
further development. The supplementary note addresses Section 41 of the Crown
Minerals Act 1991, which may or may not have an effect on the design of the
This presentation gives an introduction to the policy framework and conceptual issues for a wholesale gas market. It looks at the size, structure and characteristics of the New Zealand gas market in relation to other international markets and presents some high-level options available for the operation and governance of a trading market.
This presentation provides a status report on the development of the wholesale market with particular focus on the options and motivation for locating trading at a hub. Two options are proposed: a virtual hub and a trading hub. The advantages, disadvantages and operational aspects of each option are explored and the conclusion is drawn that the trading hub option provides the best long-term solution.
Gas Industry Co entered into a service provider agreement with M-co in 2008 for provision of a trading system. That agreement was novated to NZX in 2009 when NZX purchased the business assets of M-co.
The service provider agreement can be viewed here.
There are four interlinked documents that govern the operation of the New Zealand Gas Exchange:
Entities wishing to join the market must apply using the form below and must supply all requested information.
For trades where s41 of the Crown Minerals Act 1991 applies, an application
form for Minister's consent can be found
here on the
Ministry of Economic Development website.
Date Published: April 2007
Author: Gas Industry Co
Following extensive consultation with gas industry participants, it was suggested that Gas Industry Co take a staged approach to development of a wholesale gas trading market, the first step being to develop a standard gas sale contract for use in short term, direct-bilateral trades.
Gas Industry Co, in conjunction with industry participants, has developed a standard gas sales contract which is available free of charge for use by industry participants. Please click on the following links to view the GSA and Standard Terms:
The standard contract comes in two parts:
As the standard contract is designed for trading on both the Maui and Vector systems, arrangements for the transportation of gas are dealt with outside of the standard contract. The standard contract provides for the non-exclusive trading of gas and therefore does not contain any restrictions on the on-sale of gas to third parties.
Gas Industry Co has developed a basic user guide to assist with use of the standard contract. Please click on the following link to view the user guide: