European Natural Gas Retainer Service (ENG)

About ENG

Through a comprehensive set of deliverables, PIRA’s European Natural Gas Retainer Service provides clients with independent and timely analysis of Western and Central European natural gas markets — including supply/demand fundamentals data, price forecasting, and analysis of market developments. Delivering rapid response to requests by email or phone, ENG offers an unsurpassed competitive edge for clients looking to support activity in all aspects of the natural gas business.

All retainer service deliverables are available via PIRA Online (inclusive of a robust archive) and/or via email. They include:

Analytical Reports:

  • European Gas Forecast Monthly
  • European Gas Price Scorecard Weekly
  • European Gas Demand Forecast Daily

 Data:

  • Forecasts for 22 European countries
  • Daily updates of demand by sector and pipeline/LNG trade flows, including Norwegian exports and Russian gas production
  • Access to the online ENG Data Center for supply/demand data by country and sector
  • Monthly overview of macroeconomic trends impacting European gas markets
  • Access to short- and long-term price forecasts for European gas markets

 Other key deliverables:

  • Phone/email access to PIRA’s consulting staff
  • Invitations to the European Retainer Client Seminar in London
  • Discounts on other PIRA retainers (e.g. European Electricity), PIRA University, and multi-client studies

 

ENG’s Key Features

  • Direct interaction with PIRA’s European natural gas consulting staff
  • Daily trade data, including demand by sector, cross-border flows, Norwegian exports, and Russian production
  • Weekly and monthly reports on supply/demand data, including demand, production, imports, exports, storage, and LNG
  • Demand forecasts (12 to 18 months forward) for more than 20 countries
  • Weekly analysis of working gas storage
  • Daily 10-days-forward gas demand forecast
  • In-depth coverage of key legislation affecting European gas markets
  • Analysis of European macroeconomic trends and drivers impacting gas markets

What Do ENG Clients Receive

European Gas Forecast Monthly

This staple report is the core of the European Natural Gas Service, covering supply, demand, working gas storage, and price forecasts (12-18 months forward) for Europe’s largest markets, including individual forecasts for 22 countries, ranging from the largest to the fastest growing.

The report is issued at the end of the month, containing four distinct sections that, together, build up the results into a clear viewpoint on market direction, which is summarized on the first page. The report covers emerging drivers of price in an analytical framework that, in addition to the key fundamentals, incorporates macroeconomic drivers, cross-commodity trends, and changes in other markets around the world that will affect the flow of gas in and out of Europe.

Weekly European Gas Price Scorecard

This report succinctly assesses the key gas fundamentals and macroeconomic factors driving price movements over the next month and quarter, including a write-up of key market factors that change the short-term outlook for prices in the U.K. and on the Continent. The report is dispatched every Wednesday, and it includes a quick recap of key factors that highlight the forces driving the market in a bullish or bearish direction. Charts and tables analyze primary elements of the European gas balance.

Highlights include:

  • Daily supply from the North Sea, the Netherlands, Russia, Algeria, and LNG
  • Demand
  • Storage
  • Electricity and oil markets
  • Macroeconomics, HDDs, and exchange rates
  • Spot prices for the U.K., Zeebrugge, TTF, NCG, Gaspool, and PEG Nord
  • European oil-indexed prices
  • End-user prices

European Daily Natural Gas Demand Forecast and Portal Data – New

This daily report contains a snapshot of 10-days-forward daily gas demand for six European countries. The projections incorporate custom temperature forecasts across Europe, while factoring in the impact of developments from broader economic trends via industrial production forecasts. Detailed daily demand data are available, with sector breakdowns, through the ENG portal. The data is updated daily, and it includes demand departures from seasonal normals and comparisons to the previous day's forecast.

Annual Retainer Client Seminar – London

The seminar presents our medium- and long-term (to 2030) outlooks for oil, gas, coal and electricity markets. The setting allows clients to interact with the PIRA consultants who prepare the forecasts, as well as other attendees from a wide range of energy-related companies.

All presentations (audio and visual) are also available via PIRA Online. (The number of invitations depends on a client’s retainer package and licensed distribution.)

PIRA Online

PIRA Online provides ENG clients with timely and convenient access to market analysis and short- and long-term price forecasts for European gas markets. Through the specially designed ENG "Portal," users can quickly navigate between recent reports (and an archive) as well as the ENG Data Center, where a wealth of data can be accessed and downloaded, and the Energy Price Portal, where European gas price forecasts can be accessed along with other global energy commodity prices and margins.

Some of the reports and data available online include:

Macro Europe

  • Monthly overview of macroeconomic trends that impact gas use in key European markets such as industrial production, GDP and business confidence.
  • Benchmark economic drivers — such as the German IFO and French INSEE — are tracked versus gas demand and gas inventories.
  • Large end-users of gas — such as the steel, aluminum, and chemicals sectors — are tracked to assess the possibility and probability of underlying shifts in gas demand in the industrial sector.

ENG Data Center

  • Supply/demand data for 22 European countries, including production, imports, exports, storage, and demand.
  • Links to “data behind the data,” giving users a seamless connection to the entire ENG database.
  • Daily supply and demand data for France, Spain, the Netherlands, the U.K., and Belgium.
  • Field-by-field production for key producing countries.
  • Gas demand by sector.
  • Key data on all of Europe’s working storage facilities, including withdrawal rates and working capacity.
  • Heating and cooling degree days for every major city and region of Europe. Comparison to 10-year normal
  • PIRA's Energy Price Portal, featuring spot- and oil-indexed price forecasts (see below).
  • A breakdown of the European gas grid, showing which companies own and operate key infrastructure and what markets they serve.
  • PIRA’s regularly updated macroeconomic data (currencies, U.S. economy and manufacturing, world economies and air travel).

The Energy Price Portal

A key feature of all PIRA retainers, the Energy Price Portal allows users quick and easy access to all of PIRA’s latest energy price forecasts (both short- and long-term) for European gas markets.  

A key feature of the Energy Price Portal is PIRA’s Equation Manager, a specially designed utility that allows users to define, analyze and store up to 100 custom price spreads — across commodities and inclusive of freight — in the form of multi-variable equations that use PIRA’s forecast prices.

The Portal also provides the ability to create and export large data sets in Excel, CSV and PDF formats, in addition to click-of-the-mouse charting capabilities.  No more searching through multiple reports to locate prices; no more hand-entering data into your spreadsheets.

The Portal’s forecast horizons currently include both short-term (monthly to December 2013) and long-term (annual to 2030) averages.

For the European market, coverage of prices extends to both spot and contract (oil-indexed) markets. These two types of prices represent overlapping markets within Europe. Spot prices have emerged as a new force over the past decade, while contract prices were the foundation from which the European gas market was built, and they still maintain a primary position in how gas is priced. Spot prices reflect a stronger correlation with supply and demand balances, while contract gas reflects a closer tie to issues involving inter-fuel competition. While the two markets exist in the same space, they operate in different ways.

The Energy Price Portal offers an easy method by which to see these differences as they emerge. Prices are updated twice per month and represent our latest view of changes in the gas balances as well as our evolution of thinking in the competitive fuels market. PIRA forecasts both spot and contract prices up to 24 months ahead on a monthly basis. Final prices for the previous month are posted within the first few business days of the next month.

PIRA carries prices for spot markets in the U.K. (NBP), Belgium (Zeebrugge), and the Netherlands (TTF), which are the three main spot markets in Europe at present. These prices represent an average of the “day-ahead” settlement prices during a given month. All three of these markets trade based on a different set of supply/demand fundamentals, but they are increasingly reacting to each other as more gas flows between them.

PIRA carries a European contract gas price forecast for the German border. This price is a weighted average of all German gas imports using oil-indexed formulas and is essentially a benchmark for all oil-indexed prices in Europe. This price is updated once per month around the 15th day of the month. Actual prices are lagged by one to two months and are representative of imports from Russia, Norway, and the Netherlands. 

European Natural Gas Prices Contained in the Energy Price Portal

WHOLESALE

 

 

Belgium Average

Italian Average

UK NBP Day Ahead

Dutch Gas at German Border

Norway Gas at German Border

Zeebrugge Day Ahead

European Day Ahead Average

Russian Gas at German Border

PEG Nord Day Ahead

German Border Contract Avg.

TTF Day Ahead

NCG/Gaspool Day Ahead

CEGH Day Ahead

 

 

MONTHLY INDEX

 

 

NBP Monthly Index

 

 

 

Private Briefing

PIRA’s senior European gas consultants are available on a private basis to discuss PIRA’s latest thinking and address each client’s specific issues by assessing how the markets will impact their business, including special interest topics as requested.

Phone/Email Access to PIRA’s European Gas Group

Clients can obtain timely analytical support and additional market information while discussing our latest insight on short-term natural gas markets with PIRA analysts.

Discounts on PIRA’s Other Retainers and Multi-Client Studies

Clients receive discounts when adding other retainer services (e.g. European Electricity Retainer Service) or when purchasing multi-client studies.

ENG's Approach and Methodology

The ENG service provides both a Pan-European and regional focus and is divided into four primary components.  Each component provides a monthly assessment of the entire European gas market, along with special attention paid to specific countries or issues on a timely basis.  The approach relies on PIRA’s fundamentals analysis, starting with gas supply from Europe’s “big four” providers (Algeria, the Netherlands, Norway, and Russia) and demand trends among the most mature and fastest growing markets.

An assessment of the overall European gas transportation market provides context for regional analyses and, finally, an overview of oil indexes on gas markets provides an outlook for prices. In addition to PIRA’s well-known command of the market fundamentals, ENG takes the product one step further by providing readily available and easy-to-access research upon which the analysis is built. It provides clients with the entire pyramid of information, so they can see both the story for Europe in its entirety but also several different breakdowns of 21 individual countries as well.  As an Internet-based product, ENG offers new levels of depth in terms of providing “the data within the data.” It also offers a tracking system for key gas contracts as well as a survey of pipeline tariffs and transit costs.

PIRA has defined regions with common infrastructure and market issues but breaks these regions down into interlocking circles of competition, rather than separate spheres of influence.  There is the “PIRA Big Five”: France, Germany, Italy, the Netherlands, and the UK. These countries hold the biggest gas markets in Europe and offer a diverse end-user base.  One or two gas suppliers have dominated these countries for decades.  Growth has been steady, but liberalization is changing how demand grows.

Then there’s also the “PIRA Pacemakers” — Czech Republic, Hungary, Poland, Spain, and Turkey — a group of newly emerging gas markets, which in some cases were nothing more than transit countries in the past but are now emerging as central markets of their own.  PIRA also distinguishes between Northern and Southern European markets, which, while integrated through EU liberalization, are evolving quite differently.  Southern Europe’s future is inextricably tied to the Mediterranean market and North African suppliers; Northern Europe contends with a flood of suppliers from the North Sea.  And then there’s Russia’s Gazprom, a single company that controls 20% of the European market.  The lines continue to blur when addressing Central Europe and the Balkans, two markets where gas demand plunged a decade ago and is still a good 10 BCM/Y lower than a decade ago. The market is there, but who will supply it and will it be at prices that end-users in developing countries can afford?

Analytical Framework and Service Details

 PIRA takes the analytical approach of recognizing the various inter-relationships between four key factors.  Understanding these fundamental issues and value drivers is critical.

1.  Gauging the Fundamentals:  Exports, imports, production and stock changes all affect demand, but so do gross domestic product, heating degree days and industrial production.  All of these variables are woven into PIRA’s demand forecast for a dozen countries in Europe on a monthly basis.

2.  Marketing Issues:  What’s a more profitable play, buying gas at Zeebrugge or at the German border? What’s the easiest way to sell Russian gas in France, directly from Gazprom, through a location swap, or from storage?  What’s more important to producers, establishing direct sales to end-users or maintaining the profitability of existing transmission companies in which they own stakes?  Storage was completely irrelevant a few years ago; now it is a primary price setter and creator of hubs.

3.  New Competition:  How does gas-on-gas competition impact your market?  For example, new Russian and North African gas pipelines to Europe will affect gas prices, raising them at some price points and lowering them at others — even at locations hundreds of kilometers away from the new pipes being developed in the region.

4.  Supply Changes:  Russia, Norway and Algeria are shifting from their traditional positions as baseload suppliers to more flexible schemes. Can they compete with private producers in the North Sea?  Market control will shift away from transmission companies, but into whose hands and how will those transmission companies respond?

Who Can Benefit from ENG

The stakes are high when making decisions regarding European gas markets, where participants can be on either side of million-dollar gains or losses.  In order to maximize your profit potential while staying ahead of the competition, PIRA believes that “knowing the numbers” of supply, demand and price is essential to winning success in this new and hard-to-predict market.  The European Natural Gas Service can make a winner out of: 

Gas Marketers:
The shifting nature of pricing, unbundled services, and pipeline availability make the European energy market one of the world’s most difficult markets to assess. ENG not only offers gas analysis, but also PIRA’s respected forecasts for European oil products. Simply put, we call the market. Gas-on-gas pricing and interfuel competition are covered comprehensively. ENG will assist you on a monthly basis in pinning down prices, key markets for demand growth, and potential supply changes.

Pipeline Companies:
Europe’s well-established pipeline and distribution companies are undergoing the greatest change of all.  Competitive challenges and opportunities outside of traditional markets provide kilometers of uncharted markets to conquer.  Pipeline companies will be dealing with a plethora of new firms looking to do everything from gaining third-party access to transmission pipelines to deciding how to stretch highly profitable distribution grids into neighboring countries.  ENG’s fundamental analysis offers these firms a glimpse of how extra-territorial markets will be affecting the bottom line, providing an assessment on the most promising growth opportunities in the region.

End-Users:
Perhaps no other type of client will find ENG as valuable as the end-user.  As the driving force behind European market liberalization, buyers of gas, power, and oil are now faced with the daunting task of choice.  Power generators, industrial buyers, petrochemical firms, and commercial buyers will be offered deal after deal, but with these choices a complex web of commercial decisions arises: Is the supply source reliable? What price can be obtained? Where is the market heading?  ENG provides end-users with the numbers and analysis to correctly answer these critical questions.

Gas Producers:
The ability to access markets will be a key element in targeting Europe as a growth area.  The big suppliers in the North Sea, Algeria, and Russia all need to stretch their market reach beyond traditional sales areas.  In the UK, markets are already liberalized, and the Interconnector Pipeline to Belgium has created the first real spot market on the continent at Zeebrugge.  In Russia, several new pipeline projects could flood Europe with low-cost gas.  Will all of these projects materialize, and when?  For commercial producers, this question is critical for investment.  With a bevy of new producers now able to market their own gas, competition will be keen.  ENG helps producers understand which regions will be pipeline-capacity constrained and how these bottlenecks will impact basis differentials.  Indigenous production, as well as imports from Russia, North Africa and the Mideast, are assessed, with long-term forecasts helping clients assess investment opportunities.

Financial Institutions:
As financial institutions are called upon to provide debt for new pipeline and electric generation facilities, it will be imperative for them to analyze accurately the market environment.  Lending to the power sector requires a thorough understanding of the natural gas markets that will support the gas-fired facilities being built to compete in the deregulated European market.  ENG can be a valuable resource for conducting due diligence on regional markets, growth potential, and constraints.

Fees

PIRA's European Natural Gas Retainer Service can be purchased on its own or together (with a discount) in a package with the European Electricity Retainer Service. Clients of other PIRA retainers e.g. North American Natural Gas may subscribe to ENG under discounted terms. For prices and licensing options, please contact your PIRA account executive.