A boom in liquefied natural gas exports and growing demand in Asia may pave the way for a trading hub in Singapore and a benchmark price for the fuel, according to the International Energy Agency.
“There is a huge, new wave of LNG projects coming to the market,” Fatih Birol, chief economist at the Paris-based International Energy Agency said in an interview in the city-state today, citing gas export plans in Australia and Papua New Guinea. “At the same time, we expect substantial growth of demand in Asia,” particularly in China and India, Birol said.
The renegotiation of supply contracts by South Korea and Japan, the world’s biggest buyers, may also encourage more trade outside long-term contracts, Birol said. Most LNG is sold on a term basis, while fuel in the spot market is sold cargo-by-cargo.
“Put all of them together, and I think we will see a golden age of gas in that region,” Birol said. “Therefore, there is a need for something like spot oil trading.”
Singapore, the oil-trading hub of Asia, is “very appropriate” base to build LNG trading, Birol said. A spot market in the city could be developed “through 2020,” he said.