Booming LNG Market Steps Out Of The Dark As Transparency Push Grows

"Traders spend a lot of time talking on a bilateral basis with other traders to see whether they can sell spot cargoes," Ahmad Adly Alias, vice president of Petronas LNG marketing and trading division said at a conference in late May, adding that a platform like GLX was a more effective way for price discovery.

On Tuesday, CME Group Inc said it will develop the first physically deliverable U.S. LNG futures contract on its New York Mercantile Exchange.

Still, LNG has a long way to go before reaching the level of liquidity and transparency in oil - by far the world's most traded commodity - but which only came after many years. Steelmaking raw material iron ore only shifted to transparent spot pricing after four decades of yearly-set contracts.

Majority of LNG in Asia remains under opaque long-term contracts linked to the price of oil, as producers opt for steady revenues to fund LNG export projects, some of which have cost $50 billion to develop, said FGE's Siau.

"Until providers of project debt and equity are comfortable with the risks and rewards of using a spot LNG index, we expect the proportion of spot LNG available will be limited," he said.

(Reporting by Jessica Jaganathan Editing by Manolo Serapio Jr.)


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