LNG's oil-link driving prices in Asia

No relief for Asian LNG importers as oil rallies - Interfax | No relief for Asian LNG importers as oil rallies James Byrne Nuclear outages have made Japan and South Korea more dependent on oil-indexed LNG imports. (Kogas) Asian LNG importers look set for little relief this year, as oil-indexed gas prices hover close to record levels on the back of an oil market stretched by supply disruptions and ongoing geopolitical tensions in the Middle East. ... Asian buyers have seen their LNG bills mushroom since early 2011, with average prices regularly climbing above $16/MMBtu because of surging oil prices and a tighter spot market for gas. In the past 30 months, Japanese prices have averaged $15.76/MMBtu; in the 30 months before that, average prices were just $10.89/MMBtu. .... But with most LNG bought under long-term contracts, the real pressure on prices has been from oil. Since climbing back above $100/bbl in February 2011, average monthly Brent prices have only once dipped below the $100/bbl level, in June last year, in what some analysts argued was evidence for a new price floor based on an upward march in marginal costs. . . . At $110/bbl prices, oil-indexed contracts would land LNG in Japan at roughly $14-17/MMBtu based on a 13-15% slope and a constant of $0.6/MMBtu – a fixed fee usually included in Asian term contracts.