Gunvor to expand into spot LNG trading as supply increases

Bloomberg

Gunvor Group, the world’s fourth-biggest oil trader, plans to expand into short-term buying and selling of liquefied natural gas (LNG) as global supply rises, two people with direct knowledge of the matter said.

The Cyprus-based trading house will charter vessels for spot agreements and sell cargoes in Asia and the Atlantic basin, tapping into supply from Nigeria, Australia and Southeast Asia, the people said, asking not to be identified because the plan is confidential.

Seth Pietras, a spokesman for Gunvor in Geneva, declined to comment by e-mail.

Gunvor follows Vitol, Trafigura Beheer, Glencore, global energy companies and utilities in competing for spot cargoes as new projects boost LNG supply, first from Australia and later from the US.

The company, which has so far focused on long-term contracts, has an agreement to liquefy natural gas at the planned Magnolia LNG project in the US as well as an accord to supply Panama with the fuel.

Gunvor is also considering a tie-up with OAO Novatek for the sale of fuel from the proposed Yamal LNG project in the Russian Arctic, Leonid Mikhelson, CEO of Tarko-Sale, Siberia-based Novatek, said in January.

Gunvor hired Ksenia Babenkova as an LNG trader for its Geneva office from Gazprom Marketing & Trading, while Kalpesh Patel from BG Group will start in Singapore, according to the people. They will focus on short-term trading.

Rising Trade

LNG trade will rise by 40% to 450 billion cubic meters (16 trillion cubic feet) by 2019, the International Energy Agency said in its medium-term gas market report in June. Spot and short-term LNG contracts accounted for 27% of total trade last year, compared with 25% in 2012, according to the International Group of Liquefied Natural Gas Importers, a Paris-based lobby group.

Spot prices for cargoes delivered to Northeast Asia, the world’s biggest buyer of LNG, rebounded to $11.70/MMBtu on Aug. 18, according to New York-based Energy Intelligence Group’s World Gas Intelligence publication. Prices fell for 21 weeks through July 14, the longest stretch since Bloomberg began reporting WGI data in June 2010, from an historic high of $19.70 earlier this year.

Almost 70 million metric tons of LNG capacity, or 20% of global capacity, is poised to come online in the next few years in Australia, Neil Beveridge and Oswald Clint, analysts at Sanford C. Bernstein & Co., said in an Aug. 22 report.

Source: Bloomberg