Liquefied Natural Gas as a Commodity
|LNG is a Tradable Commodity...||...But a Complex and Evolving One|
|Always Available at a Price||Lack of Standard Terms|
|Price Responsive to Supply/Demand||Complex Seaborne Logistics|
|Marginal Cargo Follows the Money||Fragmented Trading and Pricing|
|Global Pricing Impacts||Minimal Transparency|
|Introduction of Risk-Taking Firms||Thin, Illiquid Benchmarks|
Designing an Online Market for Physical LNG Requires Unique Solutions
Handle Complex Markets
With so little standardization of commercial terms or trading practices, the terms of trading in LNG are more complicated than price/size/term. The platform must recognize this and allow for more detailed negotiation of highly structured and bespoke terms.
Support Market Evolution
The existing market for LNG is evolving and growing. The trading platform that supports it must leave room for the market to breathe, ensuring that buyers and sellers are provided with choices as to the trading formats they use, the terms, and the transparency.
Push Deeper into the Transaction Life Cycle
The challenges of LNG trading do not stop at the execution of the trade, nor should the trading platform. It is necessary to incorporate a communication channel between the buyer and seller through the loading, delivery and unloading of each cargo.
Incorporate Third-Party Products and Services that Support Liquidity Objectives
As the LNG market evolves, new products and services can encourage liquidity by making existing processes simpler, more cost-effective, more efficient and less risky. A delivery method to introduce these products and services is a key requirement for LNG trading.