Nigerian Regulator Publishes Gas Trading/Gas Exchange Regulations - Africa’s premier report on the oil, gas and energy landscape.

Nigerian Regulator Publishes Gas Trading/Gas Exchange Regulations

The Nigerian Midstream and Downstream Petroleum Regulatory Authority has published regulations on gas trading and gas exchange.

The regulations, already gazette, are to—

(a) regulate the establishment and operations of gas trading and settlement exchange platforms;

(b) establish the principles for the secure, reliable and efficient trading and settlement of natural gas and other gas commodities; and

(c) promote and sustain the efficient and robust gas trading, exchange and settlement of natural gas and other gas commodities.

These Regulations shall apply to activities connected to the establishment of secure, reliable and efficient trading and settlement systems for natural gas and other gas commodities on exchange platforms regulated by the Authority.

Those qualified to participate in a gas trading and settlement exchange are —

  • exchange operators; (b) natural gas transmission line operators; (c) gas producers ; (d) gas aggregators ; (e) gas shippers ; (f ) wholesale gas suppliers, gas distributors, gas retailers and wholesale gas consumers ; (g) gas facilities and terminals or gas importers ; (h) network operators ; (i) clearing houses ; (j) participants of the exchange ; (k) members of clearing house ; (l) gas transporters ; (m) gas storage providers ; (n) gas exporters ; (o) any other party transacting on the exchange ; and (p) potential exchange participants.

The Authority may initiate action for market coupling of a gas exchange with another exchange, where a commodity, which is produced by utilising gas as a major input, is traded, to minimise the risk to a producer of such commodity. The Authority may extend applicability of these Regulations, with or without modifications, to derivatives, forward and future contracts in respect of such commodities and services. The NMDPRA may also allow contracts at the gas exchange denominated in foreign or local currencies. The Authority shall approve new contracts introduced by the gas exchange in these Regulations.

For approval of new contracts, the Authority may examine intra-day, day-ahead, term-ahead contract and other like contracts; price discovery methodology and proposed matching rules; (c) transaction period ; (d) risk management mechanism ; (e) margin mechanism ; (f ) final price settlement mechanism ; (g) gas delivery mechanism ; (h) delivery duration ; and (i) penalty for contractual deviation.

The Authority, after granting the gas exchange an opportunity of being heard, may by order, suspend or withdraw transactions on any contract from the gas exchange and issue any consequential directive as deemed necessary..

A gas exchange shall adopt market design and propose contract specifications, keeping in view the following principles — (a) price discovery mechanism shall ensure fair, neutral, competitive and efficient prices ; (b) the bidding mechanism may be auction or as continuous ; (c) contract design shall be such so as to increase liquidity ; and (d) the physical market design and pipeline operations shall comply with the guidelines and regulations provided by the Authority.

Fuller details of the Nigerian Gas Exchange Regulations are on the…

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