Platts proposes to launch global LNG arbitrage matrix

Platts, part of S&P Global Commodity Insights, is seeking feedback on a proposal to launch a global LNG arbitrage matrix on July 15, 2024. The matrix would provide daily analysis of the potential to optimize the sale of an LNG cargo based on that day's price assessments published by Platts.

The arbitrage would compare the potential netback achievable for shipping an LNG cargo to different destinations from various supply basins, expressed as a differential to the appropriate JKM derivative assessment in $/MMBtu.

The matrix would reflect a cargo of LNG being shipped from the supply basin in the middle of the next half-month cycle from the assessment date and priced at the DES assessment for the appropriate arrival half-month period at the destination, based on the voyage time to the destination.

The voyage time assumption from the supply basin to the destination is based on the best-case voyage time in the table "Voyage times in days" of the Specifications Guide Global LNG (/content/dam/spglobal/ci/en/documents/platts/en/our-methodology/methodology-specifications/global_lng.pdf) plus a couple of days for logistical delays. The corresponding freight is assessed and published daily.

For example, LNG Arbitrage North Asia via Cape vs Atlantic (USA loading) would refer to the netback difference between selling a US-loading LNG cargo to North Asia via the Cape of Good Hope and selling the same cargo to Northwest Europe.

On any assessment date in H2 April, the cargo in question would be assumed to ship from the US in the middle of H1 May. When the cargo is sold to North Asia, taking into account the voyage time from the US to North Asia via the Cape of Good Hope, the cargo would be assumed to arrive in North Asia in H2 June.

When the cargo is sold to Northwest Europe, taking into account the voyage time from the US to Northwest Europe, the cargo would be assumed to arrive in Northwest Europe in H2 May.

The Platts LNG Arbitrage North Asia via Cape vs Atlantic (USA loading) on April 25 would be calculated as follows, reflecting a negative arbitrage spread:

The derivatives assessment used in the calculations would be for the most relevant traded full-month contract on the assessment day, either Pricing Month or Mo01. In the above example, it would be the assessment of the June 2024 derivative contract on April 25.

The matrix would have a timestamp of 16:30 London time and be published on business days when both London and Singapore are open.

Platts is proposing to launch the following arbitrage margin calculations:

Platts LNG East West Arb

1.1 LNG Arbitrage North Asia vs Atlantic (West Africa loading)

1.2 LNG Arbitrage North Asia vs Atlantic (Middle East loading)

1.3 LNG Arbitrage North Asia via Panama Canal vs Atlantic (US loading)

1.4 LNG Arbitrage North Asia via Suez Canal vs Atlantic (US loading)

1.5 LNG Arbitrage North Asia via Cape vs Atlantic (US loading)

Platts LNG North South Asia Arb

2.1 LNG Arbitrage North Asia vs South Asia (West Africa loading)

2.2 LNG Arbitrage North Asia vs South Asia (Middle East loading)

2.3 LNG Arbitrage North Asia via Suez Canal vs South Asia (US loading)

2.4 LNG Arbitrage North Asia via Cape vs South Asia (US loading)

Platts LNG South Asia Atlantic Arb

3.1 LNG Arbitrage South Asia vs Atlantic (West Africa loading)

3.2 LNG Arbitrage South Asia vs Atlantic (Middle East loading)

3.3 LNG Arbitrage South Asia via Suez Canal vs Atlantic (US loading)

3.4 LNG Arbitrage South Asia via Cape vs Atlantic (US loading)

As part of this matrix, Platts would use the following existing price assessments:

1. LNG Japan/Korea DES 1 Half-Month – AAPSU00

2. LNG Japan/Korea DES 2 Half-Month – AAPSV00

3. LNG Japan/Korea DES 3 Half-Month – AAPSW00

4. LNG DES West India Marker 1 Half-Month – LMEAA00

5. LNG DES West India Marker 2 Half-Month – LMEAB00

6. LNG DES West India Marker 3 Half-Month – LMEAC00

7. LNG NWE Spot DES 1 Half-Month – AASXV00

8. LNG Japan/Korea derivatives Pricing Month (Singapore Close) – LJKMO00

9. LNG Japan/Korea derivatives Mo01 (Singapore Close) – LJKMO01

10. LNG Japan/Korea derivatives Pricing Month (London Close) – JKLMO00

11. LNG Japan/Korea derivatives Mo01 (London Close) – JKLMO01

12. LNG Nigeria-Japan/Korea Freight cost $/MMBtu – AAUSC00

13. LNG Nigeria-NWE Freight cost $/MMBtu – AAUTG00

14. LNG Nigeria-West India Freight cost $/MMBtu – AAUSS00

15. LNG Middle East-Japan/Korea Freight Cost $/MMBtu – AAUUA00

16. LNG Middle East-NWE Freight cost $/MMBtu – AAUTE00

17. LNG Middle East-West India Freight cost $/MMBtu – AAUSP00

18. LNG US Gulf - Japan/Korea Freight cost via Panama$/MMBtu – LAUVI00

19. LNG US Gulf - Japan/Korea Freight cost via Suez $/MMBtu – LAUVJ00

20. LNG US Gulf - Japan/Korea Freight cost via Cape $/MMBtu– LAUVK00

21. LNG US Gulf - NWE Freight cost $/MMBtu – LAUVE00

22. LNG US Gulf - West India Freight cost via Cape $/MMBtu – LAUVP00

23. LNG US Gulf - West India Freight cost via Suez $/MMBtu – LAUVO00

Please send feedback and questions to LNGeditorialteam@spglobal.com and pricegroup@spglobal.com by June 10, 2024.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.