Although once seen as the fair and secure way to value natural gas, oil-indexation has been losing ground as the dominant pricing method in Europe. Most recently, even Russia's Gazprom, the foremost advocate of oil-pegged gas prices, has yielded to pressure and decided to increase the share of spot pricing in its export portfolio.
Platts European power and gas specialists Lucie Roux and Vesa Ahoniemi discuss the history of oil-indexation of natural gas, the factors behind the continent's increasing preference to hub-pricing and how new LNG supply is likely to further displace oil-indexed gas in Europe.
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