Gordon Bennett and Tim Mendelssohn Spark Debate on LNG Freight Pricing and Risk
The liberalisation of LNG is creating a global natural gas market, with freight acting as a virtual pipeline between continents. This has boosted demand for risk management tools amid the volatility of time charter rates and the nascent liquidity of spot LNG freight markets.
To manage this risk, ICE is the first exchange to list LNG Freight futures contracts, underpinned by the spot price assessments of Spark Commodities. These futures contracts are designed for market participants active in the LNG community, including ship owners, LNG producers and consumers, portfolio players and brokers.
These contracts complement the most comprehensive, connected global gas offering, and will trade and clear alongside ICE’s highly liquid global gas benchmarks including TTF, Henry Hub, NBP, GCM, JKM and WIM.
The Spark30S contract covers a route in the Atlantic basin between Sabine Pass in the United States Gulf Coast and the Gate LNG terminal in the Netherlands.
The Spark25S contract applies to a route in the Pacific basin between the North West Shelf (NWS) area in Australia to the Tianjin LNG terminal in China.
Numbers in the contract names indicate the number of charter days for the respective routes.
Contracts are traded and settled in USD per day. The settlement price of the contracts are based on the Spark30S (Atlantic) and Spark25S (Pacific) LNG freight spot price assessments.