A team of Australian innovators believes a new online liquefied natural
gas exchange can transform the way the global commodity is bought and
sold.
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GLX Founder and CEO Damien Criddle (Photo: Business Wire)
The GLX platform will allow cargoes of LNG to be sold and purchased in a
way which ensures all industry participants are paying and receiving
fair and transparent market prices.
The platform has been developed by a group of LNG industry executives
and professionals who share the belief that the time has come for the
LNG market to capitalise on e-commerce.
GLX founder and CEO Damien Criddle said that while other bulk seaborne
commodities had moved to online trading platforms, trading in LNG had
changed little since the industry began in the 1960s.
“The LNG industry is renowned for embracing the latest technology in the
exploration, development, production, transportation and regasification
processes, but when it comes to trading the product it has been slow to
take advantage of the digital revolution which has transformed so many
other industries,” Mr Criddle said.
“The GLX platform will create significant efficiencies and advantages
for all industry participants and ensure supply and demand come together
in a much more transparent and efficient manner.”
The GLX platform was developed in Perth and supported by software
developers in Melbourne and Sydney. It was designed using the GLX team’s
extensive experience in LNG and refined based on discussions with a
number of leading LNG industry participants. Sellers of LNG can hold
auctions for individual cargoes with selected counterparties, while
buyers can also hold auctions to purchase cargoes from selected sellers.
Currently, the majority of spot sales of LNG are conducted based on
bilateral relationships and ad hoc tenders or negotiations. These
processes are not efficient and do not provide parties with the
assurance that they are paying or receiving fair market prices.
The GLX platform facilitates trading of LNG based on supply and demand
fundamentals and allows transparent price discovery, which will
ultimately lead to the creation of reliable and trusted LNG price
indices.
The global LNG trade has been characterised by long-term contracts since
the industry began in the late 1960s, but spot – or one-off – trades
have grown steadily over the past 20 years. Almost 30% of LNG cargoes
are now traded on short-term agreements, and that percentage is expected
to grow in years to come with supply increasing rapidly and buyers
looking to diversify their portfolios to a mix of long term, short term
and spot.
GLX Chairman Rob Cole said the platform demonstrated Australia’s ability
to export its LNG expertise.
“This platform is an international exchange, but the innovation was
driven by Australian LNG professionals who believed there was a better
way to trade and put their belief in to action,” Mr Cole said.
“The technology will improve the efficiency and transparency of the LNG
market as a whole, for the benefit of the industry in the short term and
the long term.
“We believe there are compelling reasons for buyers and sellers of LNG
to embrace the move to digital trading.”
Approved LNG companies will now undertake trials of the platform to
ensure they are familiar with its operation before live trading
commences. Trading on the platform is expected to commence early in 2017.
Note for Media: GLX Founder and CEO Damien Criddle will be available
for interview at the conclusion of the company’s Australian launch at
10:00 on 28 October 2016 at Print Hall, Brookfield Place, 125 St Georges
Tce, Perth.
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