U.S. Natural Gas Prices Continue to Adjust Amid Global Market Volatility

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Global gas prices, including those for Russian gas, are determined based on international gas and oil product prices.

There are several key benchmarks for global gas markets, with two being particularly important:

1. U.S. Market (Henry Hub):

- Current price: fell to $2.9 per million BTU (British Thermal Units) on Monday.

2. European Market (TTF):

- Current price: dropped to $506 per 1,000 cubic meters.

1. Henry Hub - American gas. This is a physical gas distribution hub located in Louisiana, which serves as the benchmark for natural gas prices in the U.S., traded on the New York Mercantile Exchange. The unit of measurement is British Thermal Units (BTU). To convert the price to an equivalent of 1,000 cubic meters, a factor of 35.8 is used. It is important to note that this price reflects only the raw material cost and does not include liquefaction, transportation, and regasification costs. Consequently, the end consumer in the U.S. pays significantly more for gas.

2. TTF - European gas. This is the main benchmark for gas prices in Europe. TTF stands for Title Transfer Facility, a virtual gas trading platform.

It is worth noting that gas pricing mechanisms around the world are diverse, including exchange trading (competitive pricing, as seen on TTF in Europe), oil-indexation (linking gas prices to oil prices), regulated prices, and direct contracts where prices are determined by the balance of supply and demand, which influences 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 are now increasingly influenced by spot markets and competitive mechanisms, although the link to energy prices remains.

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