Full article can be read here.
-
Europe is on track to import more than 600 cargoes of US LNG this year
-
Each cargo could earn traders up to $125 million in the spot market
-
EU gas buyers are signing up for long-term LNG deals to mitigate spot price volatility
-
EU leaders are squabbling over a pointless price cap instead of fast-tracking vital demand reduction policies
If you were in any doubt about where the real money is being made during this prolonged energy crisis, look no further than commodities trading house Trafigura. The Swiss-based global trader made an eye-popping $7 billion profit in its 2022 annual results. That’s more than the company’s previous four years’ profits combined. Shareholders and top traders are divvying up a cool $1.7 billion in payouts.
Trafigura trades the full gamut of oil and petroleum products, with crude accounting for nearly half of its physically traded volumes. Liquefied natural gas (LNG) is only a small part of its portfolio (4% by volume) but Trafigura is an important player in transatlantic gas trade. The company holds LNG offtake agreements with Cheniere Marketing and Freeport LNG in the US, and with other LNG producers in the Middle East and Asia.
Trafigura also holds positions across the gas value chain and leveraged those to help get gas to Europe.
“Using our network of leased pipelines, we were able to carry gas from the Permian Basin, which straddles West Texas and southeastern New Mexico, to liquefaction plants on the coast, then across the Atlantic to deliver it to our regasification slots in Europe.
“From here, our LNG and Natural gas team was able to trade and deliver the molecules to where they were needed. In many instances, the gas went into leased storage ahead of the winter.” – Trafigura
So when we talk about the gas trade becoming obscenely profitable from war in Ukraine, Trafigura is the type of company to hold in mind. It makes money at every stage of the process: when the molecules are piped from the wellhead into the Texas gas grid; when they are liquefied and loaded onto a cryogenic vessel for transport; while they are en route to Europe; when they are unloaded at a receiving terminal and warmed up back into a gaseous state; when those molecules are pumped into the transmission network; and when they are injected into an underground storage facility (and when withdrawn later).
There is a moral debate to be had about whether lining the (already deep) pockets of Trafigura’s traders and shareholders is preferable to sending (considerably less) money to the Kremlin for the same amount of gas. In the context of war in Ukraine, Trafigura could be painted as part of a heroic corporate effort to bring ‘freedom molecules’ to Europe. Even if we accept this premise, the financial cost of those ‘molecules of freedom’ bears scrutiny.