Shell (RDS.A) and Tokyo Gas LNG Deal Is Unique: Here’s Why

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Royal Dutch Shell plc RDS.A and Tokyo Gas Company Limited recently inked a long-term liquefied natural gas (‘LNG’) deal, in accordance with an innovative purchase pricing formula that is partly based on coal indexation.

The deal is worthy of attention because of the usage of coal-index pricing for the LNG contract unlike the usual oil indexation or natural gas benchmark Henry Hub. Markedly, this move marks the first time a Japanese firm will be using a coal-based pricing formula for an LNG contract.

The LNG2019 Shanghai meet saw increasing diversification of price indexation, with sellers coming up with novel ways to price the fuel.

iversity of pricing options in the LNG contract was witnessed when Shell recently inked … based on Brent oil benchmark as against gas indexation….

An excerpt from Yahoo finance