Tullett Prebon, SGX to launch Middle East, India LNG index
London-based interdealer broker Tullett Prebon, joined forces with Singapore Exchange (SGX) to develop a spot pricing index for the Middle East and Indian LNG markets.
The new index aims to enhance price discovery and risk management in the region, according to Tullett Prebon’s statement.
Following industry consultation, the new index will provide “a transparent and trusted reference price for LNG Delivered Ex-Ship under flexible terms to key ports in Dubai, Kuwait and India.”
As the LNG market moves towards oversupply, the role and relevance of spot and shorter-term contracts has increased. However, the industry still lacks transparency and credible price references.
The Middle East and India region, in particular, has seen a boost in spot trade but lacks an accepted price marker and market participants are often relying on tenders for price discovery. Those hedging physical exposures have limited options, and are using Far East LNG and/or UK oil and gas benchmarks to manage risk.
The new index, to be published twice a week by SGX, aims to provide a credible, consistent and transparent pricing mechanism, as the volume of LNG trades in the region continues to rise. It could also serve as a first step towards standardizing LNG trade in the region.
The launch of the index is expected in the second quarter of 2017. The DKI index will form part of the SGX LNG Index Group or ‘Sling’ series of indexes.