Energy Risk House of the Year Award for Natural Gas (Europe) 2008
Essen
Energy Risk House of the Year Award for Natural Gas (Europe) 2008
“From the Czech border to the UK, from Belgium to Italy, we’re trading all the markets all the time to optimise our portfolio by the hour,” says Kevin Alger, head of gas trading at RWE Supply and Trading. RWE’s physical and financial presence across Europe’s gas markets, combined with its innovative efforts to develop liquidity in markets where it is lacking, made it a worthy winner of our House of the Year, Natural Gas Europe award.
The 17-strong trading team is active on the UK’s NBP hub, where it accounts for around 10% of traded volumes. It is also a major presence on the Zeebrugge (Belgium) and TTF (Netherlands) hubs. Along with trading in France’s increasingly liquid PEG system, the company has also played a major role in developing liquidity in RWE’s native German market, where it is an important player on the EGT and BEB hubs. One of the firm’s most innovative schemes in the past year was its auction of secondary gas storage capacity on the EGT hub, using the Store-X platform. It auctioned off eight capacity packages, each of an operational gas volume of 100 million kilowatt hours over a three-year period.
A total of 18 companies took part, with fi ve companies ultimately buying the capacity. The auction was oversubscribed, and RWE will look to offer similar products in the future. “It’s not the norm to auction off capacity in the markets as a whole, even in liquid markets like the UK,” says Alger. “In a relatively illiquid market like Germany you wouldn’t expect many people to offer such products. I’m proud that we were the first.” RWE has been an active campaigner for market development through the European Federation of Energy Traders (EFET), and Alger himself was a keyfigure in founding the Zeebrugge, TTF and German hubs. His team has developed along with the markets, having been active primarily on the NBP, the team now has a pan-European outlook. “The environment is developing very quickly. Markets like Germany are really starting to take off,” says Alger, who observes that recent developments at the EGT hub, which became one market area in October 2007, have “massively increased liquidity”. “Regulatory issues can be a problem in some countries, but generally the trend of market development is very positive,” he says. A further development that the group has faced is the merger of RWE Trading with RWE Gas Midstream, creating RWE Supply Trading. Alger is excited about the new opportunities presented by the integration. “We can provide a different angle to the more traditional midstream business,” he says. “There’s more and more internal deal fl ow as midstream contracts are optimised and markets become more liquid.”
Alger has been with RWE for nine years and head of gas trading since 2001. He feels that his team is rather unique in its spirit. “At many rival companies traders trade their own book. We have a profi t and bonus pool, which is ultimately dependent on everyone pulling in the same direction,” he says. The team mentality helps to generate new ideas and trading strategies, as those active in developing markets work closely with those trading liquid ones. “The fact that they’re talking to each other helps them to identify common trends in the markets. There’s a lot of discussion about how the fundamentals of the different markets interact,” says Alger. This communication becomes vital, as Europe’s gas markets continue to develop and integrate. Alger is certain that is team is well placed to continue to outshine the opposition. Many banks remain active only in the paper markets and on liquid hubs, but RWE is trading at the boundaries of Europe’s liquidity and geography.
Essen
Energy Risk House of the Year Award for Natural Gas (Europe) 2008
“From the Czech border to the UK, from Belgium to Italy, we’re trading all the markets all the time to optimise our portfolio by the hour,” says Kevin Alger, head of gas trading at RWE Supply and Trading. RWE’s physical and financial presence across Europe’s gas markets, combined with its innovative efforts to develop liquidity in markets where it is lacking, made it a worthy winner of our House of the Year, Natural Gas Europe award.
The 17-strong trading team is active on the UK’s NBP hub, where it accounts for around 10% of traded volumes. It is also a major presence on the Zeebrugge (Belgium) and TTF (Netherlands) hubs. Along with trading in France’s increasingly liquid PEG system, the company has also played a major role in developing liquidity in RWE’s native German market, where it is an important player on the EGT and BEB hubs. One of the firm’s most innovative schemes in the past year was its auction of secondary gas storage capacity on the EGT hub, using the Store-X platform. It auctioned off eight capacity packages, each of an operational gas volume of 100 million kilowatt hours over a three-year period.
A total of 18 companies took part, with fi ve companies ultimately buying the capacity. The auction was oversubscribed, and RWE will look to offer similar products in the future. “It’s not the norm to auction off capacity in the markets as a whole, even in liquid markets like the UK,” says Alger. “In a relatively illiquid market like Germany you wouldn’t expect many people to offer such products. I’m proud that we were the first.” RWE has been an active campaigner for market development through the European Federation of Energy Traders (EFET), and Alger himself was a keyfigure in founding the Zeebrugge, TTF and German hubs. His team has developed along with the markets, having been active primarily on the NBP, the team now has a pan-European outlook. “The environment is developing very quickly. Markets like Germany are really starting to take off,” says Alger, who observes that recent developments at the EGT hub, which became one market area in October 2007, have “massively increased liquidity”. “Regulatory issues can be a problem in some countries, but generally the trend of market development is very positive,” he says. A further development that the group has faced is the merger of RWE Trading with RWE Gas Midstream, creating RWE Supply Trading. Alger is excited about the new opportunities presented by the integration. “We can provide a different angle to the more traditional midstream business,” he says. “There’s more and more internal deal fl ow as midstream contracts are optimised and markets become more liquid.”
Alger has been with RWE for nine years and head of gas trading since 2001. He feels that his team is rather unique in its spirit. “At many rival companies traders trade their own book. We have a profi t and bonus pool, which is ultimately dependent on everyone pulling in the same direction,” he says. The team mentality helps to generate new ideas and trading strategies, as those active in developing markets work closely with those trading liquid ones. “The fact that they’re talking to each other helps them to identify common trends in the markets. There’s a lot of discussion about how the fundamentals of the different markets interact,” says Alger. This communication becomes vital, as Europe’s gas markets continue to develop and integrate. Alger is certain that is team is well placed to continue to outshine the opposition. Many banks remain active only in the paper markets and on liquid hubs, but RWE is trading at the boundaries of Europe’s liquidity and geography.