The market today
Pricing
In many European countries, the price of natural gas is linked to the prices of oil products. This link has a historical background. After the discovery of substantial natural gas reserves in the Netherlands at the end of the 1960s, it was necessary to determine the economic value of the natural gas. It was decided that the natural gas price should be based on the price of the alternative fuel(s) used by businesses and households before the discovery of the reserves. The reference fuels were fuel oil for industry and domestic fuel oil for households. This price methodology was chosen at the time, as that was the best way to calculate the value of natural gas as a fuel. Since then, this methodology has been adopted by many European countries and is applied over almost the whole continent. Most sales contracts drawn up by European and non-European suppliers are still based on oil-linked prices. GasTerra also offers oil-price-linked contracts. However, due to its many years of experience and the flexibility afforded by the Groningen field, GasTerra can also offer other pricing solutions that can respond to changes in the gas market. Buyers can choose a fixed price or a spot-market-linked price formula based on supply and demand. Not only that, we can also offer customised solutions.