Singapore Eyes LNG Trading Hub Status
Singapore looks to pull ahead in the race to become Asia’s main gas hub by establishing a domestic gas trading market.
Rising liquefied natural gas (LNG) supply and demand within Asia has prompted Singapore to to become a centre for energy trading.
Singapore, already a global oil trading hub, is aiming to take advantage from increasing numbers of buyers especially in China, but also India and other parts of Asia.
Announcing the decicion, Singapore’s trade and industry minister S Iswaran said creating a domestic gas market would “allow domestic gas price discovery that reflects Singapore’s demand and supply conditions”.
Forecasts suggest that Asia will buy two-thirds of the world’s LNG this year. The Singapore exchange plans to launch an Asian benchmark for LNG to break its link to oil prices.
The minister also announced plans to establish a Secondary Gas Trading Market (SGTM) in Singapore, where gas buyers and sellers can trade gas domestically on a short-term basis.
"An SGTM can yield several potential benefits. It will allow domestic gas price discovery that reflects Singapore's demand and supply conditions. Second, gas users will be able to complement their portfolio of long- and medium-term supplies with short-term supplies," said Iswaran.
Reportedly, Singapore Exchange told Reuters that it aims to develop an Asian benchmark for LNG in order to stop the reliance on oil-related pricing indexes.
Japan, which is the world’s largest importer of LNG, is competing with Singapore to be the regional centre of LNG trade in Asia, and is already in the process of liberalising its domestic electricity market. China is also a potential competitor, although it is currently far behind both Japan and Singapore.
