Tullet Prebon to launch India and Middle East focus LNG Index

Tullett Prebon, one of the world's leading interdealer brokers, is collaborating with Singapore Exchange (SGX) to develop a spot pricing index for the Indian and Middle East liquefied natural gas (LNG) markets to provide a credible, consistent and transparent pricing mechanism.
The new index, expected to be launched in the second quarter of this year, is to enhance price discovery and risk management in the region, it said in a statement today.
Following industry consultation, the new index will provide a transparent and trusted reference price for LNG Delivered Ex-Ship under flexible terms to key ports in Dubai, Kuwait and India (DKI).

The new DKI Sling Index will be published every Monday and Thursday by SGX, Asia's leading and trusted market infrastructure.
As the LNG market moves towards an oversupply situation, the role and relevance of spot and shorter-term contracts has increased, said Tullett Prebon.
However, the industry still lacks transparency and credible price references, it noted.

The Middle East and India region in particular has seen a boost in spot trade, but lacks an accepted price marker and market participants are often relying on tenders for price discovery, said the statement.
Those hedging physical exposures have limited options, and are using Far East LNG and/or UK oil and gas benchmarks to manage risk, noted Tullett Prebon.

The new index aims to provide a credible, consistent and transparent pricing mechanism, as the volume of LNG trades in the region continues to rise. It could also serve as a first step towards standardising LNG trade in the region, it said.
Melissa Lindsay, Global Head of LNG at Tullett Prebon, said: "Over recent years we have seen an increase in the volume of spot trade into the Middle East and India region and this new index will provide better price discovery and fair value to our clients.
"Over time there will be moments where the regional price decouples from the Far East LNG or European Gas prices, so it is important for an independent and trusted regional price," said Lindsay.

Janice Kan, Head of Commodities at SGX, said: "The winning combination of Tullett Prebon's extensive network and deep understanding of the LNG market, along with SGX's transparent and trusted methodology, will help the new index to develop as a benchmark for the region.