Global LNG Pricing Terms and Revisions: An Empirical Analysis

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dc.contributor.authorAgerton, Mark
dc.contributor.orgJames A. Baker III Institute for Public Policy
dc.date.accessioned2016-08-22T15:46:29Z
dc.date.available2016-08-22T15:46:29Z
dc.date.issued2014
dc.description.abstractMost LNG is sold under confidential, bilateral long-term contracts, particularly in Asia. Thus, though prices are thought to be indexed to crude oil, actual prices, contract terms and price revision clauses are not known. Therefore, I use customs data and techniques for detecting multiple unknown structural breaks in cointegrated regressions to characterize empirical pricing relationships and make inferences about pricing terms for 16 Japanese, South Korean, Taiwanese and Spanish LNG price series. LNG does appear to be indexed to oil, but terms appear considerably more complex and varied than rules of thumb. I find evidence for S-curve behavior, multiple revisions and variation in both the degree of indexation and the specification of oil benchmarks. Japanese terms are revised most. Terms for the other importers appear more stable, and indexation is weakest in Spain. This paper complements existing work on gas market integration, which largely ignores the data-generating process for LNG prices.
dc.identifier.citationAgerton, Mark. "Global LNG Pricing Terms and Revisions: An Empirical Analysis." (2014) James A. Baker III Institute for Public Policy: <a href="http://bakerinstitute.org/research/global-lng-pricing-terms-and-revisions-empirical-analysis/">http://bakerinstitute.org/research/global-lng-pricing-terms-and-revisions-empirical-analysis/</a>.
dc.identifier.urihttps://hdl.handle.net/1911/91282
dc.language.isoeng
dc.publisherJames A. Baker III Institute for Public Policy
dc.relation.urihttp://bakerinstitute.org/research/global-lng-pricing-terms-and-revisions-empirical-analysis/
dc.subjectLNG prices
dc.subjectlong-term contracts
dc.subjectstructural breaks
dc.subjectcointegration
dc.titleGlobal LNG Pricing Terms and Revisions: An Empirical Analysis
dc.typeWorking paper
dc.type.dcmiText
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