LNG Approaches Its 1970s Moment

It's easy to forget, but until the crises of the 1970s the oil market as we know it barely existed. The ``Seven Sisters'' -- grandmothers of today's Exxon Mobil, Chevron, BP and Shell -- controlled some 88 percent of the world's crude production. The price of oil was set according to long-term agreements between drillers and refiners, and few quoted it on the evening news or checked it in the day's financial pages.

The global market in liquefied natural gas looks a lot like that today. While gas pipelines have allowed the development of the Henry Hub and National Balancing Point benchmarks in the U.S. and Europe, Asia -- home to about three-quarters of LNG demand globally -- still prices its shipped gas in relation to oil on multi-year or even multi-decade agreements. Most LNG is sold directly to power stations, and comes encumbered with contract terms banning its re-sale.