The share of gas-on-gas pricing in the global market rose by one percentage point in 2020 to reach 49.3 percent, according to the latest pricing survey by the International Gas Union published July 8.
This, the IGU said, was largely driven by a “significant” shift in LNG imports to gas-on-gas pricing and away from oil indexation.
“The rise in gas-on-gas LNG imports in 2020 reflected another sharp rise in spot LNG cargoes,” it said in the report.
The IGU has carried out its closely watched wholesale pricing survey since 2005, with responses covering 98 percent of total world consumption. Total gas demand in 2020 was 3.943 Tcm, the IGU said.
The rising trend in gas-on-gas pricing in LNG imports was a continuation of the movement over the last three years, it said: “The total gas-on-gas pricing share of LNG imports in 2016 was 25% and in 2020 that had risen to 44%.
“The rise between 2016 and 2018 was all due to rising spot LNG imports, while in 2019 the increase was partly spot LNG imports and the rush of LNG to Europe’s traded markets. In 2020, the increase was due to rising spot LNG cargoes.”
The IGU added that the impact of COVID-19 on the global gas market, while stalling LNG demand, did not appear to have slowed the rise in spot LNG imports.
While gas-on-gas pricing globally continues to increase, the IGU said oil indexation retained its share of total global demand at around 18.5 percent due to a switch toward oil indexation away from regulated pricing in some countries.
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