LNG pricing - Moving forward

While the bulk of global LNG volumes remain locked up in opaque long-term deals, attempts are being made to introduce price transparency and a forward curve to the market. Roderick Bruce investigates

Despite the increasingly important role that liquefied natural gas (LNG) plays in global energy supply, it still lacks a market-based mechanism and a forward curve to allow for efficient price discovery and risk management.

Traditionally, the vast majority of LNG supply deals have been long-term (typically 15-20 year) bi-lateral contracts between producer and consumer, with defined delivery points. Contract prices are usually indexed to a basket of other commodities, including Brent crude and