Bloomgerg: Regional Gas Price Differences Will Remain Beyond 2035, IEA Says

Natural gas prices will vary across regions until more flexible supply terms develop and a global market is formed to narrow the gaps, according to the International Energy Agency.

For prices to converge, contracts for liquefied natural gas supplies and oil-indexed pricing need to be loosened, spurred by accelerated gas-market reforms in Asia and LNG exports from North America, the Paris-based IEA said today in its World Energy Outlook 2013 report.

“Although gas price differentials have come down from the extraordinary levels seen in mid-2012, natural gas in the U.S. still trades at one-third of the import prices to Europe and one-fifth of those to Japan,” the IEA said. “While regional differences in natural gas prices narrow in our central scenario, they nonetheless remain large through to 2035.”  MORE