Trafigura LNG Trading More Than Doubles on New Buyer Demand

  • LNG volumes rise to 4.2 million tons in year through Sept. 30
  • New buyers helped increase liquidity, LNG head Hallouche say

Trafigura Beheer BV more than doubled its liquefied natural gas volumes this year amid demand from new buyers including Egypt and Pakistan.

The commodity trader boosted the amount of LNG handled to 4.2 million metric tons in the financial year ended Sept. 30, from 1.7 million a year earlier, it said Monday in its annual report, following a doubling in volumes last year that made it the world’s biggest independent LNG trader. Having started in the Atlantic basin, Trafigura expanded to markets east of Suez, it said.

“The industry is now so flexible that a new buyer can come in, build infrastructure and bring supply in a very short period of time,” Hadi Hallouche, 35, head of LNG trading at Trafigura, said by phone from Geneva. “This has helped increase market liquidity."

The Middle East and North Africa this year had the biggest growth in LNG demand as Egypt and Jordan started floating terminals, which typically allow nations struggling to combat power shortages to begin imports more quickly and at a lower cost than land-based facilities. Pakistan and Lithuania also added floating storage and regasification units in the past year.

Trafigura also supplied cargoes to Jordan this year, according to Jordan’s National Electric Power Co.

Rising Liquidity

“Liquidity in the global LNG market grew in 2015 as new supplies from Australia, Indonesia, and Papua New Guinea coincided with the emergence of new LNG buyers such as Egypt, Pakistan and Jordan,” Trafigura said in the report. “With more available shipping capacity, this has created significant opportunities for independent traders.”

The Middle East is on track to import 9.8 million tons of LNG in 2015, compared with 3.9 million tons a year earlier, according to Energy Aspects Ltd., London-based consultants.

‘Tipping Point’

Next year, global liquefaction capacity will rise about 12 percent as plants in Australia and the U.S. start producing the superchilled fuel, according to Sanford C. Bernstein & Co. As output expands and buyers’ preferences change toward shorter-term and flexible contracts, other traders from Noble Group Ltd. to Koch Supply & Trading also seek to grow in the market.

“The market is moving closer to the widely expected tipping point where the majority of global LNG supplies will be traded on a short-term rather than through long-term contracts,” Trafigura said.

Spot and short-term LNG trading will rise to 50 percent of total trade by 2020, according to a forecast from Cheniere Energy Inc.

Trafigura will invest opportunistically in infrastructure, according to the report. Trafigura in June signed an agreement with Singapore LNG to use excess capacity in a terminal on Jurong Island, which Singapore LNG Chief Executive Officer John Ng said is a step forward in facilitating LNG trading out of the island nation.

Trafigura expanded its team in Geneva, Houston and Singapore, according to the report.

“Looking forward, we see the LNG market continuing to grow in size and liquidity, with new American and Australian export flows likely to be a key focus on the supply side and European imports playing an important role in balancing demand,” Trafigura said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE