LNG Markets Daily Methodology

 

ICIS quotes LNG in Europe, Africa, Asia-Pacific , US, South America, India, China and the Middle East as follows:

Region	Assessment name	Type	Freq	Units
Global	EAX Spread	Spot	D	US$/MMBtu
Global	NBP Spread	Spot	D	US$/MMBtu
Asia-Pac	East Asia Index (EAX)	Spot	D	US$/MMBtu
Asia-Pac	DES Japan	Spot	D	US$/MMBtu
Asia-Pac	DES South Korea	Spot	D	US$/MMBtu
Asia-Pac	DES China	Spot	D	US$/MMBtu
Asia-Pac	DES Taiwan	Spot	D	US$/MMBtu
Asia	DES India	Spot	D	US$/MMBtu
Middle East	DES Dubai	Spot	D	US$/MMBtu
Middle East	DES Kuwait	Spot	D	US$/MMBtu
Europe	Mediterranean Index (MDX)	Spot	D	US$/MMBtu
Europe	NW Europe Index (NEX)	Spot	D	US$/MMBtu
Europe	Iberia Index (IBX)	Spot	D	US$/MMBtu
Europe	DES Turkey	Spot	D	US$/MMBtu
Europe	DES Greece	Spot	D	US$/MMBtu
Europe	DES Italy	Spot	D	US$/MMBtu
Europe	DES Spain	Spot	D	US$/MMBtu
Europe	DES Portugal	Spot	D	US$/MMBtu
Europe	DES Netherlands	Spot	D	US$/MMBtu
Europe	DES Belgium	Spot	D	US$/MMBtu
Europe	DES France	Spot	D	US$/MMBtu
Europe	DES Britain	Spot	D	US$/MMBtu
US	DES US East	Spot	D	US$/MMBtu
US	DES US Gulf	Spot	D	US$/MMBtu
South America	South America Index (SAX)	Spot	D	US$/MMBtu
South America	DES Brazil	Spot	D	US$/MMBtu
South America	DES Argentina	Spot	D	US$/MMBtu
South America	DES Chile	Spot	D	US$/MMBtu
Middle East	FOB Middle East	Spot	D	US$/MMBtu
Africa	FOB North Africa	Spot	D	US$/MMBtu
Africa	FOB Nigeria	Spot	D	US$/MMBtu
Asia-Pac	FOB Far East	Spot	D	US$/MMBtu
US	FOB Trinidad	Spot	D	US$/MMBtu
Asia-Pac	FOB Northeast Asia	Spot	D	US$/MMBtu
Asia-Pac	FOB Australia	Spot	D	US$/MMBtu
Europe	FOB Northern Europe	Spot	D	US$/MMBtu
Europe	FOB Reload Zeebrugge	Spot	D	US$/MMBtu
US	FOB Reload US Gulf	Spot	D	US$/MMBtu

Recent changes to this methodology

Date	Assessment	Change
15 June 2010	All	Clarification of some terms and definitions.
17 November 2010	DES Portugal	Added.
17 November 2010	DES Chile	Added.
17 November 2010	US Gulf, Month-ahead FOB Reload	Added.
17 November 2010	ICIS  Iberia Pool Prices	Added
17 November 2010	ICIS  South America Pool Prices	Added
17 November 2010	ICIS  Pool Prices for two months ahead - all locations	Added.
19 September 2011	DES US East	Adds Everett and Canaport as other regional ports considered in the assessment
19 September 2011	DES US Gulf	Assessment basis port switches from Lake Charles to Sabine Pass. Adds Freeport, Lake Charles, Golden Pass and Gulf LNG as other regional ports considered in the assessment.
19 September 2011	DES Argentina	Adds Escobar as the other regional port considered in the assessment
29 November 2010	DES Dubai	Added
16 January 2012	DES Netherlands	Added
16 January 2012	Pool Prices	Renamed: “Regional Indices”
16 January 2012	Pool Prices	Netherlands DES price included in NW Europe Regional Index (NEX)
16 January 2012	DES Assessments	Addition of EAX spread and NBP spread
16 January 2012	Spot DES Assessments and Regional Indices	Roll date brought forward from the end of the calendar month to the 16th
16 January 2012	Lay Up Costs	Singapore assessment discontinued
16 January 2012	East Asia half month inputs	Added
16 January 2012	East Asia Spot Bids and Offers	Added
16 January 2012	Latest Global Spot Transactions	Added
16 January 2012	DES Japan	Adds Joetsu, Mizushima, Tomakomoi as other regional ports considered
16 January 2012	DES China	Adds Rudong and Dalian as other regional ports considered

1. GENERAL METHODOLOGY

ICIS publishes market prices based on information continuously gathered from market participants about: spot transactions; spot bid and offer levels; contract price negotiations; prices of related commodities; and relevant freight costs.

ICIS includes in its price-generation process only information gathered up to the published market close time for each commodity and assessed period. ICIS does not make retrospective adjustments or changes to price quotations based on information subsequently received.

ICIS regards all arm's length transactions that meet its specification criteria as carrying equal weight.

ICIS uses proprietary models where necessary to normalise data to the typical specifications for cargo size and date ranges given for each commodity.

Some ICIS assessments are the product of calculation alone - for example, in markets where insufficient market activity takes place to permit price assessment, or where a market itself habitually sets prices according to a formula. Such calculated assessments are noted as such in their detailed methodology specifications.

ICIS endeavours to crosscheck all the transaction information it gathers. ICIS will not use information for assessment purposes where such checks call into doubt the accuracy of the original information, or where a transaction appears to have occurred under circumstances that render it non-repeatable or otherwise markedly unusual.

2. PUBLICATION SCHEDULE

LMD will be published with a full set of DES and FOB assessments for every region Monday to Friday (inclusive), year round. LMD is not published on 25 December or 1 January, or the contiguous working day if either date falls on a weekend.

On the days preceding non-publication days, assessments are made before the usual closing times, typically at 12:00 local time.

3. TIMING OF ASSESSMENTS

DES and FOB assessments will be made for Asian and Middle Eastern locations at 16:30 Singapore time, on the day of publication.

Assessments for European locations are made at 16:30 London time, on the day prior to publication.

Assessments for US and South American locations are made at 14:30 US Eastern Time, on the day prior to publication.

On the days preceding non-publication, assessments are made before the usual closing times, typically at 12:00 local time.

4. SPOT DES ASSESSMENTS

All ICIS spot DES assessments give a single value for the named region. This represents the price most likely to transact. The value relates to a specific delivery point within the named region. This delivery point will typically be the most active spot cargo receiving terminal in that region.

Deals and pricing information for other LNG receiving terminals within that region may be accounted for in the final assessment, but may be assessed at a differential to the key discharge port, dependent on market fundamentals and shipping costs. Details for each location are given in the table below.

DES assessments do not take into account the cost of regasification, blending or transport into the domestic network from the LNG import terminal.

Lean and rich cargoes are taken into account in the assessments.

Cargo sizes included in the assessment range from 30,000m3 of LNG up to 266,000m3 (Q-Max category). Partial cargoes within this volume range will also be taken into account. Two calendar months are assessed. The assessments roll on the 16th of the calendar month. For example, on 16th January, the two front months roll from February and March, to March and April. Where 16th January falls on Saturday or Sunday, the assessments roll on the following Monday.

EAX Spread – this value is a calculation, subtracting the published EAX for that day from the each published DES Assessment for the same day.

NBP Spread – this value is a calculation, subtracting the latest published ICIS NBP assessment from each published DES Assessment. The benchmark ICIS  NBP assessment is published in the original trading unit (p/th) in sister publication European Spot Gas Markets. The original assessment is converted into $/MMBtu for publication in LNG Markets Daily, using Bloomberg’s FX rates, modelled by ICIS into a forward curve that is applied to the precise contract delivery period.

DES ASSESSMENT POINTS

Contract name	Assessment basis port	Other regional ports considered
Japan	Tokyo Bay	Chita, Himeji, Kawagoe, Niigata, Oita, Sakai, Senbouku, Sodeshi, Tobata, Yanai, Yokkaichi, Joetsu, Mizushima, Tomakomoi
South Korea	Pyeong Taek	Gwangyang, Incheon, Tongyeong
China	Guangdong	Fujian, Shanghai, Rudong, Dalian
Taiwan	Yung An	Taichung
India	Hazira	Dahej
Dubai	Jebel Ali	N/A
Kuwait	Mina Al Ahmadi	N/A
Turkey	Marmara	Aliaga
Greece	Revithoussa	N/A
Italy	Rovigo	Panigaglia
Spain	Huelva	Barcelona, Bilbao, Cartagena, Ferrol, Sagunto
Portugal	Sines	N/A
Netherlands	Rotterdam	N/A
Belgium	Zeebrugge	N/A
France	Montoir	Fos Cavaou, Fos Tonkin
Britain	Isle of Grain	Dragon, South Hook, Teesside
US East	Cove Point	Everett, Canaport
US Gulf	Sabine Pass	Lake Charles, Cameron, Freeport, GoldenPass, Gulf LNG
Brazil	Pecem	Guanabara
Argentina	Bahia Blanca	Escobar
Chile	Quintero	Mejillones

5. SPOT FOB PRICES

ICIS assesses the FOB value at the world's eight major LNG-producing locations.

These assessments are calculated using a model that builds incremental forward curves for the world's 21 busiest spot cargo receiving terminals, using ICIS DES assessments. The model then maps sailing times from a 20-40 day FOB loading window onto this forward DES curve to determine potential market prices at destination. The cost of shipping for this voyage is then deducted from the final market price.

Shipping costs from all eight producing regions to all 21 destinations are calculated using ICISproprietary charter rate assessments, bunker and fuel costs, boil-off, port charges and Suez charges where relevant. All costs are assumed for a round-trip voyage.

ICIS bases its assessments on the highest netback value achievable globally, according to this model.

If FOB trading liquidity shows sustained growth, ICIS will consult the industry on how trading information should be taken into account in assessing these points.

FOB Assessment Points

Contract name	Assessment basis port
Middle East	Ras Laffan
North Africa	Arzew
Nigeria	Bonny Island
Far East	Bintulu
Trinidad	Point Fortin
Northeast Asia	Sakhalin
Australia	NWS
Northern Europe	Snøhvit

6. SPOT LNG-REGIONAL INDICES

Regional Indices are provided daily for five regions, for two front months: East Asia (EAX)

• South America (SAX)
• Mediterranean (MDX)
• NW Europe (NEX)
• Iberia (IBX)

The EAX is calculated using an arithmetic average of the day’s DES front month and second month ahead assessments for Japan, South Korea, Taiwan and China.

The SAX is calculated using an arithmetic average of the day’s DES front-month and second month ahead assessments for Argentina, Brazil and Chile.

The MDX is calculated using an arithmetic average of the day’s DES front-month and second month ahead assessments for Greece, Italy and Turkey. The IBX is calculated using an arithmetic average of the day’s DES front-month and second month ahead assessments for Spain and Portugal.

The NEX is calculated using an arithmetic average of the day’s DES front-month assessments for Britain, Netherlands, Belgium and France.

The front two calendar months will be published. The indices roll on the 16th of the calendar month. For example, on 16th January, the two front months roll from February and March, to March and April. Where 16th January falls on Saturday or Sunday, the indices roll on the following Monday.

7. EAST ASIA HALF MONTH INPUTS

Half month assessments are provided for the four individual DES markets of East Asia (Japan, Korea, China and Taiwan) and for the EAX, in addition to the full two months.

The half month inputs roll on the 16th of the calendar month and the first working day of the calendar month. Where the 16th falls on Saturday or Sunday, the assessments roll on the following Monday.

Five half month contracts are assessed, for the second, third, fourth, fifth and six half months ahead. For example, on 16th January, the half month contracts quoted will be as follows:

• H2 February
• H1 March
• H2 March
• H1 April
• H2 April

Full month assessments for these markets will be equal to the average of the two component half month assessments.

8. EAST ASIA SPOT BIDS AND OFFERS

Firm, verifiable bids and offers for the East Asia markets are published daily. This information represents prices available to the market on the day of publication, to the best knowledge of ICIS'market reporters after the day’s investigation and analysis. If reporters have reason to consider bids and offers are not firm, they will not appear in the publication. Bid and offer information is a key part of the assessment process, along with deals done, price evidence from surrounding markets and other fundamental data.

9. LATEST GLOBAL SPOT TRANSACTIONS

The five latest spot transactions discovered and verified by ICIS will be displayed daily.

The full list of spot DES and FOB trades for all locations will continue to appear in the weekly publication Global LNG Markets and are available via FTP.

10. CHARTER RATES

ICIS assesses on a daily basis both short- and long-term charter rates for LNG vessels.

Short-term is defined as fixtures for a chartering period of up to two months, with delivery taken within 40 days.

Long-term is defined as fixtures for a chartering period of two months minimum and up to five years, with delivery taken within 180 days.

Both Atlantic and Pacific basin rates are assessed. Atlantic is defined as west of the Suez Canal and Pacific as east of the Suez Canal.

The capacity of the vessels included in the assessment ranges from 30,000m3 to 266,000m3 (Q-Max category).

11. FOB RELOAD ASSESSMENTS

ICIS assesses the cost of a cargo reloaded from the Zeebrugge receiving terminal in Belgium daily.

The period assessed is for loading at any point during the following calendar month. ICIS assesses the cost of a cargo loaded from the US Gulf receiving terminals every day. Re-loads from both Freeport and Sabine Pass are taken into account when making the assessment.

The period assessed is for loading at any point during the following calendar month.

The assessments roll on the first working day of the calendar month. For example, on 1 January, assessments roll from January to February.

12. KEY OIL AND GAS PRICES

ICIS NBP

The two front-month values are midpoints of the original NBP bid-offer assessments carried in the daily ICIS publication European Spot Gas Markets (ESGM). The original assessments are in p/th. The original assessments are converted into $/MMBtu for publication in LNG Markets Daily, using Bloomberg’s FX rates, modelled by ICIS into a forward curve that is applied to the precise contract delivery period.

The assessments carried in LMD are the latest published values

ICIS Zeebrugge

The two front-month values are midpoints of the original Zeebrugge bid-offer assessments carried in the daily ICIS publication European Spot Gas Markets (ESGM). The original assessments are in p/th. The original assessments are converted into $/MMBtu for publication in LNG Markets Daily, using Bloomberg’s FX rates, modelled by ICIS into a forward curve that is applied to the precise contract delivery period.

The assessments carried in LMD are the latest published values.

ICIS Japan Import

The two front-month values are ICIS assessments of the average price of LNG imported into Japan from long-term contractual suppliers for these periods.

These are calculated assessments, made using historical Japan customs-cleared (JCC) data and forwards oil price data.

These assessments roll on the first working day of each new calendar month. They will be published in every issue of LMD.

Latest published JCC

The JCC figure is the monthly average price of crude oil imported by Japan from all sources, which is calculated by the Japanese finance ministry before the end of the following calendar month.

The full calendar of publication dates is available on the Japanese customs website:http://www.customs.go.jp/toukei/calendar/calend_e.htm

NYMEX Henry Hub

The two front-month values are the futures settlement prices from the NYMEX exchange (NG contract) on the day prior to publication of LMD.

ICIS Brent

This is the midpoint of the bid-offer spread published daily by ICIS Pricing in its World Crude Report. The contract assesses Dated BFOE (Brent/Forties/Oseberg/Ekofisk) at the time of the Intercontinental Exchange (ICE) close in London (at 19:30).

North Sea grades are assessed for a 10-21-day forward trading period, with the BFOE marker set at the level of the lowest of the four constituent grades (Brent, Forties, Oseberg and Ekofisk).

NYMEX WTI

The two front-month values are the futures settlement prices from the NYMEX exchange on the day prior to publication of LMD.

13. AVAILABLE FIXTURES

This table displays vessels available for chartering on a short-term basis. It provides the vessel name, the company with effective control of the vessel (current charterer), the length of time the vessel will be available for (Availability Window) and the dates (Period). It also gives the size of the vessel, its location and the state of its tanks (warm, cold or inert).

To comment on any aspect of this methodology, or to propose changes, please contact Roman Kazmin, Editor LMD, ICIS, roman.kazmin@icis.com.

ICIS continually develops, reviews and revises its methodologies in consultation with industry participants. Product specifications and trading terms and conditions are intended to reflect typical working practices prevalent in the industry.

 

Methodology last updated:

16/01/12