Asian spot prices for LNG and other energy commodities

Abdullahi Alim; Peter R. Hartley; Yihui Lan

doi:10.5547/01956574.39.1.aali

Asian spot prices for LNG and other energy commodities

Abdullahi Alim, Peter R. Hartley, Yihui Lan

Research output: Contribution to journal › Article › peer-review

3 Citations (Scopus)

Abstract

We investigate the relationship between the Japan-Korea Marker (JKM) price of LNG, which has become more important as spot trading of LNG has increased, and spot prices of Brent oil, fuel oil and thermal coal in Asia. We find that the JKM price appears to reflect inter-fuel competition in Asia. In this respect, it could be better than oil or other spot natural gas prices as a reference price for indexing long-term LNG contracts in Asia. The JKM may also be suitable for underpinning the development of an LNG pricing hub in Asia with associated derivatives markets.

Original language	English
Pages (from-to)	123-141
Number of pages	19
Journal	Energy Journal
Volume	39
Issue number	1
DOIs	https://doi.org/10.5547/01956574.39.1.aali
Publication status	Published - 1 Jan 2018

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title = "Asian spot prices for LNG and other energy commodities",

abstract = "We investigate the relationship between the Japan-Korea Marker (JKM) price of LNG, which has become more important as spot trading of LNG has increased, and spot prices of Brent oil, fuel oil and thermal coal in Asia. We find that the JKM price appears to reflect inter-fuel competition in Asia. In this respect, it could be better than oil or other spot natural gas prices as a reference price for indexing long-term LNG contracts in Asia. The JKM may also be suitable for underpinning the development of an LNG pricing hub in Asia with associated derivatives markets.",

keywords = "Asia, Cointegration, Inter-fuel competition, LNG, LNG contract trades, Spot energy prices, Vector error correction models",

author = "Abdullahi Alim and Hartley, {Peter R.} and Yihui Lan",

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AU - Hartley, Peter R.

AU - Lan, Yihui

PY - 2018/1/1

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N2 - We investigate the relationship between the Japan-Korea Marker (JKM) price of LNG, which has become more important as spot trading of LNG has increased, and spot prices of Brent oil, fuel oil and thermal coal in Asia. We find that the JKM price appears to reflect inter-fuel competition in Asia. In this respect, it could be better than oil or other spot natural gas prices as a reference price for indexing long-term LNG contracts in Asia. The JKM may also be suitable for underpinning the development of an LNG pricing hub in Asia with associated derivatives markets.

AB - We investigate the relationship between the Japan-Korea Marker (JKM) price of LNG, which has become more important as spot trading of LNG has increased, and spot prices of Brent oil, fuel oil and thermal coal in Asia. We find that the JKM price appears to reflect inter-fuel competition in Asia. In this respect, it could be better than oil or other spot natural gas prices as a reference price for indexing long-term LNG contracts in Asia. The JKM may also be suitable for underpinning the development of an LNG pricing hub in Asia with associated derivatives markets.

KW - Asia

KW - Cointegration

KW - Inter-fuel competition

KW - LNG

KW - LNG contract trades

KW - Spot energy prices

KW - Vector error correction models

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VL - 39

SP - 123

EP - 141

JO - Energy Journal

JF - Energy Journal

SN - 0195-6574

IS - 1

ER -

Asian spot prices for LNG and other energy commodities

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