It will take at least five more years for the global liquefied natural gas (LNG) market to become a fully hedgeable market like oil, said Tellurian Inc. chairman and LNG pioneer Charif Souki in an interview posted Thursday by IHS Markit.

The LNG market, which originated decades ago as a point-to-point business with long-term contracts indexed to oil prices, has “made enormous progress in terms of liquidity” in recent years, Souki said in an interview with IHS Markit Vice Chairman Daniel Yergin as part of a CERAWeek conversation series. 

“But the market has not evolved sufficiently where the financial instruments represent a big premium to the physical movement of the commodity,” Souki said.

For example, financial trades in the oil market outnumber physical trades by a...