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01.04.2013 11:48Japan to Launch LNG Futures by 2015
LNG futures will allow consumers and producers to hedge against price swings, while challenging the current method of linking the fuel’s cost to oil
© Lens Envy@flickr.com
Japan, the biggest buyer of liquefied natural gas, plans to list the world’s first futures contract for the fuel on the Tokyo Commodity Exchange within two years, the country’s ministry of economy trade and industry said.
The futures will be for cash settlement in dollars and based on an index price for spot LNG cargoes delivered to Japan, Bloomberg reported. While the contracts would not be for physical delivery, they would allow Exchange Futures for Physical (EFP) transactions that enable traders to swap their futures positions for a physical holding.
LNG futures will allow consumers and producers to hedge against price swings, while challenging the current method of linking the fuel’s cost to oil. That’s more important after Japan’s bill for LNG climbed to a record last year, helping push the nation’s trade deficit to an all-time high of some EUR 57 bn, as it switched to thermal electricity generation after the shutdown of its nuclear plants. Customs data show that last year Japan imported a total of 87.3 metric tons of LNG at the cost of 6 trillion yen (about EUR 50 bn).
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