CAN HENRY HUB OR NBP BECOME A PRICE INDEX FOR ASIA PACIFIC LNG CONTRACTS

摘要

Our survey on "whether US Henry Hub or UK National Balancing Point (NBP) could be used as a price index for Asia Pacific LNG contracts" to major Asian LNG players revealed a general resistance, interestingly from both buyers and sellers, to a rapid introduction of pure Henry Hub or NBP contracts replacing Japan's average imported oil price (JCC) linkage in Asia. However, there was significant curiosity and interest in the idea, particularly from buyers as they saw how oil prices could be volatile in recent years - In 2008 it reached over $100/bbl and then plunged. The current Atlantic gas-on-gas price discount to oil indexed LNG prices in Asia is obviously tempting for buyers and the idea of a portfolio of pricing mechanisms to reduce exposure to any one market also has some level of support. The large majority of sellers, on the other hand, prefer oil price linkages for its projected price level, transparency, reliability and acceptance by all players over the decades. Not to anybody's surprise, it is not easy to break an entrenched tradition of oil linkage in Asia Pacific. From a structural perspective - i.e., regionally fragmented natural gas markets - a substantial shift to long term Henry Hub or NBP pricing in Asia is still years away. Our survey showed that Asian LNG players are still very concerned by price volatility of Henry Hub and NBP and are worried that security of supply could be jeopardized by abandonment of the oil linkage. The most probable source for Henry Hub or NBP infiltration to Asia could be through Atlantic basin spot and long-term supply. More likely this will occur with some blending with JCC or Brent to entice Atlantic suppliers to divert cargoes to Asia.