From today, the trading of liquefied natural gas (LNG) on MIBGAS’ exchange will undergo a boost with Spain’s first LNG market maker. Pavilion Energy Spain will offer an LNG market maker service following the agreement signed with MIBGAS Derivatives, a subsidiary of MIBGAS that manages the trading of LNG and natural gas futures.
The agreement, which comes into force today for a period of three months and that may be extended for three months more, is a decisive step towards creating a robust LNG market in south-western Europe. This move leverages the strategic position of the Iberian market and capitalizes on the potential of its infrastructure, such as the six regasification plants existing in Spain, as well as the existence of a single virtual tank or TVB for LNG trading.
In the words of Raúl Yunta, President of MIBGAS, "This agreement is a decisive commitment by a great company and world reference such as Pavilion Energy for the development of an LNG hub in Spain, which could become a reference for the price of this product in the Atlantic basin".
“Pavilion Energy is pleased to take on the role of an LNG market maker for the Spanish market, building on our expertise and capabilities as a global LNG trader and supplier of natural gas,” said José Simón, Managing Director, Europe of Pavilion Energy, “We expect increased liquidity for LNG as a commodity, as Spain transitions from a traditional balancing market to a more efficient and wholistic hub model”.
MIBGAS was a pioneer in June last year launching the negotiation of LNG spot products in the six Spanish plants. This organized market or exchange - the first in the world to be launched - took a further important step on 1 April 2020 when it concentrated on TVB, or the Virtual Balance Tank, the LNG trade. This meant that the liquefied natural gas storage tanks of all the Spanish regasification plants were united in a single virtual tank, so that the agents participating in the market can, from that date, buy and sell LNG regardless of its physical location, thus increasing the number of counterparties.
The TVB was the beginning for the creation of a unique LNG hub in the world, which has attracted the attention of international companies such as Pavilion and which, with this agreement, shows its significant commitment to the Spanish LNG market.
MIBGAS has a total of 119 registered agents, and its platform covers natural gas spot products including monthly (M+1), while MIBGAS Derivatives - a subsidiary of MIBGAS - trades natural gas and LNG spot products. It also offers the service of registering bilateral OTC transactions. MIBGAS is also the Guarantee Manager of the Spanish gas system.
About Pavilion Energy
Pavilion Energy is a wholly-owned subsidiary of Temasek. Headquartered in Singapore, its fully integrated energy business encompasses a downstream supply and marine business; global LNG trading, shipping and optimisation; upstream investments as well as energy hedging and financial solutions. Pavilion Energy is expanding its global footprint with market access into Europe and an office in Spain, driving a more sustainable future fuelled by natural gas. For more information, visit www.pavilionenergy.com