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E.ON trading chief says German power market 'bust,' optimistic on gas

Berlin (Platts)--27 Nov 2013 645 am EST/1145 GMT


The German power market is "bust," according to the head of E.ON's trading unit -- but there are growth opportunities for the German gas market.

"The market is bust for now, that does not mean that there is no chance that this will improve in the future," the chairman of E.ON Global Commodities Christopher Delbrueck said Tuesday at the sidelines of an energy trading conference in Berlin.

According to Delbrueck, the German power market at the moment is failing to deliver on its key targets to deliver clean, affordable and reliable electricity.

Trading opportunities in power are also more limited due to the flatness of the curve with volumes continuing to shift from longer to shorter maturities, Delbrueck said.

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However, with regards to its gas wholesale trading business, the head of E.ON's trading unit was more optimistic amid strong annual growth for the German gas hubs Gaspool and NCG.

"I am optimistic that we can achieve a turnaround for gas," he said.

"We could see the churn rate for both German gas hubs rising to 5, while the TTF may drop to that region," he said, especially with increased market integration in Europe. TTF and NBP are currently the most liquid gas hubs.

"We are now almost more optimistic for European gas market integration than for power," Delbrueck said.

"Regulatory frameworks will decide where power and gas will be traded in the future," he said with regards to whether OTC-trading of power and gas will remain dominant or whether energy exchanges may increase their market share in the future.

Delbrueck said that E.ON was looking to get more active in global commodities trading, especially coal and LNG and that E.ON opened a new trading desk in Chicago.

E.ON Global Commodities last month appointed Stephen Asplin as chief commercial officer for power and gas trading, while David Finch will will take on the same role for EGC's global trading in coal, oil, LNG and freight. "The new configuration of our trading operations reflects our focus areas: first, the trading of physical commodities on globally interconnected markets and, second, asset-based power and gas activities in Europe and the US," EGC Chairman Christopher Delbrueck added. EGC is Germany-based E.ON's wholesale energy trading business with around 1,200 employees.

--Andreas Franke, andreas.franke@platts.com
--Edited by Maurice Geller, maurice.geller@platts.com

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