First Singapore LNG derivatives contract traded

Singapore Exchange on Monday revealed the first trade of the new SGX FOB Singapore SLInG LNG derivatives contracts between Trafigura and Pavilion Gas. 

The two companies traded a total of 10,000 mmBtu of SGX free-on-board (FOB) LNG swaps in the March 2016 contract, SGX informed in a statement.

The transaction was based on the FOB Singapore SGX LNG Index Group (SLInG), a spot price index for Asian LNG based on contributions from 20 major physical participants, including a balanced mix of buyers, sellers and traders.

According to SGX, the FOB Singapore SLInG LNG derivatives contracts addresses ongoing market developments where the dynamics of price formation and risk management in the LNG market are becoming increasingly important. This is on the back of an onslaught of new supply capacity, softer demand from several traditional buyers, rising short-term spot sales and less predictable trade flows.

Tan Chin Hwee, CEO Asia Pacific, Trafigura, said, “We believe increased participation in this market will contribute to improving transparency and liquidity and reducing the risk for the Asian LNG market and ultimately enhancing customer security of supply.”

LNG World News Staff