Koch Supply & Trading Takes Nigerian LNG in Market Debut

Koch Supply and Trading has bought six liquefied natural gas (LNG) cargoes of Nigerian origin and leased a tanker to carry the fuel, its first taste of spot LNG trading, trade sources said.

Volumes likely originate from Italian utility Enel's long-term capacity at Nigeria's Bonny Island LNG export facility, several traders said.

"We think this strip of cargoes may not have been bought directly from Enel. It could have been traded around a few times," a trade source said.

The deal was apparently concluded months ago but the cargoes will only start to be loaded onto ships from October for onward delivery.

The new entrant has also sealed its transportation needs with a year-long lease of the 152,300-cubic-metre-capacity Seri Bakti tanker at a rate of $82,000/day, shipping sources said.

Koch Supply and Trading was not immediately available to comment.

Koch set up an LNG trading desk in June last year with a focus on delivering cargoes to East Asia and Latin America, according to a company statement at the time.

New players are entering the LNG spot trading market as banks reduce their presence due to strict capital controls, while growth in traded volumes gives more traders space in which to operate.

Glencore Xtrata, Noble Group, Axpo and DufEnergy Trading recently set up LNG trading desks, joining trading giants Vitol, Gunvor and Trafigura , which made their move a few years ago.

Singapore's Temasek Holdings in April set up its own LNG arm, Pavillion Energy, with $1 billion of capital to invest in upstream projects, storage and import terminals.

Vitol, the world's biggest oil trader and dominant force in LNG among the trading houses, made its mark after securing deals to supply LNG to Kuwait, South Korea and Argentina, in addition to trading regularly on the spot market.

Gunvor bought 19 LNG cargoes from Peru in 2011 and has transacted spot business ever since, while Trafigura won a tender to supply 19 cargoes to Mexico this year.

The trading houses hope to exploit spot trading opportunities to Asia and Latin America at a time when dramatic price differences between geographic regions are fuelling profits.

Prices in Europe are at around $10 per million British thermal units and in the United States have sunk to about $4/mmBtu, while top LNG consumers in Asia and Latin America pay around $15.50/mmBtu.

Reporting by Oleg Vukmanovic; Editing by Dale Hudson (C) Reuters 2013.