In-depth Report on the Natural Gas Industry: The Global Natural Gas Price Surge—Causes, Trends, and Impacts

The development of the global natural gas industry can be divided into four phases. The first phase—the initial period (1920–1950)—saw the commencement of natural gas exploration, production, and utilization, with the United States accounting for approximately 90% of total output. The second phase—the growth period (1951–1970)—witnessed diversification in the types of natural gas extracted and expansion of production zones to Europe, the Soviet Union, the Middle East, and North Africa. The third phase—the leapfrog period (1971–2005)—gave rise to five major production regions: North America, Russia, the Middle East, Asia-Pacific, and Africa; natural gas usage also became increasingly diversified. The fourth phase—the revolutionary period (since 2006)—has been marked by dramatic advances in extraction technologies and output; the United States, leveraging breakthroughs in unconventional gas production, achieved substantial growth in total natural gas output, thereby catalyzing the global development of unconventional natural gas. 1.2. International markets predominantly adopt market-based pricing, while domestic pricing in China is gradually being liberalized. Natural gas pricing mechanisms fall into six categories: gas-to-gas competition pricing, oil-indexed pricing, regulated pricing, bilateral monopoly pricing, market netback pricing, and no-pricing. Currently, the two most widely used international pricing methods are gas-to-gas competition pricing and oil-indexed pricing. The North American natural gas market favors gas-to-gas competition pricing, whereas European markets employ both models; the Asia-Pacific market primarily relies on oil-indexed pricing. In the United States, natural gas pricing has been fully marketized: downstream users may select their own suppliers or purchase directly from producers, with prices negotiated between large consumers (e.g., power plants) and suppliers. Regarding pipeline transportation fees, U.S. pipeline companies typically charge a fixed fee (for reserved pipeline capacity) plus a commodity fee (for actual capacity usage). To date, the U.S. has established 24 natural gas trading hubs—including Henry Hub—whose spot and futures prices serve as key benchmarks for domestic natural gas pricing. The UK’s natural gas pricing mechanism operates through competitive market pricing at the National Balancing Point (NBP). As the first European country to fully liberalize its natural gas industry, the UK employs a relatively simple pricing structure: end-users transact with suppliers at terminal prices, while suppliers negotiate coastal prices with producers. For pipeline transportation, the UK applies a price-cap methodology, adjusted every five years, aiming to enhance pipeline operator efficiency while reducing corporate costs. Today, the NBP stands as Europe’s most mature and active natural gas trading market—and serves as the pricing and delivery point for UK-based international natural gas transactions. China’s natural gas pricing mechanism has evolved across three stages. Initially, natural gas prices were uniformly set by the state, leaving producers no autonomy in pricing. In the second stage, pricing regulations were relaxed: Sichuan Province’s natural gas was subject to a “fixed-quantity quota” policy, while gas volumes exceeding the quota were priced autonomously by enterprises. In the early third stage, China adopted a government-guided pricing model—“benchmark price plus floating range”—where the benchmark ex-factory price was linked to crude oil and liquefied petroleum gas (LPG). It was not until November 2019, when the revised draft of the Central Government Pricing Catalogue was released, that natural gas was formally categorized into regulated and non-regulated gas, with differentiated pricing applied accordingly.

The European Natural Gas Market: Who Wins Amid Multilateral Competition?

Against the backdrop of frequent fluctuations in international oil prices, any development in energy markets triggers acute sensitivity among governments worldwide. Europe is a major natural gas consumer. As domestic production continues to decline, imports have surged rapidly—raising critical questions: Should Europe opt for cheaper Russian natural gas, or invest in more terminals to import U.S. liquefied natural gas (LNG)? What is the significance of the Southern Gas Corridor? How might natural gas help rebalance trade relations? … Amid this multilateral contest, how will the European natural gas market evolve? Its future remains uncertain. Lubmin, a picturesque seaside resort on Germany’s Baltic coast, boasts expansive beaches, soft sand dunes, and dense pine forests. Located a few hours’ drive north of Berlin, it offers visitors a tranquil, scenic postcard view of coastal serenity. Today, however, excavators and barges departing from Lubmin’s port—and large construction sites hidden behind the pine trees—signal the imminent launch of a massive infrastructure project. The Nord Stream 2 Pipeline Project Sparks Controversy This controversial project traverses central Europe, straining relations between Germany and several close neighbors. At sea, excavators are carving an enormous underwater trench, extending in a straight line toward land-based construction sites. If all proceeds according to plan, this trench will soon house a high-profile pipeline transporting a vital commodity: natural gas from Russia. Planned since 2015, the Nord Stream 2 pipeline is scheduled for completion by the end of 2019. Proponents argue the project makes strong commercial sense: it will link the world’s largest natural gas exporter with Europe’s largest economy, doubling the capacity of the existing Baltic Sea corridor—Nord Stream 1—which has operated since 2011. Together, the two pipelines would ultimately deliver up to 110 billion cubic meters of natural gas annually—enough to meet one-quarter of the entire EU’s demand. Opponents, however, contend that Germany’s vigorous support for the project reflects poor judgment: once completed, the pipeline would deepen Europe’s dependence on Russian natural gas. The European Commission has been the project’s principal opponent, arguing it undermines the EU’s efforts toward energy independence and supply diversification. Unsurprisingly, the strongest opposition comes from Washington. U.S. President Donald Trump has repeatedly and explicitly stated his intention to halt this €9.5-billion project and indicated concrete measures would follow. U.S. LNG supplies are steadily increasing, making the question—“Can Europe become a major buyer of U.S. natural gas?”—a hotly debated topic. During his July 25 meeting with European Commission President Jean-Claude Juncker, Trump emphasized that the EU—with its 28 member states—represents a massive LNG buyer, while the U.S. possesses abundant resources. Multiple European companies participate in Nord Stream 2 investments. Kirsten, an energy analyst at Germany’s Institute for International and Security Affairs, likens the Nord Stream 2 project to an onion: peel away one layer of controversy, only to find another, deeper layer beneath. At its core lies a simple yet pivotal question: Is energy from Russia reliable?

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Braskem will join Rio de Janeiro's free natural gas market on November 1, enabling direct supplier purchases. The move is expected to reduce overall costs by 25% to 30% and increase production at its local plant by 2%.

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