Changing the way LNG is bought, sold and traded globally

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Katan Hirachand, Managing Director - Energy project finance, Société Générale
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Ahead of Gastech 2018, Gastech Insights spoke to Commercial Governing Body Member, Katan Hirachand, Managing Director – Energy Project Finance Group at Société Générale to hear more about the evolving global gas industry and the new ways projects are financed.

Gastech Insights: What are the new frontiers for global natural gas & LNG?

Katan Hirachand: The past few years have demonstrated incredible ability to connect new markets, establish new uses of LNG and widen the footprint for natural gas. This is against the backdrop of a highly competitive market and the “energy transition” to cleaner fuels showing that gas has a baseload role to play in the global energy mix. The downstream markets have become more “bite-sized” which is forcing a squeeze on suppliers not only in terms of being competitive but also giving flexible supply terms. Many of these new markets are changing the way LNG is bought/sold and traded and it is clear risk is being shifted back to the suppliers in many cases.  

Gastech Insights: How will the greater volumes of LNG now online impact the global gas pricing and trading? 

​Katan Hirachand: This can only be a good thing for increasing demand as LNG becomes more affordable and it’s a great thing that the change has happened pretty quickly over the last few years preceded by a history that was characterised by “tramline” sales with little flexibility. These changes will bring new buyers into the LNG world and provide greater scope for entrepreneurial developers looking at smaller-scale solutions. The “portfolio” player will play a significant role in this space given the flexibility they can provide in the backdrop of markets that have evolved whether through liberalisation or new markets that have emerged for LNG.

Gastech Insights: How does the industry finance regas projects in developing economies?

​Katan Hirachand: FSRU’s have largely led the way in developing economies – this has been a fast and efficient way to open up new markets which had previously not been available. The providers of FSRU’s have taken on the funding burden themselves in most instances and used their own balance sheets in combination with external funds – there are a number of fixtures which entail taking significant residual value risk which may be mitigated through renewals or redeployment and I would see the possibility of funding pools to take this risk become available going forward as the use of FSRU’s proliferate.

Gastech Insights: What are you most looking forward to at Gastech 2018?

​Katan Hirachand: Seeing how the 2nd wave of US LNG has fared; what has been achieved on cutting costs; where innovation has been applied – technically, commercially and financially. Hearing from the new consumers and what they will need to ensure gas and LNG plays a key role in the energy mix.

Share your insights and join the conversation: What do you believe is next for the global gas and LNG industry? Leave your comment below. 

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