Abstract
Despite being the world’s largest LNG-consuming region and the fastest-growing LNG market, Asia still lacks an LNG trading hub and associated pricing benchmark that reflect the region’s gas market fundamentals and send a reliable price signal for imports. Recent changes in the LNG market have improved conditions for the emergence of one or more hub-based prices in Asia as an alternative to oil-indexation, the prevalent LNG pricing structure in the region. In addition, an oversupplied market has created a common need between buyers and sellers to find new ways to trade and finance LNG at a time of demand uncertainty and investment shortfalls. These developments not only would make the LNG market more open, transparent, and competitive by facilitating physical exchanges and hedging but also would bring broader benefits, including greater regional integration, enhanced energy security, and greener economic development. Singapore is well-positioned to serve as an LNG hub, given its geographic position; established trade, legal, and financial ecosystem; and progress toward assuming this role.
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