The natural gas market, like the electric market, is a network-based market. This means it requires a transport and distribution network to supply the gas demand of the final consumer.
The networks have characteristics of a natural monopoly. This is, it makes no sense to duplicate the network to accommodate new entrants, if it has sufficient capacity. Therefore, the liberalization of gas, that is, the introduction of competition, is based on recognized and regulated third-party access to the network.
The basic guidelines and principles of the regulation to this effect are common to all member states of the European Union. Thus, the integration of the European natural gas market was made based on the so-called “gas target model”.
The integration of the European gas market is based on the harmonization of European network codes. Such as the balancing regulation, the one on allocation of cross-border capacities, the one on tariffs for the use of infrastructure, or the one on congestion management.
These harmonized regulations enable the physical connection between the different trading "hubs" and price arbitrage between them. For example, the Iberian hub is the so-called virtual balancing point (VBP) traded on MIBGAS VBP and the Dutch hub normally used as a European price reference due to its high liquidity is the title transfer facility (TTF). Within a hub, gas can be exchanged without network restrictions and without considering its physical location.
Regulatory stability, its predictability, certainty, and coherence are very relevant
Ultimately, for the gas market to fulfill its function, all elements of the supply chain must function adequately, from procurement, transport, distribution to the final consumer.
In this regard, regulatory stability, its predictability, certainty, and coherence are very relevant. In particular, in those regulated activities with natural monopoly characteristics.
Furthermore, for the supply to be not only secure but also competitive, markets are required in which there is competition, absence of entry barriers, non-discrimination, and transparency.
These requirements are provided by the voluntary organized gas markets “exchanges”, such as MIBGAS. Bilateral gas transactions “OTC”, even though they are valid and commonly used, lack transparency and maintain entry barriers to new entrants.
Consequently, markets such as MIBAS that support gas title transfers in the corresponding hubs are essential to guarantee a competitive gas market.
Currently, gas markets are going through difficult times. The challenges are multiple: war in Ukraine, Iran's conflict with the US and Israel, transition towards sustainable energies, etc.
It should be noted that the three countries with the largest gas reserves in the world - Russia, Iran, and Qatar - are directly involved in these conflicts.
However, even in this context or especially because of it, it is necessary to recognize the good functioning of the market, especially in the face of these adverse circumstances. And this, both from the point of view of ensuring supply, and of the price signal provided.
On the one hand, the availability of a sufficient volume of buy and sell offers has allowed energy players, especially the smaller ones, to make their demand coverage viable. The logical repercussion in the decrease of long-term contracts in times of high volatility has been compensated by the liquidity, even increased, of short-term contracts.
On the other hand, the market provides an essential price signal, especially in times of high volatility. The elasticity of demand plays a relevant role here. For example, the high price of gas caused by the conflict in Iran and the unavailability of liquefied natural gas from Qatar due to damage to facilities and the closure of the Strait of Hormuz, induced Asian countries to substitute this fuel for another. Thus, for example, Japan and South Korea have lifted their limitations on coal production and have maximized their nuclear production.
Although perhaps the elasticity of European gas demand is not as high as the Asian one due to gas consumption for electricity production, also here the price signal provided by the market is essential.
Thus, it allows the integration of markets through price arbitrage between hubs. For example, a marketer can buy gas in one hub at a lower price to sell it in another hub at a higher price, taking advantage of the difference in quotation for a certain product.
In this regard, it is noteworthy how, due to a value chain, efficient infrastructures, and market, MIBGAS PVB has become one of the most competitive hubs in Europe.
For example, in 2025 the price difference between MIBGAS PVB and TTF (Spanish versus Dutch) for the gas product with physical delivery the following month (M+1) was negative on 95% of the days. This means that the price of gas on the Spanish hub was more competitive than the benchmark Central European gas for practically the entire year.
And this is the result of the proper functioning of an entire chain of which we can be proud: marketers, regasifiers, transporters, distributors, operators, managers, authorities, regulators, supervisors, etc.
This value chain also supports the transition of the energy system to an environmentally sustainable system. Hence, the next challenge: the promotion of the organized market for renewable gases. Here too, MIBGAS expects to contribute to it.
about the signing:
Raúl Yunta Huete is president of MIBGAS.