The LNG market remains an illiquid market, where trading based on long-term contracts with inflexible contractual terms is the mainstream. Market participants are hoping for a transformation of the LNG trading market into a liquid and open market.
The environment surrounding LNG trading has been undergoing significant changes in the last few years, including the fall in spot LNG prices stemming from the fall in crude oil prices since 2014 and the emergence of new LNG importers and suppliers. Nevertheless, the LNG market remains illiquid, with trading based on long-term contracts with inflexible contractual terms still the dominant market practice.
The purpose of this report is to bring to light the realities of a predawn market. We will first review the reasons for the need to develop an LNG trading market, investigate the situation at the forefront of the market through interviews in Singapore and Japan and highlight the position of the LNG market by comparing it to other commodity markets before reviewing the challenges and outlook for this market and offering market participants a perspective for the future as our conclusion.
Partner, KPMG FAS Co., Ltd.
Director, KPMG Consulting Co., Ltd.
© 2020 KPMG AZSA LLC, a limited liability audit corporation incorporated under the Japanese Certified Public Accountants Law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2020 KPMG Tax Corporation, a tax corporation incorporated under the Japanese CPTA Law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.