In a strategic move to bridge the structural gap between Nigeria’s vast natural gas reserves and a fully functioning domestic market, JEX Markets has unveiled plans to build a regulated trading exchange aimed at curbing counterparty risk and creating transparent price discovery.
Operating as Nigeria’s pioneer licensed gas trading platform, the exchange seeks to transition the country’s fragmented, bilateral gas deals into a liquid, central marketplace, setting the foundation for a benchmark price index that could eventually power energy trading across West Africa.
Speaking at the sideline of the West Africa Regulator Forum (WARF) in Abuja on Tuesday, Blessing Ayemere, Chief Executive Officer, JEX markets said that the platform exists to give gas producers, shoppers, and consumers a transparent, efficient, and bankable venue to trade, clear and settle gas transactions.
According to the CEO, JEX markets is focused on boosting transparent price discovery, by referencing prices formed through an organised exchanged based market, as against an opaque bilateral deals.
He said, “JEX Markets is a dual regulated markets company, we have the licence from the Nigerian Midstream & Downstream Petroleum Regulatory Authority, for gas trading, we also have that of SEC, the commodity exchange.
“Every trade under the JEX market is centrally cleared through FMDQ clear, removing bilateral settlement exposure.
“We know that when it comes to gas trading, the issue of counterparty settlement is a major deal, so with the structure that we have, we expect that payment finality will almost happen immediately on the platform. And then we also have established market rules and trading framework. Also, at this time, we are establishing contacts and partnerships with key market participants.”
Also speaking, Oscar Onyema, chairman, JEX markets, said that while Nigeria boasts some of Africa’s largest natural gas reserves, which is backed by major producers, rising industrial and power demand, expanding LNG and CNG sectors, the wealth in resources has yet to translate into a fully functional gas market.
He emphasized that a functioning market requires more than molecules and pipelines but transparent price discovery and standardisation.
“Nigeria has one of Africa’s largest natural gas resource bases. We have significant producers, major industrial consumers, expanding power demand, growing LNG, CNG and other gas-based industries, and an increasingly supportive policy and regulatory environment.
But possessing gas is not the same thing as having a gas market,” he said.
Onyema said that JEX is building a regulated marketplace where qualified buyers and sellers of natural gas can transact transparently, efficiently and with significantly reduced counterparty risk.
“It requires credible counterparties, effective clearing and settlement, reliable delivery arrangements, and market data that participants can trust. That is the infrastructure gap JEX Markets has been established to help close.
“JEX is building a regulated marketplace where qualified buyers and sellers of natural gas can transact transparently, efficiently and with significantly reduced counterparty risk. Importantly, we are not seeking to replace the institutions that already make Nigeria’s gas industry work, our approach is to connect them.
“The exchange sits at the centre of an ecosystem involving the regulator, producers, gas marketers and aggregators, transportation infrastructure, clearing and settlement institutions, financial institutions and, ultimately, the industrial and commercial users of gas.
“Our ambition is therefore bigger than creating another electronic trading platform. We are building market infrastructure and the distinction is important,” he said.
Speaking further, Onyema stressed that a successful gas exchange should help convert bilateral and relatively fragmented transactions into a deeper marketplace in which prices become increasingly transparent; buyers can access multiple sources of supply and sellers access a broader pool of demand.
He said that a gas exchange must be able to manage counterparty exposures and establish meaningful reference prices for the Nigerian gas market.
SOURCE: Businessday
