Singapore: Russia’s Gazprom , the world’s largest natural gas producer, is stepping up operations in Asia to grab trade opportunities as rising energy demand in regional giants China and India swells the gap between appetite and output.
Gazprom set up its first Asia-Pacific commercial office in Singapore a year ago and sells one or two spot LNG cargoes in the region each month. It aims to trade a total of 2 million tonnes of the super-cooled gas, matching 2010’s volume.
Asia “is different from anywhere else. The long-term supply and demand don’t match and that’s where the opportunities are,” Arthur Tait, president and managing director of Gazprom Marketing and Trading Singapore, told Reuters in an interview.
“The potential in Australia is enormous, but I don’t expect all of (LNG projects) to come onstream.”
Rising LNG output from countries such as Australia may fall short of an estimated demand of 40 million tonnes from China and India by 2016, creating opportunities for spot trade between producers in the Middle East and Asia, analysts say.
Gazprom holds Russia’s gas export monopoly and produced 549.7 billion cubic metres (BCM) of natural gas in 2008, or 17% of global production. It expects export revenues to rise to $72.4 billion in 2011, exceeding the 2008 record, Gazprom executives said in February.
The firm entered Asia’s swiftly growing markets after exports to European Union fell, Russian deputy prime minister Igor Sechin said last year.
It usually supplies a quarter of the European Union’s gas needs but exports tumbled in 2009 .
Ahead of the game
The company is increasing its presence when a dozen global players, from oil majors Shell and BP to major lenders such as Citibank , have set up teams in the city-state in the past three years to tap the surge in trade.
“It will get more competitive, but we are equally good at it,” Tait said of growing competition in the regional LNG trading market. “We try to do things in advance of the game.”
Most of Gazprom Singapore’s spot deliveries of LNG go to Japan, Korea, China and Taiwan, Tait said.
It has also doubled its fleet of liquefied natural gas carriers (LNG) to four taken on long-term charter, and plans a further increase in the coming year.
The trader is not ignoring the traditional method of securing long-term deals -- which account for more than 80 percent of global LNG sales, and has signed two such contracts in the past year. Tait did not reveal the customers’ names.
“We are always evaluating the value of term deals against spot prices and react accordingly,” he added.
In Singapore, Gazprom plans to grow its staff to 55 by July, from 33-34 now, across products ranging from crude oil and liquefied petroleum gas to forex and carbon trading.
Gazprom completed its first crude oil deal in September 2010 when it sold one cargo of light Nigerian crude, but there are no near-term plans to ramp up activity in this business, Tait said.
It has been more active in the carbon market, where it signed some 30 offset agreements with clean energy projects last year and participated in the first trade on the Tianjin Carbon Exchange in China.
Gazprom, aiming to establish a global trading presence, has opened similar offices in London and Houston in the past decade.
It is targeting a 50 % increase in natural gas trade in the United States in 2011.