Baku, Azerbaijan, Feb. 27
By Emil Ilgar, Fatih Karimov - Trend:
LNG and natural gas should be de-linked from the oil price as a means of pricing gas, Sam Barden, the director of Wimpole International, an energy market development company, told Trend.
Asian spot LNG prices have decreased by more than 50 percent in 2015 to below $10 per million British thermal units (mmBtu).
However, the figure has been decreased again in 2016 and plunged to below $5 in first 2 months of current year.
Iran is preparing to put additional $2.5 billion of investment to complete a yearly 10.4-million ton capacity LNG plant, while it is talking with Oman to liquefy its gas in Oman's LNG plants with 2.5 million ton idle capacity annually.
"De-linking gas prices from oil will in turn add to the move towards spot pricing of gas, rather than long term take or pay contracts," Barden said.
"I think that we will see a series of exchange based regional spot pricing hubs, and that we will focus more on consumer demand in the region directly rather than export demand. However, the regional pricing will set the export price," he added.
Barden further said that one should not discount the effect that an increased use of renewable energy will have on the pricing of the hydrocarbon market by keeping prices low.
According to the International Energy Agency, the share of renewable energy in global power generation rising to over 26 percent by 2020 from 22 percent in 2013.
Barden said that in the medium to long term, if LNG does de-link from the oil price, then it would be expected that LNG outperforms oil and coal on a relative price basis.
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