Natural gas' economic value needed to be defined following the discovery of large natural gas reserves in the Netherlands at the end of the 1960s. It was decided to base natural gas prices on those of alternative fuels that companies and households were using prior to its discovery. Industrial and household fuel oils were used as reference fuels.
At the time, this pricing system was chosen because it allowed natural gas' value as a fuel to be determined most effectively. This system was then adopted by several other European countries.
Although gas and oil prices are still linked (principally for long-term export contracts), domestic market values are increasingly being set by price developments on virtual gas-trading points or 'gas hubs' where volumes may be traded repeatedly before reaching the end user. Examples include the British NBP (National Balancing Point) and the Dutch TTF (Title Transfer Facility).
GasTerra views the increasing influence of these trading points on gas prices to be a positive development. As a result of many years of experience trading gas and the flexibility provided by the Groningen gas field, GasTerra is able to offer a wide range of product and pricing concepts that capitalise on gas market fluctuations For instance, consumers can opt for fixed pricing or a spot market-indexed pricing formula based on supply and demand. Of course customised solutions are also possible.