Gas Trading Manual
Edited by David Long and
Geoff Moore WOODHEAD PUBLISHING LIMITED
Gas Trading Manual is an
important new trading handbook which has been designed to work in the same way as its
successful and well-respected sister publication, Oil Trading Manual and is set to become
the standard reference to the industry.
The manual is divided into
four complementary parts
Part 1: Introduction to gas
trading
Covers the changing nature of
the gas business, fundamentals of the market, supply and production, the different markets
for gas and introduces the main trading instruments, including weather derivatives.
Part 2: European gas markets
Examines the key role of the
EU Gas Directive in changing the structure of the European gas market. Focuses on the
prospects for competition in Continental Europe and the UK traded gas and goes on to deal
in detail with the international petroleum exchange (IPE) natural gas futures contract,
the standard OTC agreement, the On-the-day Commodity Market (OCM), the Network Code, and
take or pay contracts and gas pricing.
Part 3: Administration
Deals with the essential
'back-room' aspects of gas trading operations, including internal control frameworks,
accounting for derivative instruments and the taxation of gas trading.
Part 4: Gas and Electricity
Covers the important area of
the role of gas in power generation and the convergence of the gas and electricity
markets.
GTM is the first publication
to provide a comprehensive, regularly-updated reference source on the structure and
conduct of the international gas markets. The manual covers all the major gas trading
instruments and their applications, the trading centres, contracts, uses and users, and
the administrative, management, tax and accounting implications of participating in them.
Although GTM focuses
initially on the UK and developing European gas markets, it is intended that future
updates will extend its coverage to the US and elsewhere.
Compiled from the
contributions of leading industry professionals, it is an indispensable practical
companion for all those involved in the trading of gas.
About the editors
David Long is a Partner in
Oxford Petroleum Research Associates (Opra) and specialises in the operation and
development of oil and gas markets. He is a regular contributor to newsletters published
by Petroleum Argus Ltd, and research reports published by the Centre for Global Energy
Studies (CGES) in London. His interests include the development and application of new
trading techniques in the oil and gas industries and he has been involved in the
preparation of training material on swaps and options and development of computer software
for analysing oil price behaviour.
Geoff Moore began his career
in the gas industry with British Gas and has considerable experience of gas purchasing and
gas purchasing strategy. After privatisation he was actively involved in the development
of gas trading markets, working in the US with Natural Gas Clearinghouse (NGC Corp), and
then in the UK as Director of Strategy for Accord Energy, a joint venture by NGC Corp and
British Gas, later acquired by Centrica. Since retiring from Accord he has been working as
an independent consultant.
The contributors
Hanif Barma,
PricewaterhouseCoopers
Stephen Barraclough, IPE
Simon Blakey, CERA
Michael Brothwood, Denton Wilde Sapte
Sally Clubley, Arktauros
Sangeet Dhanani, PricewaterhouseCoopers
Phil Greatrex, CW Energy
John Hawkshaw, Petroleum Economies Ltd.
Mike Madden, MJMCSL
Philip Nutman, PricewaterhouseCoopers
Neil O'Hara, Arthur Andersen
Eldon Pethybridge, Accord Energy
Rowland Sheard, Energy Links Consultancy
David Zimmermann, Miller and Chevalier
John S Levin, Miller and Chevalier
Alain Ahkong, Pioneer Associates Ltd.
Nick F White, MJMCSL
Contents
Part 1: Introduction to gas
trading
Chapter 1: Changing nature of
the gas trade
Geoff Moore
Prologue
Definitions
Gas market structures
Developing trading markets
Gas and electricity
Chapter 2: Fundamentals of
the gas market
David Long
Characteristics of the gas
market
Natural gas
Demand, supply and storage
Chapter 3: The geography of
gas
John Hawkshaw
Introduction
Supply envelopes
Europe
Asia
North America
Latin America
Liquefied natural gas (LNG)
Chapter 4: The different
markets for gas
Philip Nutman
Introduction
Continental Europe
United Kingdom
Chapter 5: Gas trading
instruments
Sally Clubley
Introduction
Spot contracts
Futures and forward contracts
OTC derivative contracts
Swaps
Options
Weather derivatives
Appendix: Glossary of gas
trading terms
Part 2: European gas markets
Chapter 6: UK traded gas
market
Geoff Moore
Origins
Growth factors
Current structure
Recent trends
Future developments
Chapter 7: Prospects for
competition in Continental Europe
Simon Blakey
Introduction
The EU Gas Directive and
beyond
The UK-Continent
Interconnector
The new European marketplace
Conclusion: 'Not gas, but
ideology'
Chapter 8: IPE natural gas
futures
Stephen Barraclough
The IPE
The UK gas market
The IPE natural gas contract
Using natural gas futures
Delivering natural gas
Future developments
Appendix: IPE Natural Gas
Futures Contract
Chapter 9: UK gas trading
contracts
Eldon Pethybridge
Introduction
Beach contracts: performance
NBP contracts
Price, billing and payment
Information and
confidentiality
Assignment
Termination
Miscellaneous
Zeebrugge trades
Conclusion
Appendix 9.1 NBP 1997 terms
Appendix 9.2 Short term beach
trading terms and conditions
Chapter 10: OCM and the
Network Code
Mike Madden and Nick F White
Introduction
Operating under the Network
Code
Imbalance and scheduling
charges
On-the-day Commodity Market
Future of within-day trading
Conclusion
Chapter 11: Take or pay
contracts
Michael Brothwood
Changing market structure
Take or pay clauses
Enforcement of take or pay
obligation
Provisions of EU Gas
Directive
Impact of EU competition law
Chapter 12: Gas pricing
arrangements
Michael Brothwood
Introduction
Price adjustment clauses
Price indexed gas markets
Price re-opener clauses
LNG pricing arrangements
Future developments
Part 3: Administration
Chapter 13: Running a gas
trading business
Neil O'Hara
Introduction
Energy trading and marketing
Internal control framework
Role of the gas trading
function
Future developments
Chapter 14: Accounting
Hanif Barma and Sangeet Dhanani
Introduction
Accounting guidance
General principles
Futures contracts
Forward contracts
Swaps
Options
Physical hedges
Disclosure requirments
Gas market issues
Conclusions
Chapter 15: Taxation of gas
trading
Phil Greatrex
Background
United Kingdom
United States (David
Zimmermann & John S Levin)
Singapore (Alain Ahkong)
UK taxation of traded
instruments
Appendix: Articles from the
OECD model tax treaty
Part 4: Gas and electricity
Chapter 16: Gas in power
generation
Rowland Sheard
Introduction
Power generation technologies
Economics of gas-fired power
generation
Gas contracts
UK electricity market
Other power markets
Chapter 17: Convergence of
gas and electricity markets
Rowland Sheard
Introduction
Forces for convergence
United Kingdom
Continental Europe
825 pages
