The NCCPE Has Approved the New Version of the Regulation of Trading on the Natural Gas Exchange

2014-12-19

The new version of the Regulation of Trading on the Natural gas Exchange of UAB GET Baltic (hereinafter referred to as „the Company”) was approved on 19 December of 2014 at the meeting of the National Control Commission for Prices and Energy (hereinafter referred to as „the NCCPE“). The Company made amendments seeking to assure the due operation of the natural gas exchange, with due consideration of changes in the natural gas market planned to be introduced from 1 January 2015.

Major changes cover:

1. Amendments to definitions. Seeking to harmonize the definitions applied both in the Regulation and in the legal acts and draft legal acts of the Agency for the Cooperation of Energy Regulators (ACER), the new definition of „the Trading Contract“ (hereinafter referred to as „the Contract“) was introduced, while the definitions „the Product“ and „a Transaction“ were adjusted.

  • The trading contract (hereinafter referred to as “the Contract”) shall mean the instrument, which is used on the Exchange and allows the Participant to trade in the products.
  • A transaction shall mean a reached agreement of two Participants to buy or to sell the agreed volume of the product of a specific delivery period at the agreed price on the Exchange.
  • Product shall mean the natural gas, delivery to the area for trade in natural gas in the virtual spot of trade in the transmission system

2. Amendments to the characteristic of products of trading/contracts and the terms of submission of commissions.

until 31 December of 2014 from 1 January of 2015
Delivery period of a day starts at 9:00 a.m. of each day and ends at 9:00 a.m. of the next day. In 1 January of 2015, the gas day period will start from 9:00 a.m. at this day and will end at 7:00 a.m. of the next day in the Lithuanian time. From 2 January of 2015 the gas day period shall start from 7:00 a.m. of each day and end at 7:00 a.m. of the next day in the Lithuanian time.
The spot of trade the entry points to the transmission system virtual spot of trade in the transmission system
Volume of the natural gas normal cubic meter at 20°C temperature and atmospheric pressure (101.325 kPa) energy units – MWh, using gross calorific value
The minimum tick size 1 hundred cubic meters (100 m3) one megawatt-hour (1 MWh)
The trading currency Litas Euro (note: 1 EUR = 3.45280 LTL).
The minimum tick size (currency) one litas (1 LTL) one Euro cent (0,01 EUR)
Trading session (remain the same) Trading session is carried out every day (on workdays, weekends and holidays) during a trading session (from 10:00 a.m. to 14:00 p.m.). Trading session is carried out every day (on workdays, weekends and holidays) during a trading session (from 10:00 a.m. to 14:00 p.m.).

3. The procedure regarding transition from the volume of gas expressed in cubic meters to the volume of gas expressed in MWh which foresees the following:

  • Products the delivery time of which expires later than on 1 January 2015 at 9:00 a.m. cannot be acquired/sold in 2014;
  • From 1 January 2015, the participants of the gas exchange can trade as usual with due consideration of aforementioned amendments.

4. Amendments to the circumstances of limitation or cancellation of the participant‘s status.Seeking to expose all the participants of the gas exchange to the same and known beforehand procedures of limitation and cancellation of the participant‘s status, the decision to amend and present the final list of circumstances under which the market operator can limit of cancel the status of the participant of the gas exchange was adopted. The participant’s status may be restricted (which means that the option to submit order on the exchange may be restricted) or withdrawn by the decision of the Company:

  • if the participant submits to the Company wrongful or misleading information about itself, the entities or the groups of entities related to it, and the representative;
  • if the participant does not fulfil or unduly fulfils obligations to the Company, which have been assumed under the fulfilled transactions;
  • if the participant abuses and manipulates the market and (or) carries out other illegal actions with respect to the market as defined by the European Union the legal acts of the RL.
  •  if the transmission system operator notifies that the participant does not fulfil its obligations to the transmission system operator, which have been assumed under the contract with the transmission system operator, which sets the balance conditions, and submits the data proving this fact;
  • if the transmission system operator notifies that a contract with the participant, which sets balance conditions, has been cancelled;
  • if bankruptcy procedures are initiated to the participant or the participant obtains the status of a company under liquidation;
  • if the participant‘s licence granting the right to sell natural gas on the natural gas exchange becomes invalid (unless the Law on Natural Gas establishes otherwise).

5. Procedures regarding recalling the forward transactions (deals). The amended Regulation foresees an option to recall the forward transactions (deals) made on the gas exchange when:

  • The participant (-s) abuses or manipulates the market and (or) carries out other unlawful actions with respect to the market;
  • A contract with the transmission system operator which sets balance conditions is cancelled;
  • Bankruptcy procedures are initiated against the participant or the participant acquires the status of a company to be dissolved;
  • The participant ‘s licence for an activity is revoked (unless the Law on Natural Gas establishes otherwise).

Such a right and duty shall arise with respect to the Company as long as legal acts regulating the natural gas sector of the Republic of Lithuania and the provisions of the Civil Code of the Republic of Lithuania are regularly interpreted. Therefore this provision has been transposed to the Regulation.

6. Amendments to requirements to bank guarantees. The amendment foresees that, if the period of bank guarantee as a collateral for the products acquired for future periods and the services related to the acquisition thereof, which were rendered by the market operator, is not extended not later than 3 weeks prior to the expiration date, the Company shall issue to the participant an advance invoice to be paid up by the participant within 9 (nine) calendar days after the date of receipt. Otherwise the Company shall be entitled to submit to an organization that issued a collateral a request to fulfil the obligations of the participant.

7. An amendment to the allocation of an additional trading limit which does not require any collateral or advance payment. A decision regarding the allocation of such an additional trading limit shall be adopted by the Board of Directors of the Company with due consideration of the risk level of each participant individually, on the grounds of such criteria as the financial standing of the participant, the fulfilment of obligations to service or product suppliers, and other circumstances causing a financial risk.

We would like to note that the new version of the Regulation of Trading on the Natural Gas Exchange and all aforementioned amendments thereto come into effect from 24 December of this year.

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