Hub-Indexation Continues to Gain Share in LNG Trade

(Greg Molnar) Hub-indexation continues to gain share in LNG trade, rising to over 40% in 2019, according to the latest price survey of the International Gas Union. And it is even more impressive, when we consider, that hub-indexed volumes accounted for 80% of LNG trade growth since 2014.

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This has been largely driven by the surge in US LNG exports and their Henry Hub indexed contracts since 2016, and the growing share of spot cargoes delivered to northwest Europe (where hub-indexation is the only pricing option by now).

What is your view? Will hub-indexation overtake oil pricing in the coming years? There is approx. 200 bcm/a of LNG contracts expiring in the next 5 years… on which terms they will be renewed?

And will emerging markets be able to benefit from this transformation? Is is time to fast-track gas market reforms and setting up liquid hubs across Asia?

Source: Greg Molnar

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