Britain Loses Europe's Gas Trading Crown to the Dutch

Britain has been topped by the Netherlands as Europe's leading natural gas trading hub this summer, ending decades of British dominance in the sector.

Britain has reigned as Europe's busiest gas trading centre since discoveries of North Sea oil and gas in the 1970s made it Europe's main producer.

It cemented this position in the 1990s when it liberalised its energy markets, meaning much of Britain's gas was sold and exported in pounds.

However, continental Europe's markets have also liberalised in recent years, and bolstered by the common euro currency and far larger industrial and residential client base trading volumes have grown much faster than at Britain's National Balancing Point (NBP) gas hub.

Utilities like to trade in their own currency and in units compatible with their main product, electricity.

European power and gas trades in euros per megawatt-hour (MWh) while in Britain gas is dealt in pence per therm (p/th).

The main winner has been the Title Transfer Facility (TTF) in the Netherlands, located between the gas-rich North Sea and Europe's main gas consumer, Germany.

"Over the last three months, LEBA (London Energy Brokers' Association) reported traded volumes on the NBP below the TTF, with August NBP volumes 40 percent less than the TTF," research and consultancy Energy Aspects said on Friday.

LEBA represents wholesale markets broking firms active in Britain and in liberalised European energy markets.

"Strong growth on the TTF comes as the continental gas trade continues to expand, with the TTF increasingly establishing itself as the region's main trading hub," Energy Aspects said.

Trading platform Trayport in its August report on market activity also flagged the growth of TTF.

"YTD (year to date) volumes in this market have grown by 63 percent in comparison with a growth of 27 percent YTD in NBP, further highlighting the growing importance of this market," it said.

Britain's lost dominance in trading reflects the state of affairs in production, with the UK now a net importer of gas.

Imports are often shipments of liquefied natural gas (LNG) paid for in dollars, while its own gas sales in pound sterling have declined.

(By Henning Gloystein, Editing by Jason Neely)