Global Gas Market: Overview

© ООО Региональные новости

The cost of natural gas, including Russian natural gas, is determined based on current global prices for gas and oil.

Two global centers of natural gas pricing can be identified: in the USA - Henry Hub and in the EU - the Dutch hub - TTF Gas.

1. US Market (Henry Hub):

- Current price: rise on Tuesday to 4.3 USD per million BTU (British Thermal Units).

2. European Market (TTF):

- Current price: correction to 368 USD per 1000 cubic meters.

1. Natural Gas in the USA (Natural Gas - NG).

The benchmark price for gas in the USA is the price at the Henry Hub storage facility located in Louisiana.

The unit of measurement is British Thermal Units (BTU). To convert this price to the standard equivalent of 1000 cubic meters, an approximate factor of 35.8 is used. It is important to note that this price reflects the pure cost of the raw material, excluding costs for liquefaction, transportation, and re-gasification. Consequently, the consumer in the USA pays significantly more for the gas.

On the Moscow Exchange, such contracts are designated by the code NG-11.25 and similar combinations of numbers and letters.

2. European Gas.

Trading in European gas takes place mainly on European gas hubs, the largest of which is the Dutch TTF NATURAL GAS exchange. This Dutch exchange is the leader of the European gas market due to its trading volume, which exceeds the internal needs of the Netherlands by more than 14 times. Approximately 20 trillion cubic meters of gas are sold here annually.

It is important to note the high seasonality of demand for natural gas, caused by a significant increase in consumption during the winter heating period.

Overview presented by Alexey Grishchenko, Doctor of Economics, Professor at the Department of Operational and Sectoral Management of the Faculty "Higher School of Management" of the Financial University under the Government of the Russian Federation.