Trafigura trades first Singapore LNG derivatives contract with Pavilion
Singapore Exchange (SGX) said on Monday that European trading house Trafigura and local company Pavilion Gas made the first trade of a just-launched derivatives contract for liquefied natural gas (LNG), according to a Reuters report.
The $50,000 deal was based on Singapore's weekly spot price index for Asian LNG, which is measured based on contributions from 20 market participants, such as buyers, sellers and traders.
The spot price index, known as Singapore SLInG, has been published since last year, with the derivatives contract being launched on Monday.
Trafigura and Pavilion traded a total of 10,000 MMBtu of free-on-board (FOB) LNG swaps for March, SGX said, according to the Reuters report.
The trade volume was done at the smallest lot allowed by the contract and represents a fraction of a standard LNG cargo.
The new LNG contract is part of a bid by Singapore to become a regional hub of trade of the fuel and break a decade-long reliance on oil-linked pricing, Reuters reported.
The head of Trafigura in the Asia-Pacific region, Tan Chin Hwee, called the launch an "important step in the evolution of the LNG market" and said it would reduce risk in the regional market.
SGX will compete with CME Group, which began development and clearing of an LNG contract in Japan last year.
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