FT: Japan to fire up first LNG trading hub

Japan is launching its first trading hub for liquefied natural gas, as it seeks to chip away at the rigid price-setting system that has driven up its energy bills in the wake of the Fukushima nuclear crisis.

From Friday big LNG handlers such as Tokyo Electric Power and Mitsubishi Corp will be able to trade non-deliverable forwards – a type of futures contract without any physical settlement – on a new platform called Japan OTC Exchange (JOE), rather than striking private, bilateral deals.

By establishing its own price benchmark, Japan hopes to put pressure on traditional suppliers such as Qatar, Malaysia and Russia, which have generally resisted attempts to inject more flexibility into long-term contracts linked to the price of oil. MORE