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Relative Wholesale Gas Price Pressure is Converging for Suppliers across Europe
added: 2007-01-03

The growing role of wholesale traded energy markets across Europe creates a greater need for players throughout the value chain to be aware of the latest market movements and developments.

From the wellhead or power station gate to the end-user, volatility in the spot and forward price of power and gas is creating an increasingly challenging environment for all market participants.

Relative wholesale gas price pressure is converging for suppliers across Europe. In October 2005, the UK stood alone with wholesale price pressure at 81%. By October 2006, however, a fall in the NBP curve has seen the UK fall to 67% wholesale price pressure below both Belgium and France.

Frances government continues to subsidise an artificially low price of gas through its involvement in dominant supplier GDF. While the state sets a fixed tariff for gas, often at or below the costs of production, that also co-exists with a liberalised market, new entrants will continue to struggle to make headway in the French gas market.

Power price arbitrage drives Germany to net export status with France. If French hydro output continues to improve, Frances net export status with Germany should return pressuring the forward price arbitrage between the markets to revert to its historic position.


Source: Business Wire

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