It’s groundhog day again for the LNG market. Oil indexing for long-term contracts have produced huge disparities with the spot market. Asian buyers have always been willing to pay a premium for stability of supply but with excess capacity coming online every year, that mindset may slowly change. Liberalization of energy markets like in Japan also means that importers cannot pass the costs down to end users and they may start taking a more aggressive approach towards the costs of their imports in their price review negotiations. Perhaps this is why we are now seeing our first few gas price arbitrations in Asia. Baldev Bhinder speaks to Reuters on the LNG market.
