Tuesday, February 26, 2013

IEA Report Released: Developing a Natural Gas Trading Hub in Asia

Recently, the International Energy Agency (IEA) "an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond," released a new report titled, Developing a Natural Gas Trading Hub in Asia (2013). The 86-page report is available here:
Among the report’s key findings and recommendations are the following:
  • Current market structures discourage gas consumption and impact Asian competitiveness vis-à-vis more flexible markets in the US and even Europe;
  • OECD experience suggests that the single biggest obstacle for an effective gas market is a lack of infrastructure access;
  • The role of governments must change: Instead of focusing on price regulation along the value chain, governments must maintain and supervise competitive market conditions;
  • Credible state commitment to regional gas market competition can instill confidence, encourage new market participants, and promote the use of transparent hubs to balance producer portfolios;
  • Transport and commercial activities should be separated and prices deregulated at the wholesale level;
  • Singapore holds the best initial prospects for gas hub development, with Japan, Korea, and China as likely competitors in the future.

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