LNG traders see spot mar­ket get­ting big­ger as new plants start

Gulf Times Business - - BUSINESS -

Short-term trad­ing in liq­ue­fied nat­u­ral gas car­goes is poised to take a big­ger share of the mar­ket as new plants come on­line, ac­cord­ing to Bloomberg. About 90% of par­tic­i­pants polled at a ma­jor in­dus­try con­fer­ence in Lis­bon last week ex­pected the share of near-term LNG trade to be about 30%-40% of to­tal by the end of 2020. That com­pares with about 27% last year. More LNG traded un­der shorter con­tracts in­creases liq­uid­ity and gives buy­ers a wider choice of sup­pli­ers and con­tract terms. Trad­ing houses from Vi­tol SA to Trafigura Group Pte and biggest en­ergy com­pa­nies such as Royal Dutch Shell and BP help to boost ac­tiv­ity in the mar­ket by ag­gre­gat­ing vol­ume di­rectly from plants and then sell­ing some of it di­rectly in the mar­ket. Traders who are build­ing LNG port­fo­lios may even­tu­ally lock up some of that vol­ume with the con­sumers, thereby act­ing as an in­ter­me­di­ary, says Mark Gyet­vay, chief fi­nan­cial of­fi­cer of No­vatek PJSC, a de­vel­oper of LNG projects in the Rus­sian Arc­tic. While tra­di­tional con­tracts for LNG were for fixed de­liv­ery from point A to point B, there is now “a mid­dle group that’s come in,” Gyet­vay says.

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