Oil-linked LNG may be here to stay after spot market skyrockets

Hellenic Shipping News | Jan 18, 2021 at 1:00 AM
  • A blistering 1,000% rally in Asian spot liquefied natural gas (LNG) prices since July has undermined buyers’ enthusiasm for relying solely on the spot market, and means archaic oil-linked contracts are here to stay, industry sources told Reuters.
  • The allure of hybrid contracts tied to spot gas prices has diminished, however, following the recent volatility.
  • Oil contracts are typically easier to hedge against Asian gas price risk as the oil derivatives market is more liquid and easier to access than the nascent and thinly-traded Asian LNG derivatives market.