Saudis Lean on Oil-Trading Contacts in Push to Become Big in LNG

LNG is magic dust. It must be – oil revenues dip so you just sprinkle some LNG over it and voila, profits are back again. I love those developments. May there be hiccups? Well, for starters, LNG is not oil. That sounds obvious but when you are used to trade oil which is an extremely fungible commodity that allows you to unwind any deal for cash at any moment, you will be sledgehammered by the rigidity of LNG deals. There is no stranded cargo in oil – a bad deal costs you money but you don’t lose the cargo. LNG is a boiling liquid and if you dint have a receiving terminal lined up, you will not bleed, you will hemorrhage. Of course, a sink market would help a great deal. How convenient that the first real market sink for LNG emerges in North-Western Europe.

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