Business Times: Volatility in Oil Prices Won't Derail Singapore's LNG Ambition

Even as Singapore puts in place the building blocks to become a trading and pricing hub for liquefied natural gas (LNG), current market conditions mean that volumes in the spot market - crucial for its development as a hub - might dip in 2015.

Nevertheless, such short-term fluctuations would not derail the country's ambitions, as it looks set to ride a wave of supply expected to come on stream in a few years, say market observers.

Most gas prices in Asia - which consume 75 per cent of the world's LNG - are indexed to oil. With crude oil price having fallen some 40 per cent since June, and as oversupply looms, prices for LNG in Asia are expected to fall up to 30 per cent this year, Reuters reported, citing a survey of analysts and consultants.

"If oil prices continue to remain low in 2015, buyers are not incentivised to purchase volumes in the spot market," said Chong Zhi Xin, a senior gas and power analyst for Wood Mackenzie. Liquidity in the spot market, which accounts for about 15 per cent of total trade in Asia compared to 30 per cent globally, is important for Singapore to develop as a trading hub. MORE