Gas and LNG pricing and trading hub in East Asia: An introduction

This paper summarises the four papers in the special issue on ‘Gas and LNG pricing and trading hub in East Asia’ in Natural Gas Industry B.

The papers examine lessons and experiences from European hub development, other commodities, Japan's history of developing futures markets and inter-fuel substitution in East Asia. The papers find that the liquid futures market is the key to formulating benchmark prices while a well-developed spot market is the foundation; political will and strong leadership are required to overcome the power of incumbents and restructure the gas market that impedes the development of competitive markets; and East Asia needs to develop its indigenous gas or LNG trading hubs even in this period of low oil prices, and its developing market allows easier changes to new contracts than existing ones. This hub development requires governments to go through tough domestic market reforms, including liberalisation and cooperation with each other and with gas exporters.