Oil collapse fails to dent zeal for hub-based gas pricing
In recent years, European buyers of natural gas have pushed strongly in favour of contract pricing based on the continent's gas hubs, rather than more traditional formulas linked to the price of oil. Given the huge drop in crude prices, has this stance changed? Stella Farrington investigates
For decades, a debate has raged in Europe over the best way to price natural gas. Unlike in the US, where gas prices are determined by activity in traded gas markets, Europe has retained the practice of pricing long-term contracts using oil, in spite of vehement opposition from buyers.
In the past few years, a combination of rising oil prices, falling gas prices and more liquid European gas hubs caused a move away from oil indexation and towards hub-based pricing. A tipping point was reached in
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