Foreign Policy: The Winners and Losers From Falling Asian Gas Prices

The swoon in oil prices is driving another big change in global energy markets — a collapse in the price of liquefied natural gas in Asia. That promises big implications for producers and consumers alike and could even have knock-on effects on Russia’s plans to shift more of its energy business to the east.

For years, Asian countries such as Japan and South Korea have been the biggest importers of tankers full of liquefied natural gas (LNG), and as a result, the region has always paid more than other parts of the world. That so-called “Asian premium” grew so big early last year, thanks to rising oil prices and steadily growing demand for gas, that countries such as Japan paid five times as much as the United States did for the clean-burning fuel.

Now that premium is evaporating, making gas cheaper for big Asian buyers — and making the future a whole lot darker for gas exporters like the United States and Australia. Delivery prices for LNG in Japan reached $20 per million British thermal units in March 2014, twice as high as prices in Europe. One year later, LNG prices in Asia have plummeted to about $7 — slightly lower than what Europeans now pay. MORE