Trafigura boosts LNG trade by 53 pct

December 7, 2016

The Golar Ice and Golar Crystal conducting an open water ship-to-ship transfer of LNG in Gibraltar. Both vessels were under Trafigura control during this operation. — The Golar Ice and Golar Crystal conducting an open water ship-to-ship LNG transfer in Gibraltar. (Image courtesy of Trafigura)

Trafigura, one of the world’s largest commodities trading firms, said its LNG volumes rose 53 percent in the 2016 financial year as the global LNG market continued its rapid expansion.

The independent trading company increased its LNG trade to 6.4 million mt in the financial year ended September 30, from 4.2 million mt a year ago, according to Trafigura’s annual report.

To remind, Trafigura’s LNG volumes more than doubled last year from 1.7 million mt in 2014.

Trafigura noted in its report, that low prices enhanced the competitiveness of LNG as a fuel for power generation and drove a broad-based increase in demand this year, notably in Egypt, Pakistan, India and China.

At the same time, the growth in liquidity observed in the past two years accelerated at a pace faster than many had expected, Trafigura said.

“More and more market participants now realise that market liquidity is a solid basis for security of supply, creating a virtuous circle of increasing confidence and increasing participation in the spot market.”

“Although, disappointingly, the growth in liquidity has to date not enabled the creation of a widely used price benchmark for hedging purposes,we continue to believe this is just a matter of time, and the launch of an LNG index by Singapore’s SGX exchange was a promising step in this direction,” the trading company said.

Besides boosting volumes, Trafigura said it expanded the company’s LNG trading team in Geneva, Houston and Singapore. It also hired additional traders in Europe and the US to start a regional
natural gas trading business.

“The intention is to establish a sustainable physical gas business in Europe and the US, creating synergies where possible with the LNG book as energy market liberalisation continues and LNG and natural gas markets converge.”

In 2016, Trafigura has also launched an LNG infrastructure business as the Geneva-based company expects lower cost, modular and flexible infrastructure will provide a “powerful support for our trading business as infrastructure assets have for other Trafigura trading desks since the company’s inception.”

Looking ahead, Trafigura expects a further increase in global LNG supplies with prices that would stimulate new demand.

LNG World News Staff