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FGSZ will establish a Daily Natural Gas and Capacity Trading Market

FGSZ, as the operator of the high-pressure domestic natural gas transmission system, will establish a Daily Natural Gas and Capacity Trading Market, and this market will commence operations from July 1, 2010. FGSZ has a long term goal to establish the foundation for the Hungarian natural gas exchange, therefore the Company set up the market regulations accordingly, both in respect of its products and the trading system, as well as the transaction settlement.

The Hungarian Energy Office approved the regulation prepared by FGSZ by its resolution dd. April 17, 2009, thus the Hungarian natural gas sector took another major step towards developing a fully competitive market.


The Daily Natural Gas and Capacity Trading Market will be a special electronic trading platform, where the players (natural gas traders, proprietary users, natural gas producers and other system operators connecting to the high-pressure natural gas system, and operators of distribution systems) will be able to trade with natural gas and capacities of the high-pressure natural gas transmission system. This market platform will enable traders to quickly and efficiently off-trade the sufficit or deficit arising from differences between gas volumes they every day feed into the transmission system and consume, along with transparent conditions in this competitive market and using market prices that can properly reflect the genuine supply-demand situation through bilateral trading transactions.


Daily gas consumption rates keep on varying within a given day subject to weather conditions, part of the day and several other factors. However, the gas is fed into the system at a nearly steady rate. Management of emerging volatilities can cause a major problem both for traders and the transmission company. As a result of operations of the said market platform the natural gas quantity to be purchased from or sold to the gas traders by FGSZ Natural Gas Transmission Ltd. in the form of balancing gas at the end of each day in order to maintain the appropriate equilibrium in the transmission system between source and consumption may decrease from 2010. The daily price of such balancing gas will be also determined in the future pursuant to the transactions actually concluded in this market, therefore this price will most probably better reflect the realistic price level of the Hungarian natural gas market.


Traders may also sell their capacities in the transmission system that become redundant on short term through this system, thus capacity utilisation will also be more efficient.  As an aggregate result of all such actions the market participants will be able to more precisely plan their daily operations, and balance the day-end sufficit or deficit will impose a lower than present risk onto them. This will also result in a benefit for the consumers, because this electronic market platform will ultimately offer more reliable services.


FGSZ Natural Gas Transmission Ltd. will be in the position to conclude sale and purchase transactions with natural gas traders during the gas day at this new platform. Each transaction will be publicly concluded in a fully transparent manner from the moment the offer is made. The connecting system operators will also be entitled to use the same market platform for satisfying their own demands for natural gas in a transparent manner.


An independent clearing house will be responsible for the transaction settlement and this will significantly mitigate the financial risk embedded in the deals implemented in this market platform. FGSZ Natural Gas Transmission Ltd. will soon issue an invitation to a public procurement tender for securing the said services.


The daily and mid-day natural gas trading going on in this electronic market platform will facilitate the quick development of a spot natural gas market, and it will become the basis for the establishment of a natural gas exchange in Hungary.

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