Liquefied Natural Gas Trading

Sources of energy are in constant supply but with global warming and the effect of poor air quality on public health and economic development becoming increasingly worrying issues, countries across the world are cracking down on carbon emissions. Instead there is a move away from fossil fuels towards cleaner energy alternatives. Natural gas produces lower carbon emissions and is abundant meaning it can be a clean, affordable way to provide heating for industrial, commercial and residential customers around the world.

Redstone Commodity Search has been developing their market presence in the international Liquefied Natural Gas (LNG) market and has developed an enviable list of available candidates in the major LNG hubs. Redstone Commodity Search has recently helped on the following hires:

  • LNG Purchasing Manager, Europe
  • LNG Analyst, France
  • LNG Broker, Switzerland
  • LNG Ship Manager, Singapore
  • LNG Trader, Switzerland

What is Liquefied Natural Gas?

Natural gas is a fossil fuel made up of hydrogen and carbon compounds which can be found in isolation or in association with oil (for more information see oil trading). Wells are drilled to extract the gas before it is transferred to a gas processing plant to remove impurities and by-products. It is then transported through a network of pipelines and delivered to the customer.

Liquefied Natural gas is natural gas which has been cooled to a temperature of -260 degrees Fahrenheit. At this temperature it converts into a liquid state making it easier for storage and transport, this process is called liquefaction. In this liquid state, it become 1/600th of its original volume.

In liquid form it is much easier to store and transport. While natural gas is traditionally transported through pipelines, liquefying it means it can be transported across oceans and areas where there are no pipelines. LNG is transported in specially-built tanks on double-hulled ships which are among the safest in the shipping industry.

Once it has been shipped to its destination, LNG is warmed to return it to its gaseous state in regasification plants, and is held in a ‘market hub’ before being delivered as natural gas through pipelines to customers.

How is Liquefied Natural Gas Traded?

Physical trading of LNG is increasing, there are LNG trains (liquefaction plants) operating in just under 20 countries including: Algeria, Australia, Brunei, Indonesia, Equatorial Guinea, Malaysia, Nigeria, Norway, Oman, Papua New Guinea, Peru, Qatar, Russia, Trinidad, the United Arab Emirates, the United States, and Yemen.

The Middle East dominates the LNG exports market with Qatar being the largest exporter, holding almost a third of the market share, followed by the Asia Pacific (Australia and Papua New Guinea), Malaysia, and Nigeria.

Asia is the biggest importer of LNG: China, India and other Asian countries have all been increasing their demand for LNG meaning it has been growing faster than either oil or coal in each of these economies. Demand is also increasing in Europe and the Middle East with both regions seeing new countries import LNG in recent years.

Derivatives contracts for LNG are not as diverse as other products but there are some available. The Chicago Mercantile Exchange (CME), Singapore Exchange (SGX) and Intercontinental Exchange (ICE) offer contracts: LNG Japan/Korea Marker Future (2015), SGX LNG Index Group (2016), and JKM LNG Future (2016) respectively.

Who are the Customers?

  • Natural gas power plants
  • Domestic and commercial consumers to heat buildings
  • Plastics and chemicals manufacturers
  • Owners of natural gas vehicles (NGVs)