European Gas Prices Surge Amid Global Market Turmoil

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Two key international hubs that set prices for natural gas are Henry Hub in the US and the Dutch TTF Gas hub.

1. American market (Henry Hub):

- Current price: fell to $3 per million BTU (British Thermal Units) on Thursday.

2. European market (TTF):

- Current price: adjusted to $880 per 1,000 cubic meters.

1. Henry Hub - American gas. This is the Henry Hub gas distribution node in Louisiana. This benchmark plays a leading role in setting natural gas prices in the US, traded on the New York Mercantile Exchange. The unit of measurement is British Thermal Units (BTU). To convert the price to 1,000 cubic meters, a factor of 35.8 is used. It is important to note that this price reflects the raw material cost only, excluding liquefaction, transportation, and regasification costs. Therefore, US consumers pay 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 worldwide are diverse: they include exchange trading (competitive pricing, as on TTF in Europe), oil-indexed pricing (linking gas prices to oil prices), 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-indexed pricing, but now they are more oriented towards spot markets and competitive mechanisms, although the link to energy prices remains.

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