Consumers of liquefied natural gas on Wednesday called for more flexibility in how the fuel is traded in Asia. Rigid contracts and prices linked to those of crude oil have been seen as obstacles to steady development of the LNG market.
Although consuming nations have welcomed a recent fall in LNG prices in parallel with lower crude oil prices, LNG is traditionally traded at higher prices in Asia than in other parts of the world, characterized by large-volume, long-term contracts that often span 20 years.
"A market that is flexible and can function better will provide benefits for producing and consuming countries," Japanese Economy, Trade and Industry Minister Yoichi Miyazawa said in a speech at the LNG Producer-Consumer Conference, which his ministry hosted.
Jae Do-moon, South Korean vice minister of trade, industry and energy, said highly flexible supply contracts and competitive prices are needed if LNG is to be chosen by buyers despite cheaper oil prices and increasing production of shale gas.
Jae proposed that Northeast Asian nations embark on joint study of questions such as how to form LNG prices.
Fatih Birol, head of the International Energy Agency, said that the golden age of natural gas still remains a dream for many, as resources such as coal and renewable energy are gaining ground globally.
Still, demand for LNG in Asia is increasing, and boosting its competitiveness against other energy sources is necessary for growth of the natural gas market, Birol said.
Japan has hosted the conference since 2012. Energy ministers as well as over 1,000 businesspeople and government officials from more than 50 nations participated in the fourth meeting.