Westcoast Energy exercised its option to sell its remaining 49%interest in NGX Canada (NGX), an electronic gas trading exchange,to OM Gruppen of Stockholm, Sweden. The deal is likely to lead to asignificant upgrade of the Canadian trading system possibly to acontinental system with multiple commodity offerings, according toits new owner.
“Through an early exercise of our right to acquire all of NGX,we can develop NGX faster,” said Thomas Bendixen, head of OMBusiness Area Transaction in North America. “We plan to implement anew clearing structure in order to capitalize on OM’s clearingexpertise and widen the product range. In time, we will develop NGXfrom being a regional marketplace in Alberta to cover all of theNorth American market.”
NGX (www.ngx.com), located in Calgary, currently provideselectronic trading and clearing services to natural gas buyers andsellers at seven markets in Canada, including the AECO-C hub inAlberta, Empress and five eastern points: Dawn, Niagara, Parkway,Chippawa and Iroquois. Over the past six years, NGX has grown toserve 120 customers with trading activity averaging over 200 Bcfper month. The system averages more than 200 transactions a daywith about 80% at Alberta Energy’s AECO-C hub.
NGX President Peter Krenkel agreed with Bendixen that thetransaction probably would lead to an aggressive expansion,including additional commodities and services. “OM has a much moreaggressive view on expansion and growth in the business so I thinkyou’ll see NGX become more aggressive in terms of the markets andthe commodities that it targets.”
This deal follows Westcoast’s initial sale of 51% of NGX to OMin February 2000. Westcoast said it expects an after-taxcontribution to net income of $6 million from the sale. Westcoastspokesman Bob Foulkes said the exchange was not part of Westcoast’score operations of gas distribution and transmission. He deniedthat rapidly growing competition in energy e-commerce had anythingto do with the sale.
Krenkel hopes some of OM’s international success will spill overinto NGX’s operations. OM operates equity and fixed incomeexchanges in London and Stockholm. It develops technology thatincreases the efficiency of financial and energy markets throughoutthe world, e.g., the Nordic electricity exchange Nord Pool and theFinnish electricity exchange EL-EX. OM has operations in Europe,North America and Asia with offices in eleven countries.
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