The news: Macquarie is planning to expand its liquefied natural gas business by growing its physical trading efforts, according to sources cited by Bloomberg.
The context: The masthead writes that the company is hoping to capture a larger portion of the fast-growing market, pursuing long-term LNG supply deals of up to 10-15 years.
The strategy will involve taking positions in shipping and assets, sources said.
Financial institutions are working to bolster their positions in the LNG market which is currently dominated by oil majors, commodity traders and utilities. The industry predicts that global demand for the fuel is set to climb 60% by 2040.
The bank’s physical LNG plans are currently being developed through a non-banking unit, with the company hoping to expand the team in the coming months. In August, Macquarie hired former Equinor ASA executive Samuele Ravelli to lead the silver donut’s global LNG trading business.
Earlier this month, the AFR reported that Macquarie would shift its commodities trading unit out of its banking entity, which is less constrained by regulatory requirements. At the time, Moody’s Investors Service analyst Liam Li told the masthead: “We expect [Macquarie International Finance] will continue to scale up its global LNG business, which may increase capital requirements and working capital investment over time, as well as carry some execution risk.”
In August, Macquarie signed a sales and purchase agreement for 600,000 tons a year of LNG over 15 years with AMIGO LNG, a Mexican joint venture aiming to start exports in 2028. The bank is also in the process of converting its preliminary offtake pact with the planned Texas LNG project into a definite agreement.