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The development of the liquefied natural gas spot market: origin and implications

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  • Yves Jégourel

Abstract

Due to the existing geographical distance between the main consumption and production regions and the resulting significant logistical costs, the liquefied natural gas (LNG) market has historically been structured around long-term supply contracts indexed to oil prices. With the recent development of shale gas and sluggish European growth, excess LNG supply now fosters the development of spot markets, particularly in Asia, by nature more flexible and disconnected from oil prices. In this light, it is not impossible that the LNG industry becomes financialized on a relatively long-term basis.

Suggested Citation

  • Yves Jégourel, 2016. "The development of the liquefied natural gas spot market: origin and implications," Policy notes & Policy briefs 1602, Policy Center for the New South.
    • Handle: RePEc:ocp:ppaper:pb-1602
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    References listed on IDEAS

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    1. Christian Hirschhausen & Anne Neumann, 2008. "Long-Term Contracts and Asset Specificity Revisited: An Empirical Analysis of Producer–Importer Relations in the Natural Gas Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(2), pages 131-143, March.
    2. Stephen P. A. Brown and Mine K. Yucel, 2009. "Market Arbitrage: European and North American Natural Gas Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 167-186.
    3. Natasha Cassidy & Mitch Kosev, 2015. "Australia and the Global LNG Market," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 33-44, March.
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    Keywords

    commodity ; contrats; energy; oil prices; spot markets; spot; natural gas;
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