LNG

Trafigura is the world’s leading independent trader in one of the fastest growing energy markets. The LNG team is based in Geneva, and supported worldwide. It works closely with the LPG, natural gas and coal desks.

LNG’s complex logistics require substantial capital expenditure from market participants, setting high barriers to entry for producers, end-users and shippers.

In the past, this has also obliged industry players to commit to long-term contracts. Now, as infrastructure is put in place, the spot market is becoming more active and freely traded volumes are growing. We expect the LNG markets to reach a tipping point during this decade and are acting now to be sure we are ready.

We have the marketing expertise, the financial strength, the geographic coverage and the understanding of product flows required to succeed in these markets.

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Products

Many LNG contacts are traded as a differential to Henry Hub or NBP or as a percentage of Brent. None of these options are optimal from a risk management perspective, leaving both buyers and sellers open to substantial pricing risk. Platt’s has been publishing the JKM (Japan Korea Marker) which is a daily quote of LNG DES price in the Far East. Trafigura firmly supports the use of a transparent, recognisable spot LNG assessment and the increase in the liquidity of the swap market for LNG spot. This change in market practice is bringing and will continue to bring gradually greater price transparency. It also enables much more rigorous risk management, which clearly benefits all industry players.



Capabilities

As one of the largest independent traders of LNG, our mission is to offer our counterparties reliable and efficient service tailored to their needs and to support the ongoing LNG revolution. In 2013 we transported 1mt of LNG globally and in 2014 we expect this figure to double.

We have 3 dedicated full time traders based in Geneva supported by our US Natural Gas team in Houston and our European Natural Gas team. We work together with our 27 LNG regional offices in key export and import countries across the globe. We work closely with our LPG, coal and other desks enabling us to maximise efficiencies in freight and logistics and anticipate our counterparties needs.



Infrastructure

Historically LNG trading has been constrained by the high cost of shipping. But with over 150 ships expected to be commissioned before the end of the decade, this will bring the total world fleet to around 600 vessels. This unparalleled growth in shipping will drive down costs, enabling the industry to deliver LNG where it is required at more competitive prices.



White Paper: Fifty Years of Global LNG: Racing to an Inflection Point

Fifty Years of Global LNGProfessor Craig Pirrong probes where he believes the LNG industry is headed as oil-based pricing becomes a relic of the past. His analysis describes a potential revolution in LNG pricing and contracting mechanisms that will relay on trading firms and commodity markets to secure supply and manage risk.



Oil & Petroleum Products