Asian LNG Trade and GAS Market Reform: Implications for Gas and Power Consumers

Asia’s three largest gas consuming economies – Japan, Korea and Chinese Taipei – are heavily reliant for their gas supplies on Asia’s three largest gas producing economies – Brunei, Malaysia and Indonesia – as well as on Middle Eastern economies of OPEC. As a result, the potential benefits of reform in gas-importing economies are limited by the pace of reform in gas-exporting economies. And since a large share of electricity is produced from gas, this constraint will affect not only gas prices but also power prices. But some gas-exporting economies are starting to reform their gas markets to position themselves more competitively vis-à-vis other gas exporting economies. And importing economies should continue to reform their gas markets, despite their limited ability to affect gas commodity costs, since competition might greatly reduce gas transport costs.

By: Jeffrey Skeer

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