Global Gas Market: Situation Overview

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Natural gas pricing, including Russian gas, is formed based on current global gas and oil prices.

There are two primary international benchmarks for natural gas pricing: Henry Hub in the U.S. and the Dutch hub TTF Gas.

1. American Market (Henry Hub):

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

2. European Market (TTF):

- Current price: Increased to $1,030 per 1,000 cubic meters on Wednesday.

1. Henry Hub - American gas. This is a physical gas distribution hub located in Louisiana. The benchmark plays a leading role in shaping natural gas prices in the U.S., traded on the New York Mercantile Exchange. The measurement unit 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, U.S. consumers pay significantly more for the gas.

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

Gas pricing mechanisms worldwide are diverse: 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, affecting 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 now they are 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 of the Faculty of "Higher School of Management" at the Financial University under the Government of the Russian Federation.