Trafigura boosts LNG volumes

Commodity trader Trafigura posted a rise in LNG volumes for the fiscal year ending September 30 as it continues to expand the business.

Volumes rose to 12.7 million tonnes compared to 10.3 million tonnes during the same period last year, Trafigura said in its annual report.

The Geneva-based firm has firm offtake deals with US LNG producers Cheniere and Freeport, but it also works in the spot market.

Trafigura says it managed to grow volumes, deliver to new markets and sustain
profitability despite substantial LNG supply overhang and significant demand destruction in early 2020 due to Covid-19.

The pandemic effects also contributed to record low prices, large scale cancellation of US cargoes, and a subsequent fall of LNG production from 2019 levels despite production capacity actually increasing, it said.

During the fiscal year, the vast majority of Trafigura’s US LNG output flowed to Europe, benefitting the firm’s growing European natural gas operation.

Coupled with favourable spreads, this enabled Trafigura to buildout storage positions and expand into new countries in Eastern Europe.

“In the Americas, it was a year of building up our Texas business and increasing the volume of gas traded in Mexico and Argentina,” the trader said.

Looking forward, Trafigura expects the LNG market to remain structurally oversupplied for at least another year.

“But the lack of final investment decisions on new projects, as a result of weak prices and Covid-19 uncertainty, is likely to result in a substantial tightening of both the LNG and US gas markets from 2022/23,” it said.

“Gas remains the critical transition fuel to achieve the decarbonization goals adopted in
the Paris Agreement; therefore, we expect the pace of activity and the number of participants in these markets to increase over the coming years,” Trafigura said.

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