Developing Profitable LNG Pricing Strategies

Master dynamic price-setting mechanisms and global trading principles to secure successful agreements

Attend this two-day interactive programme to:

  • Apply dynamic pricing formulae to define the optimum tariffs and costs in the current and future LNG market
  • Engage in trading simulations to investigate various options to control financial risks and maximise your profits
  • Review pricing schemes – both from a buyer’s and seller’s perspective – to  develop sales contracts and purchase agreements
  • Identify advantages and disadvantages of each types of price-setting mechanism to understand buyer’s and seller’s preferences
  • Analyse the global LNG supply/demand to foresee the allocation likely to change in the next few years
  • Explore the future of LNG pricing to master project costs and apply “The Rule of Twelve”



 

What is the programme about?

The global LNG market is facing a structural dilemma. On the one hand, buyers are in favour of lower LNG prices and demand more flexibility and diversity of supply. On the other hand, LNG producers need guaranteed high prices for long-term contracts to justify the capital investment in building new plants. To satisfy the global demand and ensure a reliable supply of LNG, the most effective LNG pricing strategy is neither the lowest price for the buyer’s, nor the highest price for the seller. Buyer’s and seller’s alike have to carefully balance the advantages and disadvantages of different pricing options to find the optimum tariffs and costs for deliveries now and after 2020.

This intensive two-day training programme is a must-attend course that equips participants with all necessary insights into the global LNG market and its impacts on pricing strategies, tariffs and cost. Buyers as well sellers will gain expert and applied understanding of the development pricing strategies, principles for sales contracts and purchase agreements to leverage the advantages and minimise disadvantages of various price-setting scenarios in the global LNG market today and in the future.


 

 

Oil and Gas professionals who require a thorough overview of current and emerging best practices of pricing strategies, business developments and international trade, related to LNG projects:
 
  • General Managers
  • Commercial Analysts
  • Account Managers
  • Structuring & Pricing Professionals
  • Business Advisors
  • Business Developers
  • Finance Managers
  • Traders
  • Energy & Modelling Analyst
  • Contract Managers
  • Portfolio Managers

 

Day 1

SESSION 1: LNG Supply/Demand

- Brief introduction to LNG The role of the long term contract (and why this role is likely to
remain)


- LNG supply/demand around the world

  • How LNG is ‘allocated’ to the various markets
  • How LNG can be moved between markets
  • How is the allocation likely to change in the next few years

SESSION 2: Global Market Characteristics

Scene Setting – Pipelines - historical and milestone achievements

- The characteristics of the global gas markets

- How prices for gas (and LNG) are set in the various markets of the world

  • ‘Mature’ Asian markets – Japan, Korea, Taiwan
  • New Asian markets – China, India and others
  • Europe – North vs South
  • The Americas
  • The Middle East

- How prices have evolved since 2004

INTERACTIVE SESSION: What are the advantages and disadvantages of each types of price-setting mechanism? Participants will analyse which type of pricing sellers prefer; which type buyers prefer – and why different types of buyer in the same location prefer different types of prices.

SESSION 3: Pricing Formulae

- The various types of pricing formulae

- Crude oil indexed; with and without S Curve

- Oil products indexed; additive and multiplicative

- NBP-indexed markets in NW Europe

- Henry Hub Indexed:

  • Imports to the US
  • Exports from the US and Canada

- Other pricing types

- The advantages of each type of pricing
 

SESSION 4: Prices and Trading

- Prices for Traded LNG

  • How much traded LNG is there and who controls it?
  • What are the price drivers for traded LNG?
  • The history of traded prices
  • Traded LNG price markers

- Future trends in traded LNG

INTERACTIVE SESSION: Trade Simulation Either as a whole class or in smaller groups, participants will engage in a simplified, brief simulation of the trading of a cargo of LNG looking at the various options available and the risks and benefits of the main options.

Day 2

SESSION 5: Price Reviews

- Why do they exist?

- The elements of a price review clause:

  • Timing
  • The “trigger”
  • The “Comparator”
  • The process
  • Arbitration and expert determination

- The types of price review clauses

SESSION 6: Price Review Workshop

INTERACTIVE SESSION: Interactive session: Price Review Using a variety of examples of price review clauses drawn from real LNG sales contracts (suitably modified to be anonymous, participants will discuss the possible format of a price review clause for a potential new LNG contract – looking at this from both a buyer’s and seller’s viewpoint.

SESSION 7: Future Pricing of LNG

- Problems with today’s prices

- LNG project costs and “The Rule of Twelve”

- Future trends in oil indexed prices

- Other price types

- The role of NW Europe (and India?) as the global balancing markets

INTERACTIVE SESSION: Future oilindexed prices Split into two or more teams, participants will discuss the future of oil-indexed prices – whether they can remain in today’s market, or if hub-based pricing will become the norm?

SESSION 8: Issues Affecting LNG Prices in the Future

- LNG as a transport fuel

- Carbon pricing – is gas environmentally friendly or not?

- Putting it all together:

  • Where are we today?
  • What might the future look like?

- Conclusions

- Wrap up

 

 

Course Categories

Testimonials for our Courses

“The EPC focused sections of the course were most useful to me.”


 

Delivered by

LNG Consultant

Energy professional with 24 years international commercial and technical management experience in

Dates & Locations



This course is only available as a custom course tailored for your business, contact us to discuss your requirements.