Asia a poor candidate for an LNG hub-II: What is the solution then?
May 03: So what really will the right solution for Asia? 8Consensus on a single price can be built in a number of different ways 8The (long overdue) standardisation of spot industry contracts (e.g., MSPAs) which will have the effect of increasing OTC trade in spot LNG and, therefore, trigger the need for greater hedging. If other commodity products, such as oil, coal and iron ore, can have industry standard contracts, why cannot LNG? 8Ensuring the benchmark works in the first place (e.g., DES vs. FOB, right vessel size, quoted regularly, etc.) would be key. 8This begs the question as to whether the right benchmark already exists or an entirely new one is still needed. 8Is a virtual LNG hub more suitable for Asia? Click on Reports for more