The International Gas Union (IGU) is a global not-for-profit organization whose mission is to promote natural gas as an integral part of a global sustainable energy system and to advance the political, technical and economic progress of the gas industry. IGU has published the fourteenth edition of the Wholesale Gas Price Survey 2022 on the development of pricing mechanisms in the international natural gas market. The main results can be summarized as follows:
- Pricing in world gas imports is currently based on the following mechanisms: gas-to-gas competition (GOG), oil indexation (OPE) and fixed prices based on bilateral monopoly (BIM). Their shares in the structure of imports in 2021 were 56%, 39% and 5%, respectively. Since 2005, the OPE mechanism's share of world imports has fallen by 24 p.p. and the GOG mechanism's share has increased by 35 p.p.
- In 2021, pipeline gas supplies, which account for 58% of world imports, experienced an increase in the share of oil indexation for the first time in a 5-year period. This was caused by an increase in Russian and Algerian exports to Turkey and Spain as well as an increase in pipeline gas exports from Russia and Central Asian countries to China. LNG imports, on the contrary, exhibited an increase in the market share, while there was an increase in contract trade, and the growth of spot purchases almost stopped. This is due to their declining economic attractiveness in the second half of 2021, amid rising spot price levels.
- The highest level of wholesale gas prices in 2021 was recorded in Europe (USD 13.38/mmBtu), namely in Poland, Italy, Austria and Germany. The price of gas on the European market has more than tripled since 2020 and has exceeded prices in Asian countries for the first time since 2013.
- According to IGU experts, the high share of gas-to-gas competition pricing in global gas imports enabled the market to respond effectively to changes in demand in the LNG sector in 2022 and to ensure that supplies were redirected to priority markets. It is noted that the proliferation of the GOG mechanism enabled the gas market to send adequate price signals in the face of supply shortages, allowing European countries to substitute Russian gas supplies.
Wholesale Gas Price Survey 2022, International Gas Union (IGU), October 2022, URL: https://www.igu.org/resources/2022-wholesale-price-report/