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Trafigura's LNG volumes jump by 27% on new trade flows, contracts

By Jessica Jaganathan

* Volumes increase to 12.6 million tonnes equivalent

* Weak demand in Asia re-directed flows to Europe

* Natural gas volumes grow 147%

By Jessica Jaganathan

SINGAPORE, Dec 11 (Reuters) - Trafigura Group, the global commodity trader, increased its annual liquefied natural gas (LNG) trading volumes by 27%, driven by trade flows and the start of new contracts, the company said on Wednesday.

Volumes rose to 12.6 million metric tonnes equivalent this year, which included the start of shipments under the company's 15-year agreement to lift supply from Cheniere Energy as well as several other mid-term contracts, Trafigura said in its annual report.

Major trading firms have steadily built up a significant presence in LNG as the super-chilled fuel is viewed as a transition fuel that will help cut dependency on oil and coal, which emits more carbon and other pollutants.

"With weak demand in Asia redirecting trade flows, the European market absorbed the bulk of our Atlantic cargoes, often in conjunction with our natural gas desk, while we continued to build our position in the Far East with regionally sourced LNG," the company said.

Trafigura's rise in trading volumes follows a more than 75% increase in rival Glencore's spot LNG traded volumes in 2019 compared with last year, signalling the rise of LNG liquidity in the spot market.

Glencore is now closing in on the 11 million tonnes traded by Gunvor, the leading LNG trading house, in 2018, Nathan Arentz, head of gas trading at Glencore, said earlier this month.

Trafigura said its natural gas trade volumes also grew by 147 percent to 17.1 million metric tonnes equivalent as it became the largest supplier of natural gas to Mexico from the U.S. while it expanded its business in Europe.

"We expect the pattern of growing LNG production, increasing demand and greater market liquidity and transparency to offer more opportunities for our integrated LNG/natural gas operation in the U.S., Europe, Asia and Latin America," it said, referring to its integrated approach to trading LNG and natural gas in one team.

(Reporting by Jessica Jaganathan; editing by Mike Harrison)