Intercontinental Exchange announced plans to launch two liquid natural gas (LNG) futures contracts for North-West Europe and South-West Europe.
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The contracts are designed to help market participants trade and hedge the difference in price between LNG for delivery in North-West and South-West Europe, versus natural gas provided by pipeline to Europe, as well as LNG across the rest of the world.
The contracts will be cash settled based on Spark Commodities’ price assessments for LNG cargos and priced in USD per MMBTu in line with ICE’s existing LNG contracts. The contracts are due to launch on December 5, subject to regulatory approval.
“Reflecting the energy situation which exists within Europe today, customers need a futures contract to price LNG imports into Europe, and provide a means to manage the difference with the price of natural gas delivered via pipeline,†said Gordon Bennett, Managing Director of Utility Markets at ICE.
“The price of natural gas in Europe remains high because of an imbalance between supply and demand, caused by the significant reduction in the supply of natural gas into Europe from Russia and the downstream impact of physical capacity constraints across the European natural gas network.â€
Additionally, ICE plans to launch three supporting French PEG, German THE and Italian PSV Natural Gas 1st Line contracts on December 5, subject to regulatory approval.
The cash settled contracts will trade and settle in USD per MMBTu and provide market participants with additional flexibility to manage their LNG import exposure. ICE already offers physically delivered PEG, THE and PSV futures which are priced in Euros per megawatt hour.
TTF and the new North-West Europe LNG futures are complemented by ICE’s existing German, Italian, French and Austrian natural gas futures and together with the new South-West Europe LNG futures, which add coverage of Iberia and the Mediterranean, will increase the choice of pricing and risk management tools available to market participants.
The five futures contracts will trade from ICE Futures Europe and clear at ICE Clear Europe alongside global energy benchmarks including Brent Crude, TTF natural gas, European Carbon Allowances, Coal and Electricity, offering meaningful margin offsets across energy portfolios to maximize liquidity and capital efficiency.
The new contracts will form part of ICE’s global natural gas portfolio alongside the existing TTF, NBP, Henry Hub, JKM LNG (Platts), WIM LNG (Platts) futures, and the Spark30S Atlantic and Spark25S Pacific LNG freight futures. ■