Developing a natural gas trading hub in Asia: obstacles and opportunities
The market for natural gas in Asia is dominated by long-term contracts in which the price of gas is linked, or indexed, to that of oil. In recent years, this has helped keep Asian gas prices much higher than those in other parts of the world, leading to serious questions about whether such a system is sustainable. In this report, the IEA shows what it would take to create a regional natural gas trading hub in which prices aren’t indexed to those of oil but rather reflect local supply and demand fundamentals. Developing a natural gas trading hub in Asia aims to provide stakeholders with insights on the changes that are required in the Asia-Pacific natural gas sector – both downstream and upstream – to allow a competitive natural gas price to emerge. Building on OECD Europe and OECD America experiences, this report sets out to assess perspectives for these changes in the Asia-Pacific natural gas markets. It identifies obstacles and opportunities for a competitive natural gas price in the Asian economies to emerge.