WoodMac: four trading houses shaking up the LNG industry

Four trading houses traded an impressive 9 percent of total liquefied natural gas (LNG) sold worldwide in 2017, according to a report by the research and consultancy group Wood Mackenzie.

Trafigura, Vitol, Gunvor and Glencore are “dominating” the LNG trading landscape and these four firms traded about 27 million tonnes of LNG last year, the consultancy said.

Several other commodity trading houses such as Noble Group and DufEnergy have branched out into LNG from their core oil trading businesses, but their footprints are still “small”, it said.

Wood Mackenzie estimates that Trafigura traded around 8.1 million tonnes of LNG last year followed by Vitol with 7.5 million mt. Gunvor and Glencore traded around 6 million mt, each.

“As these four trading houses enter the market alongside large buyers and portfolio players, they start to resemble mini-portfolio players,” the report said.

According to Wood Mackenzie, past strategy has been to structure their positions on a cargo-by-cargo approach building upon emerging LNG markets in Egypt, Pakistan and Argentina. Now they want more.

Mid- to-long-term supply and market positions provide a platform for future growth – perfectly illustrated by the recent deal between Cheniere Marketing and Trafigura, the consultancy said.

To remind, Trafigura has agreed to purchase approximately 1 million tonnes per annum of LNG from Cheniere on a free on board (FOB) basis for a term of 15 years beginning in 2019.

“Investment in LNG infrastructure allows for easier access to markets and trading optionality and creates bespoke solutions crafted to meet buyer needs,” Wood Mackenzie said.

LNG World News Staff