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Trafigura boosts its LNG traded volumes by 22pct in 2017-18

Gasoil News - Published on Thu, 13 Dec 2018

Image Source: ET
Geneva-based commodity trading company Trafigura increased its LNG traded volumes by 22% to 9.9 million mt in its financial year ending September 30 2018, the annual report said. The increase was driven by a surge in Asian demand, notably in China and South Korea. In China, imports jumped by 45% on the year, supported by a national policy to import natural gas to reduce its reliance on coal for power generation.

In South Korea, LNG purchases also rose sharply due to lower nuclear output, combined with a cold winter and a hot summer.

Japan saw some strong seasonal imports despite rising output from both nuclear and renewable generation. Imports from India were up 19% in 2018 due to infrastructure expansion unlocking further demand.

It said that other emerging market such as Pakistan and Bangladesh “continued to demonstrate their growth potential.” The Asian share of its LNG business jumped to 30%, the company said.

Trafigura said that on the supply side, new LNG volume was generated from Australia, Russia and the US. But because the growth in demand was greater than the growth in supply, the LNG market resulted shorter than expected.

It said that “The widespread expectations that a global LNG surplus would emerge in 2018 were confounded. Instead, the surge in incremental LNG production, notably from the US, was absorbed in Asia and gas prices rose, taking coal along for the ride.”

Trafigura’s traded volumes had already surged 53% on year in 2017 to over 8.1 million mt of LNG.

The company said that “We expect demand to continue its upward trajectory over the next year to accommodate the new production coming online,” pointing to several multi-year offtake agreements signed with LNG producers in 2018.

In particular, it pointed to the first cargo under its 15-year purchase agreement with US LNG producer Cheniere Energy which is due to ship in January 2019. The contract represents 1 million mt/year.

Trafigura said it is satisfied with the current LNG market structure given the diversity of geography, with an important customer base in Europe, Middle East and the Americas as well as Asia.

This, together with further access to infrastructure such as LNG storage and vessels would allow the company to take further advantage of arbitrage opportunities and switch cargoes from Europe to Asia, according to market signals.

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Posted By : Nanda Koijam on Thu, 13 Dec 2018
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