The LNG sector is beginning to shift towards a new paradigm, transforming into a regional oil trading model with new sources of reliability, more speculation and increased price volatility, LNG portfolio trading expert Dr Yunji Xu said at an EMART Asia panel discussion on “Creating a Regional Futures Market for Natural Gas in APAC”.
Dr Xu of Shell Eastern Trading LNG told the audience that there has been an evolution in the LNG market and observed that “between 2007 and 2011, there was an increase of 60 percent in the number of LNG importers, and an increase of 30 percent in the number of LNG exporters”.
She explained that change in the global LNG market continues apace, and is influenced by the seasonality of the increasing demand of different countries.
Dr Xu highlighted the important roles of the LNG portfolio players in a regional futures market, whom she described as “Global Positioning Systems”. These players will provide liquidity, assist in guiding the market towards greater reliability and flexibility, and minimise pricing exposure.
James Atkinson, Counsel, Norton Rose, and Julius Foo, Director of Oil Markets, Intercontinental Exchange, shared their views and commented that the increased number of LNG market participants is fundamental for a regional futures market.
Foo said that a thriving spot exchange market is fundamental for a regional futures market. He explained that making trades on the exchange market will lower credit risk, but will require traders to post margin, and therefore see the need to obtain sufficient collateral.
By :Lim Tze Yong, EMA