"Last week the Xinhua News Agency reported that China launched its first spot market for natural gas on the Shanghai Petroleum Exchange on July 2 to cope with peak summer electricity use. However, China’s natural gas exchange is only seasonal and aims to more efficiently allocate natural gas resources and meet rising demand in the summer. Contrary to China’s seasonal exchange is the Asian LNG spot market that is becoming a dominant force in the region. This market is being developed as producers, marketers, distributors and end-users try to determine what it will look like in the coming years. Analysts often use the terms “spot” and “short-term” interchangeably, although some still differ on the true meaning of an LNG spot market. Yet most of the cargoes which are talked about as spot are often sold under short-term deals of up to two years’ duration, and medium-term contracts of two to 10 years. LNG has traditionally been bought and sold using long-term contracts of up to 20 years, linked to the price of crude oil. Yet an abundant supply of gas in recent years (much of it from shale gas resources in the US) has encouraged the development of an Asian LNG spot market. Consequently, the spot market now represents around 20% of the global LNG market. The total amount of LNG traded globally has reached 223.8 million tons per annum (mtpa) and, according to a paper published by Poten & Partners in March, short-term LNG traded volumes are projected to increase at an average rate of 11 percent per year up to 2015. This growth rate is higher than the total growth rate for the LNG market, which some analysts estimate will be 7 percent per year; therefore the proportion of short-term LNG trades is set to grow."