LNG News Editor:
Global commodities firm Trafigura said in its fiscal 2021 report that revenues, earnings and liquefied natural gas volumes increased amid rising prices, partly because of stronger LNG demand from Asia due to low hydropower reserves this year in China and also lower coal production.
Trafigura said LNG spot cargo values, the Japan-Korea Marker price, reached a record level of $35 per million British thermal units as the region attracted increasing numbers of shipments despite production disruptions in Russia, Australia, Nigeria and Norway.
Inventories
“European inventories were also at extremely low levels coming out of summer 2021,” said Trafigura.
“This points to the potential for further disruptions if the continent sees another cold winter and Europe is not the only area that has had to deal with power-related curtailments with China enacting production cuts, primarily in the energy-intensive steel and aluminium sectors,” explained the firm.
Trafigura’s LNG volumes rose about 10 percent in the fiscal year to the end of September as the firm continued to expand the business and volumes increased to 14 million tonnes compared with 12.7MT in the prior-year period.
Trafigura said its integrated LNG and natural gas team had “performed well, weathering the multitude of storms the gas market experienced” during the year.
Trafigura posted 57 percent higher fiscal 2021 revenues of $231.3 billion for all commodities sectors, reflecting higher commodity prices and increased trading volumes.
Underlying gross earnings rose 13 percent to $6.86Bln from $6.07Bln in 2020.
Net profits amounted to $3.07Bln, almost double the prior year’s result, despite including a one-off, non cash accounting adjustment which reduced net profit by $716M due to international accounting rules on the treatment of a foreign currency reserve following the consolidation of Puma Energy into the Trafigura Group.
“In these extremely volatile times, simplicity of supply chains remains our guiding principle,” Trafigura said.
Looking forward, Trafigura said its goal over the next 12 months is to work with the company’s customers to “create solutions that protect them as much as possible against such price fluctuations” in the future.
The firm noted that recent events have illustrated that natural gas is vitally needed to fuel baseload power supply alongside renewable power and, in some applications, as a transition fuel.
“Trafigura’s performance in 2021 again set new records in terms of volumes handled and overall profitability,” said Jeremy Weir, Trafigura’s Executive Chairman and Chief Executive.
“We also made excellent progress over the course of the year in further diversifying our business to play a meaningful role in the ongoing energy transition,” added Weir.
Tight market
Trafigura believes that LNG supply would have been tight in any case as plants were subject to maintenance that had been delayed by Covid-19 and a number of facilities experienced greater than usual reliability issues.
“Europe and the Far East out-competed each other to attract US LNG, pushing the price up as low inventories in Asia and Europe caused market concern,” said Trafigura.
“We complemented our existing natural gas trading operations in Europe, Mexico and the US by acquiring licences to trade gas in other liberalising domestic markets,” it added.
