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Asian Gas Buyers Trying To Break Out Of Rigid Market Structure

Date 05-April-2014
Subject Asian Gas Buyers Trying To Break Out Of Rigid Market Structure

Asian gas and power companies are starting to pair up for joint purchases of LNG after more ambitious efforts to form a regional group to win lower prices and less rigid contracts have stalled.

Japan, India, South Korea and other Asian gas importers - who take about 70 percent of global liquefied natural gas (LNG) exports - have been trying to form a buyers' club to use their dominant market presence to delink contract prices from oil and allow importing companies to resell any excess cargoes.

But after two meetings to discuss a regional buyers' group last year, a third was cancelled in February and no others have been scheduled. The issue was also not on the official agenda last week at a gas industry conference in South Korea.

Tired of a lack of progress on the government-led initiative, a number of firms - including Japanese power companies and state gas utilities in India and South Korea - are looking at other ways to buy LNG collectively, with the gain of any advantage becoming more critical as import costs soar.

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