European Gas Prices Continue to Adjust Amid Global Market Dynamics

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Two major global gas pricing hubs can be identified: Henry Hub in the US and TTF Gas hub in the Netherlands within the EU.

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

1. US Market (Henry Hub):

- Current price: increased to $3.3 per million BTU (British Thermal Units) on Tuesday.

2. European Market (TTF):

- Current price: corrected to $490 per 1000 cubic meters.

1. Natural Gas in the US (NG).

The benchmark price for natural gas in the US is set at the Henry Hub storage facility in Louisiana.

2. European Gas.

European gas trading mainly takes place at European gas hubs, with the largest being the Dutch TTF Natural Gas Exchange. This Dutch exchange leads the European gas market due to its trading volume, which exceeds the internal needs of the Netherlands by more than 14 times. Around 20 trillion cubic meters of gas are traded annually here.

It is important to note that gas pricing mechanisms around the world are diverse, including exchange trading (competitive pricing, as on TTF in Europe), oil-indexation (linking prices to oil), regulated prices, and direct contracts where prices are determined by the balance of supply and demand, influencing global benchmarks, including gas prices and the cost of alternative fuels (gas, oil, coal).

Russian gas prices, especially for export markets, have traditionally been heavily dependent on oil-indexation, but are now more focused on spot markets and competitive mechanisms, although the link to energy prices remains.

This overview was presented by Alexey Grishchenko, Doctor of Economics, Professor at the Department of Operations and Industry Management of the "Higher School of Management" Faculty at the Financial University under the Government of the Russian Federation.