Will the U.S. Become the Home of LNG Price Formation?

The nature of price formation in the global Liquefied Natural Gas (LNG) market is increasingly the subject of both industry and academic attention. As the market shows greater appetite to gradually transition from oil indexation towards gas-to-gas pricing, many alternative price references have emerged as regional price signals, reflecting their respective markets. The article examines, from a market microstructure prospective, how a new U.S. business model is altering the structure of LNG trading transactions and subsequently positioning the U.S. to be the most likely anchor for price formation for the global LNG market.