The Australian Securities Exchange (ASX) has expanded its energy derivatives portfolio with the introduction of the physically settled Wallumbilla Natural Gas Futures contract.
Trading for this new contract commenced on August 19, 2024, marking a significant development in Australia’s energy market.
The Wallumbilla Natural Gas Futures contract was developed in collaboration with the Australian Energy Market Operator (AEMO).
Key features of the contract include:
- Contract Unit: 100 Gigajoules (GJ) of natural gas per day over one calendar month
- Delivery Point: Wallumbilla High Pressure Trade Point
- Trading Hours: 10:00 am – 4:00 pm AEST/AEDT
- Contract Months: Available for the next 36 months, with October 2024 as the first contract
This new futures contract is expected to have several positive impacts on Australia’s east coast gas market:
- Transparent forward pricing: The contract provides a clear monthly forward price curve for up to three years.
- Improved liquidity: It is designed to enhance liquidity in the Gas Supply Hub (GSH).
- Risk management: The contract offers an additional hedging tool for gas market participants.
The Wallumbilla Natural Gas Futures contract joins ASX’s growing portfolio of energy and environmental derivatives, which includes Electricity Futures, Victorian Gas Futures and Environmental Futures (launched in late July 2024).
Daniel Sinclair, ASX Head of Commodities, emphasised the increasing use of derivatives for hedging energy transition risks and supporting decarbonisation initiatives.
He stated: “We’re embracing our responsibility to develop a derivatives portfolio across a spectrum of transitional energy and environmental markets.”
ASX is exploring the potential for additional futures contracts covering other domestic regional gas markets, subject to internal and regulatory approvals.
This expansion aligns with the growing importance of gas in stabilising the electricity grid as Australia transitions to renewable energy sources.
The launch of the Wallumbilla Natural Gas Futures contract represents a significant step in ASX’s commitment to supporting Australia’s evolving energy landscape and meeting the demands of various market participants, including energy generators, retailers, commodities traders, and LNG suppliers.
