Qatar to open the world’s first energy exchange to trade LNG
Doha will set aside enough natural gas to create a regional energy hub that sells LNG contracts.
Doha is preparing to launch the world’s first commodities exchange that will sell liquefied natural gas derivatives, joining the heavyweights London, Singapore and New York as a global energy-trading centre, its government announced at the recent launch of Energy City Qatar.
Economy minister Sheikh Mohamed Al Thani said, “Imex [International Mercantile Exchange] will allow the possibility of LNG shipments earmarked for North America being diverted to Asia.”
It has been widely believed that Qatar’s gas would only be sold on a long-term contract basis, but Al Thani made it clear that Qatar will release LNG for the over-the-counter spot market creating price transparency.
Esam Janahi, CEO of Gulf Finance House, which is backing Energy City Qatar where Imex will be located, said, “Spot energy trading is becoming increasingly common in the region and in Qatar. It makes prices more visible. Sellers need to know the market price, and buyers need to be able to hedge.”
The move — part of Qatar’s plan to become the region’s energy hub — puts it into direct competition with Dubai’s two commodities exchanges, which are expected to launch the sale of futures in crude and refined products this year.
Although Imex planners said they expect to finalise within three to six months what contracts the company will offer, they did not say when it would be open for business.
Janahi said Imex would be launched “soon,” and that the technology needed for the electronic trading platform already exists, and there is “no need to reinvent the wheel,” as Imex will take the best from existing regional and international exchanges. Oman-based EOS Technology Company, which already operates exchanges in Oman, Kuwait and Jordan, is setting up the Imex system in collaboration with a consortium of local Qatari businessmen and investors.
Alan Livingston, group CEO of EOS, said the system makes it very easy for vendors to plan and also provides transparency, since it records details of all trading and bidding activities, as well as archiving data necessary for compliance with regulations such as the US Sarbanes-Oxley act.
“We’re protecting the buyers from accusations of underhanded dealings,” said Phillip Thorpe, CEO of Qatar Financial Centre Regulatory Authority, which will oversee the exchange.