Tuesday, 24 October 2006 15:51
LNG trading strategies require diverse approaches
Saeid Mokhatab and David Wood
There is a distinct contrast between two prevailing LNG trading alternatives: 1) the traditional, risk-averse, long-term contract-dependent with a floor price and tough take-or-pay terms; 2) the free market, short-term and long-term trading terms with prices indexed to a volatile gas market benchmark price.
These trading alternatives - result in a quite different balance of risks and rewards among the parties in each case.
Long-term contracts give sellers the assurance that they have defined and secure outlets for substantial volumes of gas at prices usually indexed to market prices for competing fuels.
Published in
Sep 2006
