Gas Exporters Want Oil-Linked Pricing

The debate over how to price natural gas has been settled, at least for exporters, and oil-indexing should prevail.

Prices have to be linked to crude oil to keep expected revenue predictable, with some $8 trillion of investments in the fuel needed by 2040, according to Yury Sentyurin, the new head of the Gas Exporting Countries Forum, an industry group representing gas sellers, Bloomberg reported.

Many consumers are opting for different formulas used by the US and Australia, which are emerging as top exporters.

"Consumers should understand the peculiarities which producers face," Sentyurin said in an interview.

"Security of investment and supply can only be on the basis of long-term contracts closely connected to oil prices so we could plan further investments into crucial infrastructure."

Continued expansion of supply is needed to meet demand that’s forecast to grow at an average of 1.6% per year until 2040, Sentyurin said at the GECF headquarters in Doha.

GECF members include Russia, Iran, Algeria and Qatar, the world’s largest producer and exporter of liquefied natural gas.

Instead of oil, some consumers use tolling to pay for liquefaction and price the gas based on Henry Hub on the Nymex and other benchmarks.