In a historic move, a liquefied natural gas (LNG) cargo trade has been indexed to LNG futures on the Abaxx Commodity Exchange and Clearinghouse, marking the first over-the-counter (OTC) trade of its kind. The exchange is owned by Abaxx Singapore, with Abaxx Technologies, a financial software and market infrastructure company, as its majority shareholder.
This breakthrough trade, which involves two Asia-based firms, sees the LNG cargo being exported from the Gulf of Mexico (GOM). The transaction price is indexed to the Abaxx GOM LNG futures, setting a new precedent in the global LNG market.
A Game-Changer for LNG Pricing
Abaxx Technologies views this trade as a significant step toward establishing its LNG futures as a global benchmark. According to Joe Raia, Chief Commercial Officer of Abaxx Exchange, this trade demonstrates the increasing need for precise LNG pricing amid ongoing geopolitical shifts, including trade disputes and tariffs, which have influenced global commodity markets.
Raia added, “The use of Abaxx futures settlement prices for this high-value cargo gives the global LNG market confidence in the strength of our contracts and reinforces their role as a reliable tool for managing price risk with benchmarks that reflect real LNG market conditions more reliably than regional pipeline hubs or proxies.”
LNG Surge in the Gulf of Mexico
The Gulf of Mexico, a vital hub for LNG exports, has seen a surge in activity following the change in the U.S. administration. The new administration’s focus on LNG has led to the reversal of an export ban, allowing several projects to progress. Notably, the NextDecade’s Rio Grande LNG project in Texas has advanced, following a favorable court judgment.
This regulatory shift has opened new doors for LNG projects, enhancing the U.S.’s position in the global LNG market.
Related topics:
