LNG traders see spot market getting bigger as new plants start
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.