Geneva-based Vitol increased the volume of LNG it traded last year by 185%, to 7.4M tonnes from 2.6M tonnes in 2016. The performance pushed the company up into the top rank of LNG trading companies.
Vitol has been active in LNG trading since 2006 and is now one of the four commodity merchants with a wide range of activities in this segment. Between them, Vitol, Trafigura, Gunvor and Glencore were involved with 9% of the LNG sold worldwide in 2017, or 27M tonnes.
Trafigura traded 8.1M tonnes in 2017 while, according to Wood Mackenzie estimates, Gunvor and Glencore handled about 6M tonnes each. A number of other commodity trading houses, such as Noble Group and DufEnergy, have added LNG desks to their traditional oil trading businesses in recent years but their presence in the gas market is still relatively limited.
The changing nature of the LNG trades over the past decade, with a growing number of exporters and importers and the rise of spot sales, reloads, destination swaps and more flexible pricing has supported the emergence of the trading houses.
Not as risk-averse as some players and with adept ship-chartering departments able to seize spot hire and short-term charter opportunities, trading houses have proved to be increasingly suitable intermediaries between LNG buyers and sellers, not least by helping to open up markets.
The leading LNG trading houses continue to implement measures to bolster their involvement with the market. Vitol, Trafigura and Gunvor, for example, have been working with industry partners to develop LNG receiving terminal projects in Pakistan and Bangladesh where the use of floating storage and regasification units (FSRUs) is poised to underpin major import growth.
Trafigura’s 2017 performance represented a 27% jump on the LNG volumes handled the previous year. In January 2018 the Amsterdam-based trader announced a deal with Cheniere Energy under which it will purchase 1 million tonnes per annum (mta) of LNG on a free-on-board basis for 15 years beginning in 2019.
This year Vitol is also adding to its LNG portfolio through the start of an agreement signed with Gazprom Marketing & Trading in April 2017 under which it is purchasing 0.3 mta from the Russian company.
Vitol is also a major player in the LPG trades, handling 14.3M tonnes of this liquefied gas in 2017. Although slightly down on the volumes traded in 2016, which was a particularly strong growth year for Vitol in this segment, the figure nevertheless represents a significant percentage of the global seaborne trade in LPG.