SGX, To­com to jointly de­velop Asian LNG mar­ket

The Sun (Malaysia) - - SUNBIZ -

SIN­GA­PORE: Sin­ga­pore Ex­change (SGX) and Ja­pan’s Tokyo Com­mod­ity Ex­change (To­com) said yes­ter­day they have signed a mem­o­ran­dum of un­der­stand­ing to jointly de­velop Asia’s liq­ue­fied nat­u­ral gas (LNG) mar­ket, as well as elec­tric­ity fu­tures.

As part of the ac­cord, the ex­changes plan to ex­plore op­por­tu­ni­ties like co-list­ing LNG de­riv­a­tives, as well as syn­er­gies be­tween the pair’s mar­ket dis­tri­bu­tion net­works.

SGX, which listed Asia’s first elec­tric­ity fu­tures in 2015, will also share its ex­pe­ri­ence with its Ja­panese coun­ter­part, SGX’s CEO Loh Boon Chye said in a state­ment.

“We also look for­ward to draw­ing on SGX’s ex­pe­ri­ence in elec­tric­ity fu­tures, as a liq­uid elec­tric­ity mar­ket is closely linked to the de­vel­op­ment of the LNG mar­ket,” said Takamichi Ha­mada, pres­i­dent of To­com.

SGX be­gan pric­ing LNG in Oc­to­ber 2015 when it launched its Sin­ga­pore Sling in­dex, as­sess­ing car­goes on a free-on-board Sin­ga­pore ba­sis. In Septem­ber this year it launched a sec­ond in­dex, the North Asia Sling.

The lat­ter in­dex, which will price the su­per-cooled fuel for the Ja­panese, South Korean, Tai­wanese and Chi­nese mar­kets, was seen by mar­ket par­tic­i­pants as a sig­nal that the mar­ket con­tin­ues to take pric­ing sig­nals from tra­di­tional buy­ers in North Asia.

Sin­ga­pore, al­ready Asia’s main trad­ing lo­ca­tion for oil and re­fined fuel prod­ucts, and Ja­pan, the world’s big­gest con­sumer of LNG, had pre­vi­ously been in com­pe­ti­tion to es­tab­lish Asia’s main LNG hub.

The city-state has so far been seen to lack a big enough con­sumer base to war­rant a real trad­ing hub, al­though in­vestors and mar­ket par­tic­i­pants ap­pre­ci­ate Sin­ga­pore’s well es­tab­lished trad­ing reg­u­la­tions, as well as the fact that English is its op­er­at­ing lan­guage.

On the other hand, Ja­pan’s sta­tus as the world’s big­gest con­sumer was seen by LNG pro­duc­ers as cre­at­ing a mar­ket that was too im­porter-bi­ased. – Reuters

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