As the effects of full market opening in the European gas sector become more pronounced, the role of traded wholesale gas markets will grow in importance. Both established and new entrant players in markets at all stages of wholesale liquidity development will increasingly be impacted by the existence, and development, of wholesale markets in their retail operations.
In the Netherlands, the expected trend is increasing demand and a greater diversification of supply of natural gas through pipelines, storage facilities, and LNG. Due to government intervention, Datamonitor expects trade volumes on the TTF to increase on a par with the Zeebrugge Hub, making it one of the largest in Europe.
Italy's PSV and Spain's Centro de Gravedad hubs remain at an early stage of development with limited liquidity. While attempts to build a single Iberian gas market (MIBGAS) are still under way, Datamonitor notes more encouraging progress in inter-regional co-operation through the South Gas Regional Initiative between Spain, Portugal, and France.
European gas markets are in a highly segmented state and gas cannot easily flow across European borders. On the production front, there remain a limited number production sources (Russia, Algeria, Norway, the UK, and the Netherlands, along with LNG shipments). New entrants are often discouraged by long-term take-or-pay contracts.