Olivier Courrieu, Gas Portfolio Manager, Supply Division - Global Gas, GdF Suez, Paris, France.
The European gas business has been structured to help promote gas end-usage and securing countries supply. To meet these objectives, producers, midstreamers and utilities signed long term supply and purchase contracts whose prices are indexed on other commodities prices.
The last evolutions, aiming to increase transparency and competition between European utilities, lead to the creation of gas market hubs (gas pools) and better interconnection between European countries. Nevertheless, neither the commodities prices nor the different national gas markets are perfectly correlated, introducing Arbitrage opportunities: geographical, time spread and cross commodity. Moreover, the development of LNG trading is extending these opportunities worldwide.
After explaining the origin of these opportunities, the paper will present how to capture them without jeopardizing the financial result: risk mapping & management, asset back trading and financial hedging.
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