Recent emphasis on reducing greenhouse gas emissions and improving air quality has made natural gas the fuel of choice for electricity generation. Unfortunately, many countries lack this natural resource within their borders; or, they can’t access the natural resource; or, if they can access it, they can’t get it to population centres. Major emerging economies, like China and India, therefore, look to LNG as a means to enjoy the benefits of this clean-burning fuel.
However, its complex life cycle involves many stages: production, transportation in pipelines, liquefaction, storage, transportation by vessel, back to storage, and eventually regasification and consumption. Fortunately, Enuit’s ETRM CTRM solution: ENTRADE®, has out-of-box forms, features, and reports to track primary and secondary costs of each stage in LNG’s life cycle all in one uniform commodity trading and logistics management system. There isn’t another system like ENTRADE® which can handle the logistical aspects of both natural gas and bulk shipped commodities like LNG. Only ENTRADE®.
LNG deal pricing formulas can be complicated and difficult to set up in most systems, especially Excel spreadsheets. ENTRADE® makes deal entry easy because of its pre-configured formula templates and pricing engine. Formulas may reference any one of the many commodity indexes available, including Brent and WTI, Gas Daily and Inside FERC, TTF, NBP, and JKM, to name just a few.
ENTRADE®’s curve engine can be used to construct and bootstrap very complex LNG term pricing curves. Deals may be marked to intent within Entrade as well. A second formula may be entered on each trade to indicate how to value a trade based on its destination and the various flexibility and options in the delivery schedule.
ENTRADE® can evaluate LNG contracts with embedded FX and Interest Rate risk components. Each component is recognized in order to better manage FX and Interest Rate Risks. ENTRADE®’s LNG scheduling module manages flexible delivery terms, such as Take-Or-Pay, Cargo-By-Cargo, Diversion Flexibility Right, Onward and Downward Adjustment Flexibility Rights. It manages boil-off and heel, too; and, integrally reflects the boil-off and heel in risk valuation.