Singapore Suited to be Asian Gas Trading Hub

For Asia’s high gas prices to come down, the region needs to develop a trading hub and facilitate a market which better reflects supply and demand fundamentals.

Governments in the region need to work to allow markets to decide natural gas prices with minimal interference and through price deregulation, while also meeting institutional requirements to attract new market participants, Maria van der Hoeven, IEA executive director, told a Tokyo conference, Dow Jones Newswire reported.

"A key to improving functionality in the Asian gas market, that's to develop an Asian hub," Dow Jones quoted her as saying.

An IEA report released Tuesday said that while the system now could be beneficial in providing investment security, it didn't reflect the fundamentals and competitiveness of gas within the energy mix of mature economies where the gas is consumed.

Singapore seemed to be most suited in Asia to develop a competitive natural gas market and trading hub in the medium term, with Japan, Korea and China likely competitors in future, Dow Jones said citing the IEA report.

"The Asian natural gas market is the fastest-growing gas market worldwide, and is expected to become the second-largest by 2015, with 790 billion cubic meters of natural gas demand," the IEA said.