India specific LNG index
A spot pricing index for the Indian and Middle East liquefied natural gas (LNG) markets is expected in the second quarter of this year.
The new index, expected to be launched in the second quarter of this year, is to enhance price discovery and risk management in the region, sais #Tullett Prebon, one of the world’s leading interdealer brokers.
It is being launched in collaborating with #Singapore Exchange (SGX).
Following industry consultation, the new index will provide a transparent and trusted reference price for LNG Delivered Ex-Ship under flexible terms to key ports in Dubai, Kuwait and India (DKI).
The new DKI Sling Index will be published every Monday and Thursday by SGX, Asia’s leading and trusted market infrastructure.
As the LNG market moves towards an oversupply situation, the role and relevance of spot and shorter-term contracts has increased, said Tullett Prebon.
However, the industry still lacks transparency and credible price references, it noted.
The Indian and Middle East markets have seen a boost in LNG spot trade, but lacks an accepted price marker. Market participants are often relying on tenders for price discovery, said a Tullett Prebon statement.
Those hedging physical exposures have limited options, and are using Far East LNG and/or UK oil and gas benchmarks to manage risk, noted Tullett Prebon.
The new index aims to provide a credible, consistent and transparent pricing mechanism, as the volume of LNG trades in the region continues to rise. It could also serve as a first step towards standardising LNG trade in the region, it said.
Melissa Lindsay, Global Head of LNG at Tullett Prebon, said: “Over recent years we have seen an increase in the volume of spot trade into the Middle East and India region and this new index will provide better price discovery and fair value to our clients.
“Over time there will be moments where the regional price decouples from the Far East LNG or European Gas prices, so it is important for an independent and trusted regional price,” said Lindsay.
Janice Kan, Head of Commodities at SGX, said: “The winning combination of Tullett Prebon’s extensive network and deep understanding of the LNG market, along with SGX’s transparent and trusted methodology, will help the new index to develop as a benchmark for the region.”
Amreeta Eng, Group Director for Trade Promotion at #International Enterprise Singapore, said: “As LNG markets become more spot-based, this strategic partnership between SGX and Tullett Prebon will pave the way towards more transparent, trusted and reliable price discovery benchmarks.
“Singapore is emerging as a key LNG hub, with storage, trading, shipping and price discovery activities, and we look forward to more industry-led initiatives to develop the LNG markets,” said Eng.
The DKI Index will form part of the SGX LNG Index Group or ‘Sling’ series of indexes that follows the trusted methodology of collecting an average price from participants. It will be the first of its kind to use high-level terms of physical trade approach, ensuring submission of prices are on the same assumptions. fii-news.com
