Oil Price Crash Won't Alter LNG Term Deals Landscape Anytime Soon - S&P Global

Singapore — Crude oil's sudden price collapse may offer temporary breathing space to oil-linked term LNG buyers, but it won't drastically alter the scope of LNG term contract negotiations unless those low price levels are sustained over a longer period, analysts told S&P Global Platts.

Although oil's price fall has narrowed the gap between spot and term LNG prices, it's too early for the LNG market to jump to concrete conclusions on what proportion of the fall is backed by supply-demand fundamentals and to what extent it's investor-driven.

"The recent oil price crash will only impact long-term contract discussions if these low prices persist for an extended period of time," said Jeff Moore, Asia manager at S&P Global Platts Analytics.

"On one hand, it showcases that oil-indexed contracts do have access to periods of relatively inexpensive prices. However, it also showcases that the oil markets are quite volatile and that this volatility has very little impact on global gas fundamentals," he added.

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