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At the end of the 1980s, South Korea and Taiwan followed Japan, introducing oil indexation (JCC-indexed price) as they were increasing LNG imports. This paper sets out to evaluate the extent of potential changes in the regional market. The ultimate rationale is to determine the main factors, which Russia and its oil and gas companies should take into account when forming their strategy in the APR.
Henry Hub Natural Gas Futures Quotes Globex
Overreliance on gas generation assets could mean higher prices for electricity customers during severe weather events, such as the polar vortex of 2013-14, or other interruptions in supply or delivery. The new larger domestic inventory and resulting lower price of natural gas are having a profound effect on the energy industry. Natural gas futures prices are based on delivery at the Henry Hub in Louisiana. IEA. Medium-Term Gas Market Report 2015. Ed.
Energy Prices Report
Moreover, the price does not reflect basic characteristics of the gas market (in fact, HH-linkage would denote a price in the Asian market that would be oriented towards the balance of supply and demand in the US). The majority of natural gas in the Asia Pacific region is sold under long-term contracts.
This included the North-eastern provinces Heilongjiang and Jinlin. On the one hand, the pricing reform did not make it possible to fully move away from regulated prices. On the other hand, as prices rose, the reform created conditions for setting up http://socledumonde.org/kurs-cardano-na-segodnja/ platforms to sell surplus gas. It is not our intention to say that these trading areas are competing for the role of the central hub (this seemed to be one of the objectives of the IEA study on gas hubs in Asia [Ten Kate, Varro, Corbeau, 2013]).
Linkage to Henry Hub prices cannot be preferred over other pricing mechanisms on a regional scale. The price formed within this system would not reflect http://multinirmalaindonesia.com/rynok-akcij-saudovskoj-aravii-zakrylsja-padeniem/ the basic characteristics of the Asian gas market. In fact, HH-linkage would denote a price guided by the balance of supply and demand in the US.
- In Asia, most often a cost plus of import prices is passed onto the final customer, and most often without any competitive alternative or benchmark.
- This indexation option is attractive in Asia only in conditions of high oil prices and low HH prices.
- This price accounts for capacity reproduction costs.
- For high and low JCC prices, smoothing coefficients are used with the aim to protect LNG buyers and suppliers respectively from extreme volatility of oil product prices.
The pricing mechanism is most often named as the reason for disparity in price levels. For the APR, this reason is the dominant use http://sar.inmost.ir/?p=14020 of oil price linkage under long-term contracts. This paper discussed alternative pricing mechanisms in the APR natural gas market.
Taking into account the interests of the Russian companies with prospects of increasing their presence in the Asia-Pacific gas market, we can make the following conclusions. It is clear that an "ideal" model of gas pricing in the Asia-Pacific region does not exist, as there is no consensus among key importers on the preferred mechanisms.
As of the beginning of 2014, Chubu Electric and GDF Suez have been using new contracts with a tie to JKM, for the period to March 2016 [Platts., 2014; 2015]. Figure 3.
average prices — a standard coefficient of 0.1485 is used. For high and low JCC prices, smoothing coefficients are used with the aim to protect LNG buyers and suppliers respectively from extreme volatility of oil product prices. As a result, the graph of LNG price dependence on JCC has the shape of letter S, which is where this mechanism takes its name from. More detail is given in [Flower, 2008].
The main LNG importers — Japan, Korea and Taiwan — have a high proportion of demand covered by "contracted" supplies; in the period to 2025, these countries are not expected to generate additional LNG spot demand. China and India, on the https://sunday.deals/2019/10/01/stratis-kriptovaljuta-osobennosti-preimushhestva-i/ contrary, are characterised by a fairly low proportion of "contracted" supplies to cover demand. Therefore, development of the regional market outside the current price mechanisms to a large degree depends on this group of importers.