LNG PRICING:IMPACT OF GLOBALIZATION AND HIGH PRICES ON LONG TERM CONTRACT NEGOTIATIONS

摘要

Recent 'spot transactions' have demonstrated a link between Atlantic bound related transactions and Asian requests for additional cargos on top of long term commitments traditionally priced on crude oil: Will this trend towards globalization in short term transactions translate into a similar phenomenon in long term contracts? What are the implications in terms of Price Review mechanisms? Are we moving towards a global LNG price benchmark and if yes,what would it be? What would be the main drivers behind such trend and which actors would initiate it? If so what about the impact on the gas-oil linkage:will it be definitely forgotten or rather reinforced? Economic theory would support such globalization of price structures based,among other things on: Emergence of swing producers in the Middle East, Emergence of swing customers essentially in the Atlantic which have increased the options available to LNG marketers. However,the LNG industry structure and the players' expectations tend to counter this evolution towards a single price mechanism.The idea developed in this paper is that 2 different LNG markets,in Atlantic and in Asia-Pacific,will keep their own dynamics for a foreseeable future. Hence,the pricing issue,although not the only one,should remain a major hurdle to overcome by LNG project promoters to finalize long term contracts for green-field projects even in a 'sellers' market'.