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ICE to launch first ever US LNG futures contract

London (Platts)--22 Mar 2017 534 pm EDT/2134 GMT


  • To be settled against Platts assessments
  • Will enable market participants to hedge
  • US LNG export capacity set to rise quickly



The Intercontinental Exchange is to launch the first ever US LNG futures contract in May this year, it said Wednesday.

In an exchange note to customers, ICE said it planned to list the new contract on May 4, subject to completion of necessary regulatory processes.

US LNG supplies are set to grow quickly in the coming years, turning the country into a leading global supplier of destination-free, flexible LNG.

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The new ICE contract, whose size will for 2,500 MMBtu, will be a monthly cash future settled against the Platts LNG Gulf Coast Marker price assessment.

"By providing the marketplace with a US Gulf Coast LNG futures contract, along with the prospect of future additional products, domestic and international market participants now have a risk management solution that lays the foundation for a more effective means of hedging their spot and forward exposure," vice president, North American power and natural gas markets, J.C. Kneale said.

Such a tool, Kneale said, would be "particularly useful as the global LNG market continues to evolve and grow."

Only one LNG export facility is currently operational in the US, the Cheniere Energy-operated Sabine Pass terminal, but a number of other plants are due to start up in the coming years.

US LNG production capacity is expected to rise to some 70 million mt/year by 2020, making it the world's third largest LNG exporter after Qatar and Australia.

US LNG exports are expected to have largest volume of flexible-LNG by 2020, with short-term trading of LNG set to increase in the coming years.

At present, the only operational plant at Sabine Pass has two 4.5 million mt/year trains currently exporting, with a third set for substantial completion by the end of this month.

Cheniere began US LNG exports from Sabine Pass in February last year and has loaded around 90 cargoes since then.

Its contracts allow for LNG to be sent to any destination and its pricing mechanism is transparent, which the company says should allow the creation of additional liquidity.

--Stuart Elliott, stuart.elliott@spglobal.com

--Edited by Jonathan Dart, jonathan.dart@spglobal.com

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