Month: October 2016

Yet-to-find are in place volumes after integration of the chance of exploration success.

Platts Japan Korea Marker is the LNG benchmark price assessment for spot physical cargoes delivered ex-ship into Japan and South Korea.

As these two countries take the largest share of LNG imports in the world, Platts JKM is thus a key reference in marking product value/market price from supply source to the destination market.

In the LNG market space, traditional patterns of trade are evolving fast; where cargoes once changed hands only through opaque bilateral deals, the market now exhibits open sell and buy tenders for multiple and single cargoes, brokered trades, cargoes sold in longer chains and speculative trading positions taken up by non-traditional players, adding to liquidity on the spot market.

The JKM benchmark is reflective of a typical cargo being traded in Northeast Asia. For cargoes being bid and offered within the region which are outside of the regular range, Platts incorporates the value of non-typical cargoes by adjusting the value to reflect their deviance from the standard. E.g If the offer is for delivery only to Tianjin in China, rather than all of Northeast Asia, then the offer is adjusted downwards, as it is a less flexible cargo. Or if the cargo is for delivery to a non-standard delivery point, it is adjusted via a freight differential.

When Platts explains that a bid was normalized to $x/MMBtu on richer specifications as well as larger cargo size, it means that given the bid was for a cargo of higher gas spec than their standard, and the cargo size is larger than their standard, they normalized the bid price down, in order to reflect the greater difficulty in someone trying to meet the requirements.

 

Because of the fundamentals of gas, secondary market for oil is more developed than that for gas which still relies more on long term contracts.

The secondary market is essentially the oil trading market. The same cargo or parcel of oil can change hands many times before it is actually loaded on a tanker or delivered. It’s also the basis of the oil derivatives market and enables producers, suppliers and traders to hedge their positions or take long or short positions into the future depending on what they think is the future direction of oil prices. The fact that there is more of a secondary market in oil then gas reflects one of the fundamental differences between the two products.

Oil can more or less be shipped anywhere in the world that a tanker can unload; gas tends to have fixed supply chains determined by pipeline connections or LNG chains. So, secondary markets in gas tend only to be located at hubs where multiple pipelines can deliver/offtake gas e.g. Henry Hub in USA or Zeebrugge in Belgium.

Energy subsidies lead to large fiscal costs at the expense of vital spending on health, education and infrastructure. In addition, they lead to wasteful consumption. Some of the oil exporting countries are amongst the most energy intensive and least energy efficient economies. Energy subsidies engender a bias in favor of energy intensive industries. More important, such subsidies are also inequitable since they mostly benefit the rich. in certain regions, fuel subsidies also encourage cross-border smuggling and they also aggravate the level of pollution.

Once a country provides energy subsidies it is very hard to reduce them and many countries are struggling with the political challenges and instability caused by attempts to reform such subsidies as people resist what they believe to be their entitlments.

The indirect means of redistributing oil and gas rent through subsidies, transfers and free public services is inefficient, inequitable and unsustainable. In considering options for redistribution oil wealth, oil producers must assess the comparative effectiveness of alternatives. In general, cash transfers to certain segments of the population are a superior form of transfers than in-kind or indirect transfers. They are more efficient, because they give people the choice of using the money more effectively. Moreover, if they are well targeted they may achieve the objectives of equity and sustainability. Alternative means of redistributing oil wealthy also need to be evaluated and compared in light of available administrative and institutional capacity.

In addition, subsidies fuel corruption, discourage efficient energy use and make it hard for newer sources to compete.

Platts Japan Korea Marker (JKM™) is the LNG (Liquefied Natural Gas) benchmark price assessment for spot physical cargoes delivered ex-ship into Japan and South Korea. As these two countries take the largest share of LNG imports in the world, Platts JKM™ is thus a key reference in marking product value/market price from supply source to the destination market.

In the LNG market space, traditional patterns of trade are evolving fast; where cargoes once changed hands only through opaque bilateral deals, the market now exhibits open sell and buy tenders for multiple and single cargoes, brokered trades, cargoes sold in longer chains and speculative trading positions taken up by non-traditional players, adding to liquidity on the spot market.