(Picture credit: EMA)

So what exactly is a gas trading hub? Mr VV Roa, Managing Director of Galway Group Asia, shared recently that this is essentially a pricing point for trades of standardised contracts; similar to the Henry hub in Louisiana.

A trading hub has the ability to affect physical trades, he told audiences at EMART Asia during SIEW 2011. For a successful trading hub to develop there should be significant demand for energy in neighbouring markets to create the infrastructure facilities required for trade to take place.

For infrastructure development, a junction of pipelines has to be in place at an optimal geographical location. In some cases, this may require a strong regulatory system to be present. Both infrastructure development and the necessary regulatory backup help to create sufficient volume and volatility for paper trades to take place when price discovery and contract flexibility are introduced. Read more...