What Price Asian LNG?

The Asian liquefied natural gas (LNG) market faces unprecedented uncertainty over the future of pricing. A 25-year consensus over how LNG is priced has disintegrated as the Asia Pacific Basin first transformed to a buyers' market and, over the past 12 months, switched to a sellers' market. A new equilibrium is yet to emerge.

* New long-term contract prices are heading up quickly. Sellers are capturing more upside both by increasing the level of oil indexation and by eliminating the price moderating impact of s-curves.
* CERA's analysis indicates that sellers will continue to have the upper hand in Asia over the rest of the decade and beyond, supported by a tight supply-demand balance and buyers' increasing eagerness to secure supplies.
* The report concludes by asking what factors could change this outcome. It identifies "nine pointers to a different world" that could tilt the market back in favor of buyers, contrary to expectations.

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CERA Reports Online, a wholly owned subsidiary of IHS Energy, is a leading advisor to international energy companies, governments, financial institutions, and technology providers. CERA delivers critical knowledge and independent analysis on energy markets, geopolitics, industry trends, and strategy. CERA's expertise covers all major energy sectors--oil and refined products, natural gas, and electric power--on a global and regional basis.