Differences in logistical costs and pricing mechanisms have resulted in a significant spread between LNG bunker price assessments in Singapore and Rotterdam, with the latter port benefiting from more advanced infrastructure and more competitive gas-on-gas pricing.

Bright Prospects for LNG BunkeringLNG bunkering demand from non-LNG tankers is forecast to reach nearly 15 million mt/year by 2030 – bigger than the UK's import market – driven by the 2020 implementation of the International Maritime Organization's 0.5% sulfur cap for maritime fuels and the expansion of LNG bunkering infrastructure. Growing global supplies and lower prices have also increased the viability of LNG as bunker fuel.

Source: S&P Global Platts

0

3

6

9

12

15

20302029202820272026202520242023202220212020

More LNG bunker trade to emerge in Asia once ports in Singapore and Malaysiaopen for business

LNGtankers

non-LNGvessels

0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000

Singapore$390/mt*

Rotterdam$220/mt*

*December 2019 average prices

Around 50 commercial non-LNG vessels of over 10,000 deadweight mt, including tankers, containerships and bulk carriers, were expected to have consumed around 650,000 mt of LNG as bunker fuel in 2019, versus 11-12 million mt/year consumed by LNG tankers.

LNG Global Price Assessments’ – learn more spglobal.com/platts/en/products-services/lng

50,000

0

100,000

150,000

200,000

20192018 20202017201620152014201320122011

$190,000per day

LNG freight rateshit all-time high

500vessels

Global LNG fleet reachedin 2018

Australia's ACCC includesPlatts LNG shipping route

cost in its netbackprice seriesPlatts launches Pacific and

Atlantic ballast rateassessments

Platts launches Pacific andAtlantic shipping day

rate assessments

2010

LNG Asia Pacific Carrier Day Rate LNG Atlantic Carrier Day Rate

Asia PacificMideastAtlantic Basin

Transparency key to mitigate LNG freight volatilityLNG freight transparency is helping the shipping industry better accommodate the increasingly flexible nature of LNG and allow market participants to capture optionality and arbitrage opportunities, the cornerstones of commoditization.

mmt/year

mmt/year

Rise in JKM derivatives and Platts Asia MOC activityMore than 1,900 bids, offers and trades had been submitted during the Platts Asia LNG MOC process by the end of 2019. Also, the percentage of submissions that fully adhere to standardized terms regarding vessel nomination, delivery window and discharge port has steadily increased, reducing the need for normalization and boosting price formation efficiency.

Meanwhile, the JKM derivatives market has seen exponential growth over the past years, a trend that seems set to continue given the expansion of the physical spot market, the rise of LNG indexation in term contracts and the participation of financial entities in LNG derivatives.

0

50

100

150

200

250

SeptAugJulyJunMayAprilMarFebJanDecNovOct DecNovOctSeptAugJulJun20192018

Bids, Offers, and Trades ICE+CME Cleared Volume (lots)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

LNG prices in an evolving market

$/day

Number of bids, offers, trades

JKM derivatives lots(1 lot: 10,000 MMBtu)

The commoditization of LNG over the past decade has resulted in enhanced spot price transparency in the industry’s key trading hubs, greater supply security and a more interconnected market where cargoes are free to cut a path to the best netback, helping mitigate market inefficiencies and regional pricing disparities.

2019 VOLUMES TO/FROM AND SHARE OF GLOBAL TRADE

Americas Europe Africa MiddleEast

APAC LNGTerminal

DESWEST INDIA

terminals

1.4mmt0.4%

16.5mmt4.6%

7.3mmt2.0%

2.5mmt0.7%

0.6mmt0.2%

DES JKMterminals

124mmt34.7%41.7mmt

11.6%

5mmt1.4%

12mmt3.2%

2mmt0.6%

GCMterminals

1.24mmt0.3%

10.7mmt3.0%

6.2mmt1.7%

11.1mmt3.1%

NWE

4.8mmt1.3%

10.6mmt3.0%

5.9mmt1.7%

8.8mmt2.5%

10.07mmt2.8%

4.4mmt1.2%7.5mmt

2.1%

3.4mmt0.9%

MED

The growing robustness of Platts JKM® has enabled the more established markets of East Asia to operate with greater confidence and efficiency. Other emerging LNG hubs, comprising West India, Northwest Europe, Mediterranean and US Gulf Coast, are also becoming increasingly central to global market development, price transparency and risk management.

Europe includes Yamal LNG

US GULF COASTFOB Gulf Coast Marker

30.1mmt

NORTHWEST EUROPEDES Northwest Europe Marker

37.5mmt

MEDITERRANEANDES Mediterranean Marker

26.4mmt

WEST INDIADES West India

28.7mmt

NORTHEAST ASIADES JKM Marker

187.8mmt

20152014201320122011 201920182017201620 1020 09 2020

0

5

10

15

20

25DES JKM

FOB Gulf Coast

DES Middle East

DES Northwest Europe

DES Mediterranean

DES West India

$/MMBtu

DES JKMPlatts launches

JKM Swaps; first lots cleared

on ICE DES JKMChina’s NDRC sets

new third-partyterminal access

guidelines

DESWest India

Petronet-RasGas contract revisionsets precedent

FOBGulf Coast

First cargo fromthe US Gulf;

Expanded PanamaCanal opens

DES JKMJapan beginsdownstream

marketliberalization

DES JKMTrafigura, Vitol

trade firstPlatts AsiaMOC cargoDES JKM

Vitol, Telluriansign 15-year

JKM-linked USofftake MOU

FOBGulf Coast

2018 marks returnto investment

growth,strengthens

in 2019

FOBGulf Coast

ICE launches FOBUS Gulf CoastMarker (GCM)LNG futures

contract

DES JKMJapan rules

againstdestinationrestrictions

DES JKMFukushima

disaster triggersdemand spike,energy policy

shift

DES JKMPEGAS becomesthird exchange

to list JKM afterICE and CME

DES JKMTotal & Tellurian

sign 15-yearJKM-linkedUS offtake

DES EuropeOver 70% ofEurope’s gassupply linkedto hub prices

DESWest India

Platts launchesIndian DES

assessment

LNG bunkering

Platts launches Singapore and

Rotterdam LNG bunkering

assessments

Middle EastPlatts launches

Middle EastMarker dailyimport value

delivered

DESMediterraneanPlatts launches

Southern Europeassessment

DESEurope

Platts launchesEuropean DESassessments

FOBGulf Coast

Platts launchesFOB US GulfCoast LNG

assessment

DES JKMPlatts launchesJKM, first dailyLNG spot price

assessment

Freight rates

Platts launches Pacific and Atlantic

shipping day rate assessments

Trade and Infrastructure

30.1 95.0 37.5 35.2 26.4 25.4 28.7 46.2 187.9 216.6

5 7 7 7 9 9 7 12 65 8443.5 91.9 68.5 73.6 63.6 63.6 42.5 81.9 433.8 488.3

10.8 18.4 7.4 7.2 6.9 6.2 4.6 8.0 47.2 47.8

Terminals

TotalVolume(mmt)

GlobalCapacity

Share(%)

TerminalsCapacity

(mmt/yr)

2019 2025 2019 2025 2019 2025 2019 2025 2019 2025

US GULF COAST NORTHWESTEUROPE

MEDITERRANEAN WEST INDIA NORTHEAST ASIA

As the trend towards LNG commoditization gathers pace, fueled by significant additions of elastic supply and demand, the need for enhanced pricing transparency becomes ever more important to enable stakeholders to share new risks and gain the confidence they need to trade and make investment decisions.

Strategic pillars of pricetransparency in global LNG

LNG’s strategic pricing hubs