LNG-BASED PRICES BEST OPTION FOR LONG-TERM PRICING: STATOIL
As the LNG spot market becomes more liquid, an LNG-based pricing reference that is reflective of the commodity’s supply and demand balance will be the most robust option for its long-term pricing, Statoil’s Senior Vice President for Marketing and Trading Tor Martin Anfinnsen said Monday.
“We believe in long-term pricing relationships that reflect the market over time,” Anfinnsen said in an interview with Platts on the sidelines of the Singapore Energy Summit held October 26.
“A commodity that is priced off itself and has a separate price established for that commodity is more robust than a price that is derived from some other commodity,” he added.
An LNG-based price is not only more reflective of the market fundamentals than oil-linked prices, but also more sustainable in the long term and fair to both buyers and sellers, especially as the Asian markets become increasingly competitive, he added.
Asked about the use of gas hub prices such as the UK’s National Balancing Point and the US’ Henry Hub in LNG long-term contracts, Anfinnsen said: “In the current situation, we are reluctant to go with either one of them, not because we do not believe in the NBP per say, nor that we do not believe in the Henry Hub.
“But locking into one or the other in some sort of structure, if that proves to be different from where the main market is going, would not be beneficial for either one of us.
“We would encourage the development of an LNG price per say,” he said. “Platts is trying to do that and that is an interesting development.”
Statoil is a Norwegian state-owned oil and gas company with operations in 37 countries.
The company is responsible for marketing approximately 70% of total Norwegian gas exports and is the second largest supplier of natural gas to the European market, with a market share in the EU market of approximately 15%.
Statoil also markets LNG from the Snohvit field in the Barents Sea to customers globally.