SGX, TOCOM sign agreement to develop LNG market in Asia

SINGAPORE Exchange (SGX) and the Tokyo Commodity Exchange Inc (TOCOM) have signed a memorandum of understanding (MOU) to cooperate in developing the liquefied natural gas (LNG) market in Asia.

This, as the region accounts for over 60 per cent of the world's LNG demand.

The two bourse operators will also share their experiences in developing electricity futures.

The signing of the MOU was announced on Tuesday, ahead of the fifth annual LNG Producer-Consumer Conference in Tokyo, which will be hosted by Japan's Ministry of Economy, Trade and Industry and the Asia-Pacific Energy Research Centre later this week.

Singapore has emerged as Asia's LNG trading hub with more than half of global supplies passing through its proximity each year, while Japan is the largest consumer of the fuel in the region.

"Together, the two countries will play an important role in enhancing price discovery of spot LNG in Asia - a critical component of the industry's move towards gas-on-gas pricing based on an Asian LNG price, away from long-term contracts and pricing linked to oil," the two parties said.

SGX listed Asia's first electricity futures in 2015 and will share its experience with TOCOM as Japan looks to develop similar products.