Global Gas Market: Overview

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Natural gas pricing, including that of Russian origin, is formed based on current global gas and oil prices.

There are two main international natural gas pricing centers: Henry Hub in the USA and the Dutch hub - TTF Gas.

1. American market (Henry Hub):

- Current price: correction on Wednesday to 3.9 USD/million BTU (British Thermal Units).

2. European market (TTF):

- Current price: correction on Wednesday to 327 USD/1000 m³.

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 into the commonly used equivalent of 1000 cubic meters, an approximate coefficient of 35.8 is used. It is important to note that this price reflects the pure production cost of the raw material without taking into account the costs of liquefaction, transportation, and reverse regasification. Consequently, the consumer in the USA pays significantly more for 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 DUTCH TTF NATURAL GAS. 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. About 20 trillion cubic meters of gas are sold here annually.

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

Overview presented by Alexey Grishchenko, Doctor of Economics, Professor of 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.