The Index is called FOB (free on board) Singapore SLInG (SGX LNG Index Group), with FOB referring to cargo in the vicinity of Singapore.

It has been eight months in the making since Temasek Holdings’ gas arm Pavilion Energy announced it was working with several stakeholders, including SGX and IE (International Enterprise) Singapore, to develop an LNG price market.

SGX subsidiary Energy Market Company launched the index at the Energy Trading Leaders Forum in Singapore last week, having compiled data for it since January.

The weekly index is based on the averaged submissions from international LNG players who offer their fair assessment of LNG cargo prices at a virtual point off Singapore, at specified times in the future, according to Singapore’s The Business Times.

There are now 13 LNG players on board, with 10 more slated to join.

Pavilion Energy CEO Seah Moon Ming told the sixth World LNG Series last September that only three years ago the region had paid a “handsome premium” of about $US130 billion for its LNG, because because Asia lacked a clear price benchmark.

He said LNG sold in the region was pegged to crude oil prices and priced at a premium to the US and European price benchmarks.

“Some global LNG players have responded that there is no such thing as ‘cheap LNG’,” he told the World LNG Series.

“Getting the price right for Asia is critically important – to help build sustainable economies and to create room for future growth and innovation.

“There is a need for Asia to access clean energy competitively, to power and sustain livable cities for future generations. It is worth noting that between now till 2017, China would require more than $40 billion to finance the switch from coal to natural gas.

“This is where developing an Asian LNG Hub – based on an Asian LNG Price Marker – that is independent of the oil market, will better reflect actual regional gas supply and demand dynamics and therefore provide more transparent pricing in the region.”

He said creating an Asian LNG Hub would create a “vibrant and liquid” LNG market in the region; motivate investment into more storage and reload facilities and foster closer co-operation in LNG procurement. This would, in turn, contribute towards energy security for Asia.

“Government and industry leaders need to be at the forefront of driving this Asian LNG Hub initiative,” he said.