Goldman Sachs Aims to Buy Own Liquefied Natural Gas Contract

[Sofia + 35]

Goldman is in talks with Sabine Pass’s owner, Cheniere Energy Inc, to buy a cargo of liquefied natural gas, known as LNG, according to people familiar with the matter. Should a deal be struck, which is not a certainty, it would give Goldman a sought-after toehold in the LNG market, which is growing quickly as U.S. natural gas production soars and many countries shift from coal power generation to natural gas. This would be a first liquefied natural gas contract for a Wall Street firm. 

[Tom Kirkman + 8,860]

This is ... unusual.

[Stormysaga + 62]

Looks they have the funding secured. 
 

[TomTom + 183]

On 8/8/2018 at 9:06 AM, Stormysaga said:

Looks they have the funding secured. 
 

that's what Elon Musk said too 

[Jaimeso + 2]

Why is the price of natural gas going down? Gas on storage are 18% below the five year average. It does not make sense.

 

[Rodent + 1,424]

26 minutes ago, Jaimeso said:

Why is the price of natural gas going down? Gas on storage are 18% below the five year average. It does not make sense.

 

I would say flat demand. Although nat gas is not my specialty. @Marina Schwarz  may have some more insight.

[Jan van Eck + 7,558]

The Goldman approach to financial contracts to eat "the trail of the golden crumbs."  What their business model historically has been is to buy assemble, or syndicate a financial instrument or set of instruments, and not hold them but to then re-sell them, if possible with the Wall Street version of "value added" to boost the price.  In Wall Street parlance, "value added" implies that various contracts are consolidated or syndicated, for example into a "Trust."  the collective trust has more value than the individual pieces, so Goldman makes some coin on the flow of the paper through their House.

Goldman never held paper; it always attempted to sell paper, and eat a little bit of each transaction, getting rich off the "golden crumbs." 

[That all went South in the 2008 collapse, and Goldman had to submit to Federal Scrutiny by converting into a Bank in order to get bail-out funds, but since its past Director was now sitting as Secretary of Treasury (under Bush), they had an inside man to fund them. Always helps to have the right connections.  Lots of Goldman guys ended up in the Bush White House, incidentally.  Another reason why I turned that job down.]

[Dan Warnick + 6,100]

6 minutes ago, Jan van Eck said:

The Goldman approach to financial contracts to eat "the trail of the golden crumbs."  What their business model historically has been is to buy assemble, or syndicate a financial instrument or set of instruments, and not hold them but to then re-sell them, if possible with the Wall Street version of "value added" to boost the price.  In Wall Street parlance, "value added" implies that various contracts are consolidated or syndicated, for example into a "Trust."  the collective trust has more value than the individual pieces, so Goldman makes some coin on the flow of the paper through their House.

Goldman never held paper; it always attempted to sell paper, and eat a little bit of each transaction, getting rich off the "golden crumbs." 

[That all went South in the 2008 collapse, and Goldman had to submit to Federal Scrutiny by converting into a Bank in order to get bail-out funds, but since its past Director was now sitting as Secretary of Treasury (under Bush), they had an inside man to fund them. Always helps to have the right connections.  Lots of Goldman guys ended up in the Bush White House, incidentally.  Another reason why I turned that job down.]

What about Mnuchin?  Come on, Jan, I know you can tell us about the insiders on Trump's speed dial (is that still a thing?)

[Jan van Eck + 7,558]

11 minutes ago, Dan Warnick said:

What about Mnuchin?  Come on, Jan, I know you can tell us about the insiders on Trump's speed dial (is that still a thing?)

All those guys were old Yalies.  I knew that crowd from Fraternity Row, back in the day. 

[Dan Warnick + 6,100]

Just now, Jan van Eck said:

All those guys were old Yalies.  I knew that crowd from Fraternity Row, back in the day. 

And?

[Marina Schwarz + 1,576]

On 9/8/2018 at 7:09 AM, Rodent said:

I would say flat demand. Although nat gas is not my specialty. @Marina Schwarz  may have some more insight.

No drama. No sanctions. Fundamentals rule. Just because stored gas is higher than sometime before doesn't mean prices would naturally rise. There's a lot being produced. As simple as that though I'm certain many would do their best to make it sound complicated.

Excuse my intrusion amid the Yalie discussion. And?

[TomTom + 183]

On 9/7/2018 at 10:41 PM, Jaimeso said:

Why is the price of natural gas going down? Gas on storage are 18% below the five year average. It does not make sense.

 

same story as last year - we're headed into a period where gas demand is soft (between hot summer and cold winter)... next to that, production is still very high - so the narrative has shifted once again to the 'production side'

[ceo_energemsier + 1,818]

Lets join the LNG gravy train, its going to be a long train .............

[Tom Kirkman + 8,860]

1 hour ago, ceo_energemsier said:

Lets join the LNG gravy train, its going to be a long train .............

Back around 2015 and 2016, I commented ad nauseum on the now defunct Oilpro forum that the global LNG glut would likely continue up to around 2022 or 2023.  Around 2022 to 2023 the balance will likely tip from too much supply, over to demand starting to exceed supply, and LNG will likely become very profitable after 2023.

Since then there have been some changes.  Some LNG projects have been dropped, but others are moving ahead. Qatar plans to increase capacity by 40% or so by around 2022, Russia is looking to startup additional capacity by around 2022.

Pay attention to the years that some of the major LNG projects are planning to start up in the future.  Again and again you can notice the time frame target of 2022 to 2023.

So my comments from 2015 & 2016 may need to be updated.

Doh, I keep forgetting, all my comments from Oilpro forum are gone.  Wiped out after the Oilpro vs. Rigzone legal dispute (Oilpro lost, forced to shut down).  Frustrating.

[TomTom + 183]

1 hour ago, Tom Kirkman said:

Back around 2015 and 2016, I commented ad nauseum on the now defunct Oilpro forum that the global LNG glut would likely continue up to around 2022 or 2023.  Around 2022 to 2023 the balance will likely tip from too much supply, over to demand starting to exceed supply, and LNG will likely become very profitable after 2023.

Since then there have been some changes.  Some LNG projects have been dropped, but others are moving ahead. Qatar plans to increase capacity by 40% or so by around 2022, Russia is looking to startup additional capacity by around 2022.

Pay attention to the years that some of the major LNG projects are planning to start up in the future.  Again and again you can notice the time frame target of 2022 to 2023.

So my comments from 2015 & 2016 may need to be updated.

Doh, I keep forgetting, all my comments from Oilpro forum are gone.  Wiped out after the Oilpro vs. Rigzone legal dispute (Oilpro lost, forced to shut down).  Frustrating.

Looks like the same story everywhere -- because of the immense upfront costs, many LNG projects have been scrapped and the low cost producers Russia and Qatar are walking away with a shared trophy

[Dan Warnick + 6,100]

6 hours ago, Tom Kirkman said:

Back around 2015 and 2016, I commented ad nauseum on the now defunct Oilpro forum that the global LNG glut would likely continue up to around 2022 or 2023.  Around 2022 to 2023 the balance will likely tip from too much supply, over to demand starting to exceed supply, and LNG will likely become very profitable after 2023.

Since then there have been some changes.  Some LNG projects have been dropped, but others are moving ahead. Qatar plans to increase capacity by 40% or so by around 2022, Russia is looking to startup additional capacity by around 2022.

Pay attention to the years that some of the major LNG projects are planning to start up in the future.  Again and again you can notice the time frame target of 2022 to 2023.

So my comments from 2015 & 2016 may need to be updated.

Doh, I keep forgetting, all my comments from Oilpro forum are gone.  Wiped out after the Oilpro vs. Rigzone legal dispute (Oilpro lost, forced to shut down).  Frustrating.

Tom, I don't know if it is the same down in Malay, but here in LOS I have witnessed a massive number of LNG/CNG filling stations spring up all over the country in the last 5 years.  Now I know that a lot of taxis, for example, in Bangkok and Pattaya have dual fuel kits installed and they actively use both gas and natural gas, switching from one to the other depending, I think, on the length of the trip and the speeds at which they are travelling, i.e. city vs highway. When in Bangkok I always try to use one driver that I trust and I have asked him to explain his reasons for using both, and basically his answer is that natural gas is cheaper but that there can also be disadvantages, which he didn't know how to explain to me.  There are quite a few private cars that display decals with LNG or CNG in their windows, so it would seem that it is catching on with private citizens too.

My main point is that the vast majority of the stations outside of metro Bangkok never seem to have any customers.  This has made me comment to my wife while we were driving that "It would seem that somebody knows something we don't.  Maybe there is an investment opportunity buried within all of these installations."  Seriously, even though the first installations I remember from 5+ years ago still seem void of any except the odd customer, more stations seem to pop up every month.

What gives?

[ceo_energemsier + 1,818]

On 9/7/2018 at 10:09 PM, Rodent said:

I would say flat demand. Although nat gas is not my specialty. @Marina Schwarz  may have some more insight.

Possibly one of the factors could be the Chinese 25% tariff on US LNG

[ceo_energemsier + 1,818]

On 9/9/2018 at 9:59 PM, Marina Schwarz said:

No drama. No sanctions. Fundamentals rule. Just because stored gas is higher than sometime before doesn't mean prices would naturally rise. There's a lot being produced. As simple as that though I'm certain many would do their best to make it sound complicated.

Excuse my intrusion amid the Yalie discussion. And?

Yes a lot of natgas is being produced across the globe and in the US and logistics and bottlenecks are also causing the price of natgas to be depressed specially in the Permian Basin, once the pipelines are built that should ease the downward pressure on natgas prices. I believe there is still some flaring going on in ND and Permian Basin is seeing a million $ a day + of natgas being flared... what a waste of a resource that can be a value added feedstock and what a negative impact on the environment and the image of the industry. There are solutions that can be practical but havent been deployed to solve both issues!

[ceo_energemsier + 1,818]

15 hours ago, TomTom said:

same story as last year - we're headed into a period where gas demand is soft (between hot summer and cold winter)... next to that, production is still very high - so the narrative has shifted once again to the 'production side'

https://www.cnbc.com/2018/09/10/oil-could-be-toppled-as-north-americas-largest-energy-source-this-year-dnv-gl-ceo-says.html

[ceo_energemsier + 1,818]

On 8/8/2018 at 7:35 AM, Sofia said:

Goldman is in talks with Sabine Pass’s owner, Cheniere Energy Inc, to buy a cargo of liquefied natural gas, known as LNG, according to people familiar with the matter. Should a deal be struck, which is not a certainty, it would give Goldman a sought-after toehold in the LNG market, which is growing quickly as U.S. natural gas production soars and many countries shift from coal power generation to natural gas. This would be a first liquefied natural gas contract for a Wall Street firm. 

One cargo isnt such a big deal, it is a decent start in physical trading of LNG.

[TomTom + 183]

10 hours ago, ceo_energemsier said:

https://www.cnbc.com/2018/09/10/oil-could-be-toppled-as-north-americas-largest-energy-source-this-year-dnv-gl-ceo-says.html

strong article, but it doesn't really mention the LNG export capacity