Gas Prices in EU Approach $1120 per Thousand Cubic Meters

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

There are key benchmarks for global gas markets, two of which are primary:

1. American Market (Henry Hub):

- Current price: dropped to $2.5 per million BTU (British Thermal Units) on Monday.

2. European Market (TTF):

- Current price: adjusted to $1,120 per 1,000 cubic meters.

1. Henry Hub - American gas. This is a gas distribution hub located in Louisiana. It 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 without accounting for liquefaction, transportation, and regasification costs. Consequently, consumers in the US 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 are diverse globally: they include exchange trading (competitive pricing, as 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, influencing global benchmarks including gas prices and the cost of alternative fuels (gas, oil, coal).

Russian gas prices, particularly for export markets, have traditionally been heavily dependent on oil-indexation, but are now more aligned with 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 Operational and Sectoral Management at the Higher School of Management of the Financial University under the Government of the Russian Federation.