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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 benchmarks for natural gas pricing: Henry Hub in the USA and the Dutch hub - TTF Gas.
1. American market (Henry Hub):
- Current price: correction on Wednesday to 3.5 USD per million BTU (British Thermal Units).
2. European market (TTF):
- Current price: correction on Wednesday to 333 USD per 1000 m³.
1. Henry Hub - American gas. This is the Henry Hub gas distribution node in Louisiana. This benchmark plays a leading role in shaping natural gas prices in the USA, which is 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 coefficient of 35.8 is used. It is important to note that this price reflects the pure cost of raw materials without taking into account the costs of liquefaction, transportation, and reverse regasification. Therefore, 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 is worth noting that gas pricing mechanisms in the world are diverse: they include exchange trading (competitive pricing, as on TTF in Europe), oil-indexation (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-indexation, but now they are more oriented towards spot markets and competitive mechanisms, although the link to energy prices remains.
The review was 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.
