THE VALUE OF SUPPLY AND DEMAND AGGREGATORS IN THE LNG CHAIN

摘要

The next stages in the evolution of the LNG business, from a series of separate fully integrated plays to a mature, global business comprising integrated plays and interlinked but disaggregated businesses are much debated and by no means certain. One theme that emerges is the need for ‘aggregators’ to connect and enable some of the ‘disaggregated’ investment opportunities giving producers and customers the confidence to invest with the assurance that subsequently the value of their investments will be maintained. rnA case can be made for looking towards the crude oil market as an analogy. The market is very liquid and there are well-developed futures markets allowing traders to mitigate their risks. Today these mechanisms allow investment decisions for new production to be separated from the market and vice versa. By comparison, the LNG industry has higher costs relative to the value of the product with low liquidity and limited futures markets for risk mitigation. The industry is still largely based on longterm bilateral contracts. Supply and demand aggregators, such as Shell, are emerging with portfolios of market outlets, ships and supplies. These aggregators working on the margins, alongside the traditional long term contracts will help to balance supply with demand and maintain economic efficiency for investments facilitating the growth of the industry. rnDesirable qualities for aggregators are identified: long term commitment to LNG, financial strength with risk management; large portfolio with global reach. Shell is well equipped and positioned to be such an aggregator.