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BHP Billiton has broken ranks with other Australian gas exporters by urging the industry and its Asian customers to accelerate the shift away from oil-linked prices for LNG.
Reigniting a sensitive issue between Australian LNG producers and their major customers in Japan, BHP marketing boss Mike Henry told an audience of Australian and Japanese business leaders that gas pricing markets were less transparent and liquid than they should be, and a move toward pure market pricing for gas was needed.
Japanese power companies have campaigned for several years to sever the link between LNG prices and oil prices because it was forcing them to pay more for gas than consumers in Australia and North America.
Australian gas exports to Japan have traditionally been referenced to the benchmark oil price because the early use of gas in Japan was as a substitute for oil.
But gas has since become a crucial part of Japan's energy mix after the nation reduced its dependency on nuclear power in the wake of the Fukushima nuclear disaster, and Australian exporters rank among Japan's biggest suppliers.
Henry said the security of Japan's energy supply would be improved if gas pricing was not influenced by other commodities.
Gas exporters like Santos have traditionally opposed such changes because they would likely lead to lower received prices, and while Santos vice-president Peter Cleary conceded the gas pricing system was evolving, he said the vast majority of transactions would continue to be linked to oil prices over the next decade at least.


Read more: http://www.smh.com.au/business/mark...-rally-gear-20141014-3hy00.html#ixzz3G5ewlya1