The pricing of shale gas: A review

Shale gas, a new kind of energy, receives widespread attention worldwide, especially after America's unprecedented success. It has become a hot issue to discuss shale gas pricing in the area of energy markets. This study aims to identify a comprehensive explanation of shale gas pricing based on a systematic review of influential publications among mainstream database papers published between 2000 and 2019. Analyzing these records shows that (i) gas pricing mechanisms are different from region to region. The free flow spot market in America is dominated by hub pricing. Europe is in the process of converting oil indexation to market pricing, while Asia strictly implements oil indexation. (ii) Historically a coupling relationship is discovered between oil and gas, and oil is the leader. However, this correlation has been broken since the development of shale gas. (iii) Factors such as supply/demand, storage, finance, and production influence shale gas pricing. Brief conclusions show that supply and demand factors have less impact on shale gas pricing in the country where oil indexation is dominant, while they have a more significant impact on shale gas pricing in the country where hub pricing is dominant. Except for this, factors like production of shale gas, storage and finance contribute more and more to shale gas pricing since gas has been separated from the oil. In the future, a comprehensive study of what elements affect shale gas pricing can be investigated to better shape the shale gas pricing system.