Sept 21 Asia's energy-hungry nations may be
finally making headway in their push to scrap oil-linked natural
gas prices as the high cost of the fuel threatens economic
growth, especially in Japan, the world's top importer of
liquefied natural gas.
Removing the link between gas prices and oil and moving to
the so-called hub pricing would drastically cut the cost of
importing natural gas, but producer countries like Qatar have
long opposed such moves. For a related story:
Following is a selection of comments from participants at
LNG Producer-Consumer Conference held in Tokyo on Wednesday.
Comments came from speeches or abstracts of speeches compiled by
the Japanese government.
YUKIO EDANO, JAPANESE TRADE MINISTER
"With the paradigm shift due to full-fledged production of
shale gas, oil-linked indexing is starting to be less
reasonable. If new suppliers from North America, Russia and
Africa enter Asian markets in a few years, it will no longer be
"At current price levels, the use of coal and nuclear power
has to rise, which would hurt LNG demand for a long time. To
come up with a new method to replace oil-linked indexing is an
agenda that both producers and consumers have to tackle to
stabilise global LNG demand/supply."
MOHAMMED AL-SADA, QATARI ENERGY MINISTER
The minister predicted that North American shale gas is
unlikely to alter the current divide between the three main
regional LNG markets and does not see global producers embracing
future long-term supply contracts pricing delinked with oil.
"The success of the long-term LNG trade model is based on
the balance between sellers and buyers with a paramount emphasis
on reliability and performance. Securing future energy needs is
dependent on the investments we make today. Making available
future resources requires a stable investment environment.
Uncertainty and volatility could, however, discourage long-term
MARTIN FERGUSON, AUSTRALIAN MINISTER FOR RESOURCES AND
"(Australia) welcomes the increasing trend for LNG buyers to
take equity stakes in projects as the best means of achieving
long-term alignment throughout the supply chain.
"Greater cooperation in the Asia-Pacific market will be
particularly important in managing the global gas price
differential that is currently being driven by development of
unconventional supplies for the U.S. domestic market."
JOE OLIVER, CANADA'S MINISTER OF NATURAL RESOURCES
"A key strategic objective for Canada is to diversify its
energy markets, particularly to the Asia-Pacific region, where
demand is increasing.
"Based on projects proposed, Canada could export the
equivalent of 9 billion cubic feet per day of natural gas as
LNG, or 66 million tonnes of LNG annually."
HONG SUK-WOO, SOUTH KOREA'S KNOWLEDGE ECONOMY MINISTER
"It is important that both producers and consumers exchange
honest opinions on prices and contract varieties."
LIN SHENG CHUNG, CHAIRMAN, CPC CORP, TAIWAN
"Currently, CPC is interested in entering into a U.S. Henry
Hub gas-linked contract to improve CPC's price competitiveness
in LNG procurement since the crude oil price fluctuates all the
PHILIPPE SAUQUET, PRESIDENT OF GAS & POWER, TOTAL, FRANCE
"Global LNG demand will rise 4.5 percent per year during the
20 years from 2010 to 2030. Tight gas supply/demand will support
European and Asian gas prices in future."
TSUYOSHI OKAMOTO, PRESIDENT, TOKYO GAS CO
"Japan's LNG prices have deviated significantly from
internationals norms. If this discrepancy continues, it will
result in curbed natural gas consumption and conversion to other
energy sources. Therefore, we aim to bring East Asia LNG prices
into convergence with international standards by introducing the
link to U.S. Henry Hub and European gas prices."
PROF. JONATHAN STERN, OXFORD INSTITUTE FOR ENERGY STUDIES
"The gas pricing system in the three markets is no longer
logical. European prices have started to reflect Henry Hub
prices and the situation is changing. Russian gas has also moved
to near the levels of Henry Hub."
"Japan's oil-link indexing is illogical. Even if it takes
time setting up Asian markets, LNG prices should be linked to
KEN KOYAMA, MANAGING DIRECTOR, IEEJ, JAPAN
IEEJ proposed a new Asian price formula, introducing Henry
Hub pricing as an element into oil-linked indexing.
"As a result of a decline in oil consumed for power
generation, the competitive relationship of gas and oil has
weakened and oil-linked indexing is no longer reasonable. It's
inappropriate to link to oil prices that are strongly swayed by
HARI KARYULIARTO, GAS DIRECTOR, PERTAMINA, INDONESIA
"Indonesia's domestic gas demand is robust, and it is the
new role for Pertamina to supply gas to domestic markets in
addition to exports.
"The differential between Indonesia's domestic gas prices
and Henry Hub international prices will narrow gradually."
RADHAKRISHNAN GUHAN, DEPUTY GENERAL MANAGER, ONGC, INDIA
"Our present LNG import capacity has exceeded 10 million
tonnes per year (mtpa) and is set to rise to 53 mtpa in the next
"India is making efforts to get Henry Hub linked LNG
pricing. However, we do understand that suppliers have to be
adequately incentivized to keep investments going into LNG
(Reporting by Osamu Tsukimori; Editing by Aaron Sheldrick and
(email@example.com, +813 6441 1857, Reuters