Rising spot trade drives first Middle East-India LNG price index

SINGAPORE, July 5, 2016

Trade in LNG is increasingly moving to the Middle East after years centred on the major importing countries of northeast Asia. To provide much needed price transparency, global commodity market price reporting agency Argus has launched the first Middle East-India delivered ex-ship (des) LNG price, known as the Argus Middle East-India (MEI) Index™, in the Argus LNG Daily report. The new price is designed to capture the growing trade in LNG to supply rising demand from buyers in the Middle East and India.

Mideast Gulf states are among the world’s largest LNG producers and Middle Eastern and Indian buyers are turning away from term contracts to the spot market to procure gas for power generation and fertilizer and chemical production. Jordan and Egypt alone have imported more than 120 LNG cargoes since deliveries started last year. India, Dubai and Kuwait have also increased spot buying, partly to meet growing electricity demand.

The ability of buyers in the Middle East and India to import gas from around the world has encouraged growth in the region’s spot LNG trade. Cargoes from a range of traditional suppliers have moved to the region, as has gas from some of the newest LNG producers, including coal-bed methane operations in Australia and one of the first exports from the new US liquefaction plant at Sabine Pass on the Gulf coast.

The new Argus index is a reliable price reference for cargoes for delivery to Jordan, Egypt, Dubai, Kuwait and India. The index averages Argus’ assessments of the price of LNG for delivery to the Middle East and India, creating a single benchmark for use in trading, risk management and hedging across the region. Prices for four forward half-month periods are assessed and published each day, complementing Argus’ existing Asia-Pacific physical price assessments.

“Spot liquidity in the Middle East-India region has been driven not only by national importers, but also by trading firms with contractual term obligations in the region looking to backfill these positions in the spot market,” said Argus Media chairman Adrian Binks. “The Argus Middle East-India (MEI) Index responds to the need for a price reference for these deals.”

Argus’ new Middle East-India pricing complements the Argus LNG Daily report’s existing suite of global spot price assessments, market commentary and global netback pricing. The report includes the LNG industry’s first US Gulf coast free on board (fob) price assessments, which assess the price of US LNG exports six months ahead. Argus LNG Daily provides global LNG market participants with the critical insights, prices and statistics needed to stay ahead of market developments and to shape commercial strategies.