KUALA LUMPUR, June 7 (Reuters) - Asian liquefied natural gas prices are likely to remain linked to oil and stay at a premium to European and U.S. LNG rates, encouraging more investment by producers to meet growing demand in the region, a senior executive at Australian gas producer Santos said on Tuesday. Natural gas prices on the world's only two big spot gas markets -- the UK NBP and U.S. Henry Hub -- are independent of oil, unlike those in Asia and Continental Europe. "Asia's demand for secure supplies from neighbouring sources will preserve the oil-linked prices for the foreseeable future," Peter Cleary, vice-president of strategy and corporate development at Santos, told delegates at an industry conference in Kuala Lumpur. "Oil-linked prices in Asia works because buyers are comfortable with oil as an established, understood and globally traded commodity." Strong LNG prices provides an incentive for producers to invest in new projects which are needed to meet surging demand in Asia, he said. Chinese imports alone are expected to rise around five-fold to 46 million tonnes by 2020 from just over 9 million tonnes of LNG in 2010, according to energy consultancy Wood Mackenzie. In April, China's Sinopec signed a binding agreement to buy 4.3 million tonnes a year of LNG from a project to be developed by Australia's Origin Energy and U.S. oil company ConocoPhillips . [ID:nS9E7FJ008] "Asia's energy needs will continue to grow. Security of supply becomes increasingly important as buyers look to diversify supply, minimise political risk and build strong relationships with suppliers," Cleary said. Some analysts have argued that growing spot and arbitrage trade between Asia and the west will lead to the emergence of a single market price for LNG. Continued...

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