proximity decreases transportation and LNG product costs for consumers. It also avoids the additional greenhouse gas emissions generated during long transportation. The small-scale LNG plant also allows localized peakshaving to occur—balancing the availability of natural gas during high and low periods of demand. It also makes it possible for communities without access to natural gas pipelines to install local distribution systems and have them supplied with stored LNG. LNG pricing There are three major pricing systems in the current LNG contracts: Oil indexed contract, used primarily in Japan, Korea, Taiwan and China; Oil, oil products and other energy carriers indexed contracts, used primarily in Continental Europe; and Market indexed contracts, used in the US and the UK. The formula for an indexed price is as follows: CP = BP + β X BP: constant part or base price β: gradient X: indexation The formula has been widely used in Asian LNG SPAs, where base price represents various non-oil factors, but usually a constant determined by negotiation at a level which can prevent LNG prices from falling below a certain level. It thus varies regardless of oil price fluctuation. Henry Hub Plus Some LNG buyers have already signed contracts for future US-based cargos at Henry Hub-linked prices. Cheniere Energy's LNG export contract pricing consists of a fixed fee (liquefaction tolling fee) plus 115% of Henry Hub per million British thermal units of LNG. Tolling fees in the Cheniere contracts vary: US with BG Group signed in 2011; with Spain's GNF signed in 2012; and with South Korea's Kogas and Centrica signed in 2013. Oil parity Oil parity is the LNG price that would be equal to that of crude oil on a barrel of oil equivalent (BOE) basis. If the LNG price exceeds the price of crude oil in BOE terms, then the situation is called broken oil parity. A coefficient of 0.1724 results in full oil parity. In most cases the price of LNG is less than the price of crude oil in BOE terms. In 2009, in several spot cargo deals especially in East Asia, oil parity approached the full oil parity or even exceeded oil parity. In January 2016, the spot LNG price of has broken oil parity when the Brent crude price (≤32 US$/bbl) has fallen steeply. By the end of June 2016, LNG price has fallen by nearly 50% below its oil parity price, making it