Aotearoa Energy, a division of TP ICAP, has executed New Zealand’s first exchange-traded gas option on emsTradepoint, the platform for physical natural gas settlement and matching operated by Transpower New Zealand.

With this milestone, Aotearoa Energy and emsTradepoint have ushered in a new era of flexibility and risk management for the New Zealand energy market, offering participants innovative solutions to navigate an evolving landscape.

This achievement was realised following Aotearoa Energy’s close collaboration with market participations to develop a short-term gas supply solution for major users.

The inaugural deal involved a three-month option at a fixed strike price of $15.50, covering just under half a petajoule and structured for weekly deliveries. The option entitles buyers to take delivery of up to five terajoules per day for the following week at the fixed strike price of $15.50. Following execution of the deal, the New Zealand spot gas market reached trades as high as $41, prompting the option holder to exercise their right and secure guaranteed gas volumes at the predetermined call strike.

Since its launch, the option has been exercised weekly, underscoring its versatility and value to market participants.

Daniel Skipper, founder of Aotearoa Energy, commented:

“While the exchange option is not a new product, it provides end-users in New Zealand with an important hedging tool. Last year saw extremely high electricity prices and ongoing gas shortages, highlighting the volatility of New Zealand’s energy sector. With more commercial and industrial customers considering the spot market, this exchange option introduces a range of products to help both new and existing users manage risk and, importantly, ensure security of supply.”