Asia will benefit from a gas hub

Asia is the world's second-largest gas market, but it lacks a gas hub. This is because the Asian gas market is relatively undeveloped and lacks the necessary infrastructure and a framework for gas trading, said the Chief Executive Officer of Gas Supply Pte Ltd, Alan Heng. Heng was speaking at the EMART Asia conference on Tuesday, on the topic of building an integrated LNG supply chain.

Heng cited examples of successful gas trading hubs such as Henry Hub in the US, the National Balancing Point in the UK, the Dutch Title Transfer Facility in the Netherlands, noting that they had critical success factors such as the appropriate infrastructure, regulations, pricing transparency and sufficient liquidity.

China, he said, has potential for a gas hub. Firstly, it has a deep market. Secondly, it produces both conventional and unconventional gas. Thirdly, it is also building infrastructure to connect the market. The big constraint is the outcome of the deregulation of gas prices and whether China can do it in a way that will reflect true market supply conditions, he said.

In the case of Singapore, while its gas market is well-connected, geographically well-placed and has financial instruments, there is not enough physical trade to create market depth. One way to address this challenge would be to build linkages to the greater Southeast Asia market so that a sizable market will exist, giving rise to more trades.

Heng ended on an optimistic note, saying that with greater connectivity and greater development of the gas market in Asia, a gas hub would form and help Asia position itself to capture the next technological or market revolution.

By :William Tong, EMA