In many European countries, the price of natural gas is linked to those of oil products. The linking of gas to oil goes back to historical roots. After the discovery of the Groningen field in 1959, the economic value of natural gas needed to be defined. It was decided that the natural gas price should be based on the price of the alternative fuel(s) which businesses and households used prior to the discovery of the natural gas reserves. Fuel oil for industry and domestic fuel oil for households were used as the reference fuels for the ‘oil linking’. This pricing method was chosen at the time as being the best for reflecting the value of natural gas as a fuel in the market. This method has been adopted by many European countries and is now used virtually everywhere on the continent. Most long-term sales contracts concluded by European and non-European suppliers are still based on the oil price link.
GasTerra’s sales on the home market (including the TTF) amounted to 33.1 billion m³ in 2008 compared to 27.4 billion m³ in 2007. Of this volume, 20.9 billion m³ was sold to industry or power stations and retailers within the Netherlands and GasTerra sold 12.2 billion m³ via the TTF exchange. Alongside a few annual contracts with delivery on the TTF, sales with a term of less than one year increased sharply in 2008 compared to previous years. In addition to the over-the-counter (OTC) sales, where deals are concluded via brokers or directly between two parties, GasTerra has become more active on the gas exchanges, including Endex and the APX. GasTerra offers standard products for a period of a day and a week as well as a month, quarter or year or part thereof. Since the full liberalisation of the gas market in 2004, GasTerra’s market share has fallen from around 78 per cent to around 50 per cent in 2008 on the home market excluding trading exchanges.
