Transaction Reporting Obligation Of The LNG Traders Under The EU Council Regulation 2022/2576

The EU Council Regulation 2022/2576 adopted on 19 December 2022 imposes a new transaction reporting obligation on the LNG market participants in the EU, in addition to the existing reporting obligation under REMIT¹.
The purpose of the transaction reporting obligation under the EU Council Regulation 2022/2576 is to enable the European Union Agency for the Cooperation of Energy Regulators (ACER) to produce daily LNG price assessments and to establish a benchmark price for the LNG imports into the European Union that will provide more transparency on the prevailing price of LNG imports to European Union.
The LNG market participants subject to the transaction reporting obligation under the EU Council Regulation 2022/2576 are defined as trading companies (irrespective of their place of incorporation or domicile) that engage in bids, offers or transactions for the purchase or sale of LNG:
a) that specify delivery in the EU;
b) that result in delivery in the EU;
c) in which one counterparty re-gasifies the LNG at a terminal located in the EU².

What Bids And Offers Are Reportable Under The EU Council Regulation 2022/2576

According to ACER Guidance on reporting LNG market data,
"a bid or an offer is reportable as LNG market data irrespective of whether the counterparty accepts it or whether it results in a final agreement or transaction."

Only the firm bids and offers communicated to the counterparties have to be reported by the LNG market participants.
The firm bids and offers shall be reported as LNG market data by the LNG market participants who submitted them.
If the bid or offer is accepted by the counterparty and a contract is concluded for delivery of LNG at a regasification terminal in EU, the sale contract must be reported at the time when the final agreement is reached.

What LNG Transactions Are Reportable Under The EU Council Regulation 2022/2576

The LNG transactions that have to be reported under the EU Council Regulation 2022/2576 are:

1) the individual transactions for the sale or purchase of LNG cargoes concluded under the long-term LNG SPAs. According to ACER Guidance on reporting LNG market data, the LNG SPAs are considered just framework agreements and do not have to be reported. Only the individual sale transactions concluded on the basis of such framework agreements.

2) the individual transactions for the sale or purchase of LNG cargoes executed under the Portfolio-type contracts. However, the Portfolio-type contracts do not have to be reported.

3) the spot transactions for the sale or purchase of LNG cargoes.

The transactions for the sale or purchase of LNG cargoes that have to be reported to ACER under the EU Council Regulation 2022/2576 must specify the delivery point at a regasification terminal located in the European Union or result in cargo delivery at a regasification terminal located in the European Union. Such transactions can be either transactions for the sale or purchase of LNG cargoes to be delivered on DES terms at a regasification terminal located in the EU or transactions for the sale or purchase of LNG cargoes to be delivered on FOB terms at a liquefaction terminal outside the EU that have an EU destination.
The in-tank sale transactions, where the title to the LNG cargo is transferred by the seller to buyer while the LNG cargo is held in storage tanks at a LNG terminal located in EU, as well as the bids and offers at the regasification terminals in EU fall outside the scope of the EU Council Regulation 2022/2576 and do not have to be reported to ACER.
The cargo swaps for the optimisation of regasification capacities and the transactions for the sale or purchase of LNG cargoes where the physical delivery involves the use of LNG carriers with a transport capacity that is less than 75,000 cubic meters fall outside the scope of the EU Council Regulation 2022/2576 and do not have to be reported to ACER.

LNG Market Data That Have To Be Reported By The LNG Market Participants

The transactions, bids and offers data that have to be reported by the LNG market participants is referred to as "LNG market data".
Article 21 of the EU Council Regulation 2022/2576 stipulates that the LNG market participants must provide to ACER the following information:
a) the contracting parties;
b) the reporting party;
c) the transaction, bid or offer price³;
d) the contract quantities;
e) the contract value;
f) the arrival window for the LNG cargo;
g) the delivery terms;
h) the delivery points;
i) the date and time of placing the bid or offer or the date and time of the agreement for the sale or purchase of LNG;
j) the date and time of reporting the bid, offer or transaction.

The obligation to submit the LNG transaction reports imposed by the EU Council Regulation 2022/2576 does not affect the transaction reporting obligations under REMIT.

Submission Of LNG Market Reports

The LNG market participants, that engage in bids, offers or transactions for the sale or purchase of LNG cargoes to be delivered on DES terms at a regasification terminal located in the EU or in bids, offers or transactions for the sale or purchase of LNG cargoes to be delivered on FOB terms at a liquefaction terminal outside the EU that have an EU destination, must provide the LNG market data reports daily to ACER as close to real-time when the final agreement on the sale/purchase transaction is reached or the communication of the bids and offers occurs.
For the purpose of collecting the LNG market data, ACER has set up a dedicated data collection system named "TERMINAL", available within the ACER Electricity and Gas Information System ("AEGIS").
The LNG market participants, who have the obligation to submit the LNG market data reports under the EU Regulation 2022/2576, have to register in the Centralised European Register of Energy Market Participants (CEREMP) and create an user account in TERMINAL system.

The Daily LNG Price Assessments And The LNG Benchmark Price

ACER collects the LNG market data in order to produce daily LNG price assessments and to establish a daily LNG benchmark price for the LNG imports into the European Union.
Since January 2023, ACER publishes three daily LNG price assessments:
- DES LNG Spot for Europe (EU) – a price assessment for the overall EU market;
- DES LNG Spot for North West Europe (NWE) – a price assessment for the Northwestern Europe;
- DES LNG Spot for Europe (SE) – a price assessment for the Southern Europe.

Since 31 March 2023, ACER publishes a daily LNG benchmark price based on the spread between ACER`s daily LNG price assessment for DES LNG Spot for Europe and the daily settlement price for the TTF Gas Futures front-month contract established by ICE Endex Markets B.V.

by Vlad Cioarec, International Trade Consultant

This article has been published in Commoditylaw`s Gas Trade Review Edition No. 3.

Endnotes:

1. See the article "Reporting Obligations Of The LNG Traders Under REMIT" published in Gas Trade Review Edition No.1.
2. See the definitions in the Article 2 of the EU Council Regulation 2022/2576.
3. The transaction, bid or offer unit prices have to be reported both in the currency and the unit of energy measurement specified in the contract, bid or offer as well as in Euro/MWh and include the exchange rate used to convert the original price currency to Euro and the conversion rate from the contract original quantity unit to MWh.