UK: ICIS Announces First Cleared LNG Swap Trade

The world’s first cleared LNG swap traded on 16 July. The contract settles on the ICIS East Asia Index (EAX) for physical LNG. The deal was brokered by Tradition over the CME Direct trading platform and has been cleared by CME Europe.

The deal was done for September at $13.90/MMBtu.

From 16 July the NYMEX also launched the East Asia Index (ICIS Heren) Swap futures contract for open outcry trading, having received approval from the Commodity Futures Trading Commission (CFTC). The product is to be cleared through CME ClearPort.

Four ICIS Heren LNG swaps, including the East Asia Index swap, were already available for clearing through CME Clear Europe, from 16 April.

“ICIS has been supporting trade in natural gas markets for over 18 years, since the first Heren Energy reports were launched. In 2007 we launched the first LNG spot market assessments. Since then, the growing volume of spot trade and market confidence in the ICIS prices have helped lay the foundation for this new era in LNG trade,” said Christopher Flook, Managing Director, ICIS.

Up to this point, there has been a very small over-the-counter swaps market for LNG, with a limited pool of counterparties and no clearing services.

“Clearing services and more active broking should accelerate liquidity growth in this market,” said Louise Boddy, Head of Gas, Power, Emissions and Coal at ICIS.

“The entrance of CME and Tradition promise to bring new counterparties and liquidity, helping the swaps to become more effective hedging tools. The ICIS EAX also provides the market with its first really accurate, transparent and reliable price benchmark.”

ICIS is the world leader in providing transparency for physical LNG trade. It publishes five regional indices and 21 country-specific assessments for spot LNG delivered into the world’s major LNG import terminals. It also publishes FOB assessments for all major producing regions and FOB reload assessments.

The EAX is an index for the DES price into Japan, South Korea, China and Taiwan. The prices for the four countries are also assessed separately. The price series has been published daily since June 2010. Relevant bids, offers and deals are also published.

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LNG World News Staff, July 17, 2012; Image: KOGAS