The gas hub in Asia
Bradley Farrell A B and Ajit Sandilya AA Ernst & Young, 11 Mounts Bay Road, Perth, WA 6000, Australia.
B Corresponding author. Email: bradley.farrell@au.ey.com
The APPEA Journal 57(2) 444-447 https://doi.org/10.1071/AJ16151
Accepted: 17 March 2017 Published: 29 May 2017
Abstract
Asia remains the last net importing region without a gas hub or a representative gas price. However, increased market liquidity and more transparent pricing presage the development of hub-based trading in the region. This paper assesses three potential locations for an Asia Pacific gas hub, considering for each location the critical enabling factors of infrastructure, markets and regulation. We suggest that an Asian gas hub will evolve, but as a tripod, with: (1) an active contract trading hub in Singapore; (2) a secondary physical hub for volume storage and transfer in Tokyo harbour; and (3) a tertiary balancing point as the ultimate price arbiter in Shanghai. We do not expect this Asian hub to mature fully until the mid-2020s. However, we do see many of the crucial elements already emerging.
Keywords: China, gas market, gas price, gas trading, Japan, liquefied natural gas, pipeline gas, Shanghai, Singapore, Tokyo.
Bradley Farrell is a Partner at EY and is the firm’s Oil & Gas Advisory Leader for Oceania. He specialises in providing advisory services to exploration and production companies, especially those with interests in LNG. Bradley’s oil and gas advisory experience includes assignments related to business transformation, asset strategy, enterprise performance management, business management systems, process analysis and improvement, organisation design and development and change management. Bradley’s experience covers capital projects, corporate and business services and operations. In his oil and gas sector role, Bradley monitors current and emerging issues, represents EY at industry events and participates in national and global consultations on energy-specific issues. |
Ajit Sandilya is a manager in EY’s Oil & Gas Advisory Services practice. With over 9 years experience with the oil and gas industry in Australia, Canada, India and the Middle East, Ajit provides strategic, operational and market advice, specialising in scenario development, strategic planning and operational efficiency. Ajit has also undertaken research into the economics of gas pipelines, trading dynamics in the global natural gas industry and offshore drilling regulation. His research is currently focused on the effect of Australian LNG exports on Asia Pacific gas markets and the role of storage facilities in oil and gas pricing. Ajit is a chemical engineer by training and holds an MBA in Natural Resources and Energy management. |
