Markets

LNG

 

Your LNG Challenges

Accurately and consistently modelling forward and spot LNG hub prices and oil indexes, and capturing the spread between the variables

Valuing long-term and flexible LNG contracts containing diversion and index price

Optimising physical and financial LNG portfolios with diverse constraints and optionality

Realistically capturing the characteristics of a deal in a system

Understanding, valuing, and maximising the full optionality in an LNG portfolio which contains flexibility in routes and destinations, options to re-gas, or sell into a gas hub market

Understanding the values derived from FOB vs DES sales

LNG traders, originators, and risk managers benefit from deal analysis, risk metrics, and scenario analysis tools

We Understand Your Market

LNG markets are transforming at a rapid pace. Increased supply and demand for LNG, and the growth in the number of LNG routes and terminals are creating a desire to move from typical long-term oil indexed agreements to shorter, more flexible contracts with diversion optionality and priced to either a gas hub (like TTF or NBP) or LNG indices (like JKM). This increased market participation is putting pressure on trading margins but also creating more mature and liquid forward and spot LNG markets. These unique market dynamics underpin the need for a specialised approach across the whole value chain from LNG deal structuring, ADP planning and portfolio optimisation right through to trading and risk management.

Be confident that you are working with specialists that understand your LNG trading, valuation, optimisation and market and credit risk management challenges. With many years of experience, we see your concerns from a practical, real-world perspective.

Our Solution: LNG

Lacima offers a complete solution from structuring and trading, to risk management of LNG portfolios. It uses the same consistent models and methodologies to capture the unique market characteristics whilst providing the comfort of stress testing and scenario analysis tools to analyse future uncertainty.

Whether you are in Trading, Structuring & Origination or Risk Management, use Lacima’s solution to accurately value LNG contracts and physical assets and support key decision making by leveraging Lacima’s risk solutions to gain deep insights into the drivers of risk and how they change through time. Lacima calculates the full range of market and credit risk metrics including Earnings-at- Risk (EaR) and Revenue-at-Risk (RaR), as well as more standard risk management metrics such as Value-at-Risk (VaR) and Potential Future Exposure (PFE), for superior trading and risk management results.

LNG Traders, Originators and Risk Managers can enjoy a range of benefits including:

  • Value and hedge the intrinsic and extrinsic value of an LNG portfolio
  • Undertake comprehensive LNG deal analysis by valuing LNG specific structures and contracts either standalone or in a wider LNG portfolio.
  • Capture pricing, optionality and flexibility in deal valuation, including:
    • Indexation to multi-commodities or multi-currencies
    • S-Curves
    • Volume flexibility
    • Multiple exercise conditions, multiple exercise period (weekly, monthly)
    • Destination flexibility
    • Cancellation/extension options (DQT/UQT)
    • FOB vs DES
  • Simulate spot and forward LNG hub prices by utilising Lacima’s single factor, multi-factor and spread models to stochastically model LNG spot and forward prices, fuel costs, transportation costs and other key variables
  • Comprehensively optimise physical operation and financial hedging of a portfolio of LNG cargos, markets, assets and deals, subject to physical and trading constraints
  • Report full risk metrics including VaR, EaR, or Profit-at-Risk or to manage and understand the risks in your LNG portfolio
  • Calculate full distributions: for revenues, costs, profits and volumes
  • Perform scenario analysis for a wide range of user defined parameters, forward curves, portfolio mixes or volatilities and other model parameters.

Extend your insights

Integrate output data from your Lacima Analytics solution with the business intelligence tool of your choice to create powerful, interactive and personalised dashboards, tailored to your specific analytics needs. Combine them with existing company dashboards for a holistic, consolidated business intelligence platform.

Model prices, valuing contracts and optimise trading, valuation, and risk management for the LNG market