Germany has started commercial operations on a new gas trading platform, Trading Hub Europe (THE) following a long-planned merger between two existing hubs to boost liquidity and simplify administration.

The two hubs — Gaspool and NetConnect Germany (NCG) — together operate a high-pressure pipeline system in the market area with a total length of around 40,000 kilometres, connecting more than 700 downstream networks and covering the entire German gas market.

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According to a statement from THE, the hubs have renamed their order books to THE to continue spot and futures trading in the market.

Europe's overall traded gas market was worth €680 billion ($787.37 billion) in 2020, turning over 70,512 terawatt hours, UK research firm Prospex said in a July report, according to Reuters.

Some 89% of volumes at Gaspool and NCG, amounting to the total of 4300 TWh for both exchanges last year, were over-the-counter (OTC) transactions and the rest were traded on exchanges, Prospex said.

Nord Stream 2 and THE

For the time being, Germany's united hub is still lagging behind Netherland’s Title Transfer Facility (TTF) and the UK’s National Balancing Point (NBP) in the number of daily trades and participants.

The German growth marketplace looks set to grow, however, as the country prepares for an increase in Russian gas supplies via the recently completed Nord Stream 2 subsea gas export pipeline.

Nord Stream 2 may ultimately supply up to 55 billion cubic metres of gas to Germany, with this gas able to flow to Poland, the Czech Republic, Slovakia and Austria, possibly replacing volumes that Russian gas giant Gazprom formerly transited via Ukraine.

The Nord Stream 2 subsidiary, with the help of its parent Gazprom, is currently appealing European gas market restrictions that limit its annual capacity to 27.5 Bcm, in German Federal Supreme Court in Karlsruhe in August, following an earlier legal battle in the Dusseldorf Higher Regional Court.

Gazprom and the Kremlin have strongly denied accusations that a refusal to boost supplies to Europe was intended to stoke up concerns about impending shortages of gas across the continent, pushing up prices and, the argument goes, strengthening the case for Nord Stream 2.

Whether intentional or not, these expectations pushed November gas futures contracts at TTF to $1900 per thousand cubic metres earlier on Wednesday, before easing to $1500 per thousand cubic metres on reports that European governments are discussing measures to tackle the energy crisis on the continent.

Russian President Vladimir Putin reiterated on Tuesday that extremely high spot gas prices in Europe are the result of the "mess" following a rapid deregulation and shifts to spot market trading in Europe, plus regulatory responses to a Europe-wide quest for energy transition and lower usage of hydrocarbons.

Putin's views were echoed by Hungary's Prime Minister Viktor Orban and Serbia's President Aleksandar Vucic as they arrived to the EU-Western Balkans Summit in Slovenia.

Orban has put the blame on the European Commission, saying it is the entity's "fault" and called for changing at least some [green] regulations, otherwise all [countries] will "continue to suffer".

Vucic said the anticipated [crossborder] "carbon tax" in Europe is a "reason behind the crisis", with European customers preferring to take gas from European storage earlier this year.

"They [European customers] have run out of their supplies, and did not sign long-term purchase deals with the Russians. Now Putin is the absolute ‘kingmaker’, with the possibility to decide who [will buy] at what price, and how a price should be raised", he was quoted as saying.