SGX, Tullett Prebon to launch spot pricing index for Middle-East, India LNG markets

Pedestrians walk through the reception of the Singapore Exchange Ltd. (SGX) headquarters in Singapore.
Pedestrians walk through the reception of the Singapore Exchange Ltd. (SGX) headquarters in Singapore.PHOTO: BLOOMBERG

SINGAPORE - Singapore Exchange (SGX) is developing a spot pricing index for the Middle East and India liquefied natural gas markets (LNG) in collaboration with inter-dealer broker Tullett Prebon.

They expect to launch the new index in the second quarter of this year, the companies announced on Monday (Jan 23).

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, they said.

The new Dubai-Kuwait-India (DKI) Sling Index will be published every Monday and Thursday by SGX, adding to its Sling series of indexes beyond the Singapore and Northeast LNG markets.

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 Tullett Prebon. Those hedging physical exposures have limited options, and are using Far East LNG and/or UK oil and gas benchmarks to manage risk, it added.

"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 Melissa Lindsay, global head of LNG at Tullett Prebon.

Said Amreeta Eng, group director for trade promotion at International Enterprise Singapore: "It is encouraging to see Singapore Exchange extending its service offerings in the LNG space. As LNG markets become more spot-based, this strategic partnership between SGX and Tullett Prebon will pave the way towards more transparent, trusted and reliable price discovery benchmarks. Singapore is emerging as a key LNG hub, with storage, trading, shipping and price discovery activities, and we look forward to more industry-led initiatives to develop the LNG markets."