Global Gas Prices Under Pressure

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Russian natural gas prices are influenced by global gas and oil prices. The main international benchmarks for gas prices are presented below (Henry Hub - USA, TTF hub in the Netherlands).

1. (Henry Hub) - American Market:

- Current price: dropped to $2.7 per million BTU (British Thermal Units) on Friday.

2. (TTF) - European Market:

- Current price: slight increase to $690 per 1,000 cubic meters.

1. Natural Gas in the USA (NG).

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

2. European Gas.

European gas trading primarily takes place at European gas hubs, with the largest being the Dutch TTF Natural Gas Exchange. This Dutch hub leads the European gas market due to its trading volume, which exceeds the internal needs of the Netherlands by more than 14 times. It handles around 20 trillion cubic meters of gas annually.

Russian gas prices, particularly for export markets, have traditionally been heavily influenced by oil-linked pricing, but are now more aligned with spot markets and competitive mechanisms, although the correlation with energy prices remains.

Global gas pricing mechanisms are diverse, including exchange trading (competitive pricing, such 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, affecting global benchmarks including gas prices and the cost of alternative fuels (gas, oil, coal).

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