LNG Trading: Moving Forward to Energy Transition

LNG (Liquefied Natural Gas) is natural gas in liquid form for convenient long-distance transportation without a natural gas pipeline. It is produced from natural gas that contains methane as a main component, separated from other contaminants and elements such as carbon dioxide, mercury and sulphur. When reduced to -160°C the gas turns into liquid at atmospheric pressure, decreasing the volume by approximately 600 times.

Due to its lower environmental impact, LNG demand has grown strongly over the past five years. It renders lower carbon emissions in power generation and better cost competitiveness than coal and fuel oil. Moreover, LNG is safer than nuclear power. 

Currently, about 400 million tonnes of LNG are traded annually, with Qatar, Australia and the United States as major producers. The largest LNG import demand in Asia is from Japan, China, and South Korea. Thailand imports approximately 6 million tonnes per year with volumes growing significantly to replace declining domestic gas production. 

Changes to LNG trade patterns are becoming more challenging. Besides long-term contracts, in recent years, 40% of global LNG volumes have been traded on a spot or short-term basis. The shipping sector is required PTT LNG trade in the spotlight: Moving Forward to Energy Transition to ensure sufficient capacity to meet the stunning growth.

PTT International Trading Business Unit (PTT Trading) sees opportunities in the changes in the LNG market that could create additional value for PTT Group, especially since setting up an LNG Trading Desk in February 2019 under PTT International Trading Pte Ltd in Singapore (PTTT), wholly owned by PTT Public Company Limited (PTTPLC). Operating more than 30 years, PTTT has extensive experience in international trading in crude oil, refined products, LNG, petrochemical products and derivatives.

Focusing on LNG, PTTT’s LNG team has covered several major trade flows around the world during the past two years. Trading volume increased from 0.5 million tonnes in 2019 to 0.8 million tonnes in 2020. In H1 2021, the team accomplished the first cargo reloading as the country faced excess capacity. The surplus was exported to North Asia during a surge in spot prices due to severe cold weather.

With strong determination, the LNG team set a goal to reach 1 million tonnes within 2021 and over 2.5 million tonnes within 2025, as per projected growth in global LNG demand. Besides extensive trading expertise, PTT Trading has established subsidiaries in strategic global trading hubs such as Singapore, China, UK, UAE and US. 

Realising that the US is one of the world’s largest LNG producers and exporters, PTT Trading has broadened its expertise and trade flows accordingly. Furthermore, it maximises efficiency in supply chain management, risk management and value chain while closely monitoring pricing volatility. 

Thailand has been importing LNG since 2011, reaching volumes around 6-7 million tonnes a year and trending continuous growth. Moreover, the government is pushing to liberalise the gas market in Thailand, aiming to make the country a trading hub for the region. Currently, PTT has an 11.5 million tonnes LNG import facility and plans to expand by 7.5 million tonnes within 2022. With PTTT’s experience in international trading along with global networks and experience in risk management and risk control systems, it will play a vital role in PTT Group’s LNG value chain that helps to ensure the country’s energy sustainability.

Mr. Disathat Panyarachun, Senior Executive Vice President, International Trading Business Unit, PTT Public Company Limited, said, “LNG is a key to Energy Transition and the global trading portfolio is increasingly focusing on LNG business. During the COVID-19 crisis in 2020, despite a 9% drop in global oil demand from the previous year, LNG demand continued to grow by about 3%. This is also in contrast to the reduction in demand for various commodities due to the pandemic.”

“PTT has a vision in line with global energy trends of moving towards a more environmentally-friendly energy future. Thailand will become a regional LNG hub by 2022. With an LNG port at Map Ta Phut and Nong Fab coming on line shortly, PTT will have a total capacity of 19 MMT per year, equivalent to the output of natural gas from the Erawan field in the Gulf of Thailand.” 

“PTTT USA will help complete the flows since it enhances LNG trading with one of the world’s top producers. PTT will trade world-wide around the clock. This guarantees our readiness to serve Thailand with energy security and perpetuates our professionalism on the global stage.”

PUBLISHED by Bangkok Post : 5 AUG 2021 AT 11:30