LNG Shifts European Gas Pricing Dynamics

The European gas market has undergone a significant shift since Russia's pipeline gas stopped flowing through Ukraine in early 2025. A new report by the Oxford Institute for Energy Studies (OIES) reveals that geography now plays a major role in determining prices, with northwestern Europe consistently paying less than landlocked Central European countries.

The study found that the Dutch TTF benchmark, along with French trading hub TRF and Belgian ZTP, have become Europe's cheapest markets. In contrast, Germany's THE trades at a modest premium, while prices rise progressively further east in countries such as Austria, Slovakia, and the Czech Republic.

According to the report, this pricing pattern reflects a structural shift rather than a temporary market disruption. The new structure is attributed to Europe's growing dependence on liquefied natural gas (LNG) after Russian pipeline supplies dwindled. Large volumes of LNG now enter Europe through terminals in France, Belgium, the Netherlands, and Britain before being transported inland.

The report notes that a similar divergence first emerged during the 2022 energy crisis, when surging LNG imports into France, Belgium, and the UK exceeded available pipeline capacity needed to transport gas further east. Markets gradually rebalanced through 2023 and 2024 before Russian gas transit through Ukraine ended, creating a new and more durable pricing pattern.

Despite the reshaping of supply routes, European gas trading continued to expand in 2025. Traded volumes across European gas hubs increased by 16%, pushing annual trading activity above 100,000 terawatt-hours (TWh) for the first time. The Dutch TTF strengthened its position as Europe's dominant pricing benchmark, accounting for 81% of total traded gas volumes.