A US technological breakthrough is reshaping the global natural gas market and threatening pricing models thousands of miles away. Three years ago, the US energy department was forecasting the US would become a big net gas importer. Companies specialising in liquefied natural gas rushed to exploit the opportunity. But engineering advances have led to a boom in extracting previously unobtainable gas locked in shale rock, of which the US has lots. Production of such "unconventional" gas is now growing so fast that the energy department forecasts imports will fall as a share of US gas supply. The flow of new gas helped US spot gas prices plunge 80 per cent between early 2008 and this summer.

Faced with a US glut, LNG producers have redirected shipments to Europe which – combined with recession-related demand falls – has sent European spot prices falling too. That is bad news for producers such as Gazprom. The Russian giant has long sold gas on “take or pay” contracts lasting as long as 25 or 30 years that link prices to oil. Spot gas prices have fallen well below contract prices and – with more shale gas and LNG coming on stream – that situation could persist.

Understandably, large European customers such as Eon Ruhrgas have started buying more spot gas and together may reportedly buy $2.5bn less Gazprom gas than their minimum contracted volumes this year. Some customers are also seeking to renegotiate long-term contracts. Gazprom says it expects customers to take contracted volumes in full, hinting it might otherwise fine them. It also says its current pricing model is the only way to ensure it can finance multi-billion dollar developments to meet Europe's long-term needs. Its negotiating hand is strengthened by the fact that spot gas volumes are too small for customers to rely on. But, suddenly, Gazprom's European stranglehold looks a lot less firm.