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Gas pricing mechanisms in the world, including those for gas of Russian origin, are formed based on global gas and petroleum product prices.
Global gas markets have their key pricing benchmarks. There are several reference indicators, two of which are primary:
1. American market (Henry Hub):
- Current price: Monday correction to 3.4 USD per million BTU (British Thermal Units).
2. European market (TTF):
- Current price: increase to 335 USD per 1000 cubic meters.
1. Henry Hub - American gas. This is essentially the Henry Hub gas distribution hub in Louisiana. This benchmark plays a leading role in forming natural gas prices in the USA, which are traded on the New York Stock Exchange. The unit of measurement is British Thermal Units (BTU). To convert the price to an equivalent of 1000 cubic meters, a conversion factor of 35.8 is used. It is important to note that this price reflects the pure cost of raw material, excluding liquefaction, transportation, and regasification costs. Consequently, the consumer in the USA pays significantly more for gas.
2. TTF - European gas. This is the main benchmark for gas prices in Europe. The name stands for Title Transfer Facility - a virtual gas trading platform.
It should be noted that gas pricing mechanisms in the world are diverse: they include exchange trading (competitive pricing, as on TTF in Europe), oil indexing (linking the price to oil), as well as regulated prices and direct contracts, where the price is determined by the balance of supply and demand, which affects global benchmarks, including gas prices and the cost of alternative fuels (gas, oil, coal).
Prices for Russian gas, especially for export markets, have traditionally been heavily dependent on oil-linked pricing, but are now more oriented towards spot markets and competitive mechanisms, although the link to energy prices remains.
Review 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.
