Let's talk LNG trading
With many of the BBs and smaller houses jumping onto the LNG trading bandwagon traditionally dominated by the oil/gas majors, what do you think of the prospects for LNG trading in the future? And will the majors continue to control the market for the mid to long term?
I'm in the industry and am keen to hear views on this. LNG looks to be headed for spectacular growth with good prospects for those on the ground, but how and where would you position yourself to gain the most from a career in LNG trading? Banks seems to be where the money is.. but they're finding it tough going given limited shipping capacity.
http://www.reuters.com/article/idUSN0729567620101207?pageNumber=2
Interesting article, but rather optimistically phrased in my view - it's still the traditional oil traders that are doing well. Banks are finding it hard going.
Apart from the oil majors, Gunvor has been doing well because of their oil industry experience. And with the exception of JPM, the other banks cited have been playing with a few to no cargoes. Compare that with a large player with easily 100 or so cargoes traded a year. Granted, this includes long term contracts, but on what basis can a small player compete, aside from offering prices at very finely sliced margins? Unsustainable strategy.
I think the lack of ability to fully financially speculate on LNG. Along with the balance sheet and capital intensity of trading such cargoes. Makes little sense for banks to enter this market right now (if ever).
Most tankers from Qatar to US/Asia, are speficially made for that deal/dock. You can not just change this stuff on the fly.
This is the same for most physical crude and products.
It's true that nat gas is much more tradeable and thus more attractive for banks. But the margins in LNG make it a worthwhile proposition if you can trade just a few cargoes a year - all you need is a good trader or two, with support from your existing commodities team. Furthermore I think many of the banks I've spoken with have ambitions to expand their teams in a big way. Citi, for one.
While projects do build tankers, there is often surplus shipping capacity (during downtimes, plant shutdowns etc) during which they can charter out vessels. In this tight shipping market it's another good business to be in. I'm curious what GS is doing in this space - anyone heard what they're up to? Or are they too busy trading conventional commodities?
http://www.gasstrategies.com/publications/gas-matters-today/78654
Big oil? Shell is now big gas. Largest producer of the majors, with XOM following closely.
Liquefied Natural Gas.... next big energy trading product??? any thoughts (Originally Posted: 09/10/2007)
any thoughts?
No, it won't be, because it is still just natural gas, but in a different state. However, it will greatly affect the prices of natural gas. As LNG becomes more commercialized, natural gas will become more of a global product (like oil) than a regional product, like it is now.
Short term LNG Trading (Originally Posted: 04/01/2014)
I've been reading that activity in the "short term" LNG market is slowly picking up. I found a few firms who specialize in this area and I'm wondering what all the dynamics are involved in that market. I understand the long term market was really more about structuring deals and probably more asset valuation based. But what about the short term market? What are all the products in play here? We have freight, I assume physical gas trading along with financial, options, probably asset optimizing, various spread markets, storage plays.
I'm just wondering if I got involved in a firm that specialized in this area, what kinds of things would I be doing and learning about and what type of skill sets would be required.
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