India, Japan plan joint procurement of LNG

Asia's demand for LNG rising on back of nuclear plant shutdowns in Japan

India and Japan are planning to jointly procure Liquefied Natural Gas (LNG). The modalities for the plan will be worked out in three months, petroleum secretary Vivek Rae said here.

Asia's demand for LNG is rising at the back of nuclear plant shutdowns in Japan and and the shift toward renewable energy China.

According to Robert  Oushoorn, Partner at European Gas Team, Booz & Company, ‘’ Hub Pricing”  mechanism should be used for concluding natural gas prices for commercial transactions rather than fixing natural gas pricing on long term contracts.

Henry Hub Natural Gas (NG) Futures allow market participants significant hedging activity to manage risk in the highly volatile natural gas price, which is driven by weather-related demand. They also provide efficient transactions in and out of positions.

Speaking on a ‘Legal, Regulation & Pricing Trends in International Gas Market’ on the concluding  day of  8th Asia Gas Partnership Summit  here today, he said the key reason for price shift in Europe based on long term natural gas contracts is that it had become over-contracted.

In such an arrangement, the price of natural gas did not either lower or minimize, he said, adding that EU policy on natural gas provides for reduced price mechanism under provisions of its natural gas legislation that is applicable to its 28 countries.

Petroleum ministry's Additional Secretary, Rajive Kumar, who was also speakig at the conference, said the Asian region would have to scale up production for natural gas trade by 2020 even as the Middle East becomes second- largest consumer of natural gas.