Energy crisis: How a Dutch market sets gas prices for the whole of Europe

The TTF allows producers, distributors and network operators to trade gas volumes.
The TTF allows producers, distributors and network operators to trade gas volumes. Copyright Peter Dejong/Copyright 2019 The Associated Press. All rights reserved
By Jorge Liboreiro
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All eyes are on the Title Transfer Facility, where gas prices have been breaking records on a daily basis.


As gas prices continue to break all-time records across Europe, all eyes turn to the TTF, the continent's leading benchmark.

The TTF refers to the Title Transfer Facility, a virtual marketplace based in the Netherlands where shippers and buyers trade gas supplies.

The hub brings together national and international producers, storage companies, distributors and network operators of the gas industry. 

Trade is open from Monday to Friday, from 08:00 to 18:00 CET. 

Established in 2003, the TTF gained prominence as the energy sector became liberalised and is today considered the reference point to monitor and understand Europe's gas market.

The volumes traded on the platform have grown exponentially over the past two decades, representing more than 14 times the amount of gas used by the Netherlands for domestic purposes.

The rise of liquefied natural gas (LNG) helped the TTF take over the UK's National Balance Point (NBD) as the continent's gas benchmark.

As in any other free marketplace, prices on the Dutch hub are determined by the fundamental economic rules of supply and demand.

Products are invoiced in euros per megawatt-hour.

Speculation fuels prices

The TTF offers two main options for traders: they can either strike deals on the spot, meant for the immediate delivery and consumption of gas, or sign so-called futures contracts.

Under a futures contract, the shipper and the buyer agree on a price at the very same time the deal is made, but the delivery and the payment take place at a later stage (for example, the following month).

The agreement obliges the shipper to deliver the supplies and offers greater certainty for companies and governments.

However, futures contracts are exposed to market speculation.

As a general rule, market actors tend to assume the worst-case scenario in their dealings in order to be prepared for a negative outcome.

Amid the Ukraine war, speculation about an imminent cut-off of Russian gas flows has been rife, leading to record-breaking prices on the TTF.

Last week's futures trading closed at €339 per megawatt-hour, a stratospheric figure compared to the €27 registered a year ago.

The latest announcements from Gazprom, Russia's state-controlled energy giant, have only fuelled fears among traders, who see flows of Russian gas dwindle at a dangerous pace.

Meanwhile, EU countries are rushing to fill their gas storage facilities ahead of the winter.


The shopping spree has increased demand and inevitably pushed prices further up, as market actors realise governments are willing to foot the expensive bill to salvage the cold season.

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