LOC11:08
08:08 GMT
The Tokyo Commodity Exchange
TOKYO, Nov 8 (KUNA) -- The Tokyo Commodity Exchange plans to tie up with a
Singapore company this fiscal year to create an over-the-counter market for
liquefied natural gas (LNG), a major Japanese business daily reported Friday.
The exchange operator, Tokyo Commodity Exchange Inc., will call on trading
houses as well as power and gas companies to trade on the planned market,
according to the Nikkei Shimbun. The move is aimed at setting a benchmark LNG
price that reflects the actual LNG supply-demand balance, the daily said.
The Tokyo Commodity Exchange and the Singapore-based Ginga Petroleum Pte
Ltd. will set up a new company to operate the LNG market, the report said,
adding that it will be the first step toward an LNG futures market, which
Japan's Ministry of Economy, Trade and Industry has been pushing for.
Japan, the world's largest LNG importer by volume, currently purchases LNG
at prices about four times higher than those in the US. Lowering LNG
procurement costs is one of the ministry's top priorities, and the ministry
plans to list LNG futures on the new market in fiscal 2014.
Ginga will likely have a 60 percent stake in the new company; the Tokyo
Commodity Exchange will hold the remainder. The new company will also act as a
broker that encourages trading among market participants.
Ginga engages in brokering services for petroleum products in Singapore.
Currently, Japan buys about 80 percent of its LNG imports through a system
that grossly distorts LNG prices on the high side.
The prices Japan pays are based on 10 to 20-year contracts linked to crude
oil prices. In the US and UK, which have abundant sources of natural gas, LNG
prices are determined by the overall natural gas market.
While Japan's LNG import prices have been high - they follow crude oil
prices - US natural gas prices have dropped on growing shale gas output and
other factors. (end)
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