Creating an Asian Market for LNG – Introduction to FOB Singapore SGX LNG Index Group (‘SLInG’)

White paper by David Carlson, Cheong Jin Yu and Adrian Lunt from the Singapore Exchange (SGX)

The emergence and growth of natural gas as a primary fuel source has been a key feature of the evolving global energy mix over the 20th century and into the 21st. While this change has run in parallel with a significant investment in pipeline transportation infrastructure throughout Europe and North America, this has not been the case in the Asia Pacific basin where energy demand is geographically diverse and in many cases islanded. The Asia Pacific region has become a powerhouse of economic growth, increasing from 30% of world economic output in 2000 to 40% by 20141. In order to continue to fuel economic growth across the region, a reliance on liquefied natural gas (LNG) has arisen as a means to cost-effectively transport natural gas from upstream production fields to centres of demand (predominately electricity utilities and city gas networks).

While Europe and Northern America have seen the development of market or balancing pricing for gas, this has largely not occurred in Asia Pacific. The development of a regional price for gas is critical to ensure that...

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