MOSCOW, September 25 (RIA Novosti) - Liquefied natural gas (LNG) consumers in Asia are expecting a weakening of the oil-based pricing model, growing gas supplies and an evolving market will help lower its prices in the next two or three years, The Wall Street Journal reported Thursday.
"The shift away from oil-based pricing can be made, will be made, and must be made," Craig Pirrong, a professor at the University of Houston, was quoted as saying by the newspaper.
"As long as the industry relies on oil to price gas, it will resemble the drunk who looks for his keys under the streetlamp not because that's where he lost them, but because that's where the light is best," Pirrong said.
The price of LNG in Asia is higher because there are additional costs that result from converting the gas into a liquid and delivering by ship. Gas has also been in short supply following the shutdown of the Fukushima nuclear reactors.
To help reduce prices, government agency International Enterprise Singapore, the Singapore Stock Exchange and portfolio company Pavilion Energy are working together to create an independent LNG price benchmark in Asia.
Earlier in September, Japan launched the first over-the-counter LNG market in Asia with the goal of leveraging its position as the world's largest LNG importer.
Whether these initiatives will help lower LNG prices is yet to be seen. A previous attempt by Asian countries to organize an LNG buyer's club to purchase gas at lower prices failed.