DMCC plans world's first LNG contract

As surging energy prices increase demand for hedging tools, the Dubai Multi Commodities Centre (DMCC) is planning to launch a liquefied natural gas future contract on its exchange.

An LNG contract could help invigorate spot trade in the product, which is now sold primarily based on decades-long contracts, and would aid efforts to arbitrage cargoes between Asia and Europe and the United States, where pipeline gas futures contracts are already actively traded. DMCC, along with LNG Impel, is setting up a 40 to 65 billion cubic feet LNG storage facility at a cost of about $2 billion to offer customers the ability to store and trade the product. The exchange is based in the commercial hub of the world's top oil-exporting region, which according to the Gulf Petrochemicals and Chemicals Association has half the world's petrochemical projects.

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