Brexit’s impact on gas markets
Dr Thierry Bros, Senior Research fellow from the Oxford Institute for Energy Studies, and speaker at the forthcoming LNGgc Amercias, looked into the impact Britain leaving the EU could have on the gas market. In their first publication on Brexit, the Oxford Institute for Energy Studies, came to 3 conclusions:
Impact on policy.
The UK needs to reshape its energy diplomacy that has in the last decade increasingly been handled by Brussels, with a concomitant decrease in knowledge and power within the UK. In the future, the UK will need to negotiate not only with the EU but also with Norway and potentially Russia.
Effects On Regulation.
The 3 interconnectors (IUK, BBL and Moffat) linking the UK to the EU could be affected by Brexit negotiations. We could see some minor changes with the aim of improving the whole system for the benefit of all consumers, or major changes with the aim of providing a harmonized unified EU/third party regulatory system for transportation pipelines.
And finally, on markets,
Brexit negotiations will have an impact on the NBP-TTF spread. So far, NBP and TTF future curves are still aligned but as soon as draft negotiations on infrastructure are available, the market will adapt. We believe that a possible outcome could be for the NBP premium to increase versus TTF particularly in winter. In addition, with the NBP becoming a smaller regional hub, trades will be reduced (and with financial services moving away from the UK, the NBP paper market could shrink), and NBP volatility could increase compared to the TTF. This is something policy makers like to avoid but it would benefit independent trading houses. It is interesting to see Trafigura seeking now to reopen LNG import terminal in UK. We can assume that this smart move is linked to the potential Brexit's impact on the UK gas market.
You can read the full paper on the Oxford Institute for Energy website. Dr Thierry Bros is a Senior Research Fellow - Gas Programme at the Oxford Institute for Energy Studies and he will be speaking at LNGgc Americas 2017. The conference will take place from 31 May to 02 June, in Houston Texas and will look at key trends and questions on the USA LNG industry. Including; LNG flexibility, pricing, project FIDs, new markets & shifts to small and mid-scale projects. With over 40 senior speakers, addressing over 50 sessions, offering unrivalled networking opportunities with over 130 leading industry figures LNGgc Americas is the meeting place for the LNG community.