In recent years, natural gas pricing mechanisms and other provisions of long-term import contracts in Europe have undergone substantial changes. These developments have shaken the pillars of the structure that has governed gas imports into Europe for decades, and their impact on the market has yet to be fully appreciated.

This paper describes how contractual terms have evolved since 2008-2009 by means of inventorying the outcomes of renegotiations and newly signed contracts. Besides adding historical knowledge, this account provides useful insights on how the transition towards hub pricing may further unfold in parts of Europe where it is still underway.

Furthermore, this study analyses the role of flexible supplies on hub price formation in Northwest Europe. It concludes that hub price movements in this region can be induced either by variations in aggregate price-taking volumes or by variations in volumes of Russian gas supplied under long-term contracts, depending on the demand environment.

Supply and demand indeed lie at the root of price formation. What can we expect in future? The paper offers two descriptive, normative scenarios that discuss the factors that may lead to lower or higher prices in Europe.