Meet the Timera team: ‘Regime change’ LNG webinar
Our feature content this week is video based for the first time. You can meet some of the Timera LNG team members in a recording of our recent ‘Regime change’ LNG webinar.
Click here for the ‘Regime change’ slide pack from the webinar.
Click here to watch the ‘Regime change’ webinar video recording.
Table 1 provides a ‘key takeaway’ summary to webinar coverage of the LNG market impact of Europe’s pivot from Russian gas to LNG.
| Takeaway | Driver | Impact |
|---|---|---|
| 1. Europe driving market | Europe aggressively competing with Asia for constrained supply until at least 2025 | Global prices set to remain elevated 2022-25 |
| 2. Flex inhibited | High prices & policy mandates acting to materially inhibit European flex provision | Demand response replaces European flex as key driver of marginal prices |
| 3.Price volatility | Reduced market flexibility & major collateral/liquidity constraints | Structurally higher price volatility & shifting correlations |
| 4. Tight market 2022-25 | New regas capacity but limited new supply | New regime market conditions drive value & risk; liquidity & collateral challenges remain |
| 5. Risks increase 2025+ | Demand uncertainty & supply response increase uncertainty 2025+ (further regime change?) | Portfolio construction & contracting strategies key for value creation & risk management |
Table 2 covers key takeaways on the LNG portfolio impact of market regime change.
| Takeaway | Description |
|---|---|
| 1. Game changer | - New market regime causing seismic shifts in LNG portfolio value… creating opportunities & risks |
| 2. Portfolio construction | - Market transition in 2022 is triggering major strategic reviews across LNG companies - Conditions rich with opportunities to deploy capital, invest in assets and aggregate portfolios - As important as capturing value from the current regime is being prepared for the next one (e.g. Chinese SPA activity) |
| 3. Value management | - High prices & volatility drive importance of dynamic management of interdependent exposures - Within portfolio value capture key (high margins vs poor liquidity); large incumbent advantage - Price signals driving relative values of flex (e.g. towards diversion flex, away from US cancellations) |
| 4. Prompt optimisation | - Higher proportion of value monetised via optimisation within year (+ liquidity / logistical constraints) |
| 5. Risk management | - New regime = step change in portfolio risk; credit/collateral issues require active management - Capabilities drive advantage (e.g. team, analytics, systems, data) |