LNG contracts contain many types of price and volume flexibility. Understanding the value and risk of the flexibility in all these contracts is key to gain an edge in a more and more global LNG market. How can we help you in staying competitive in this market?
LNG off-take or supply contracts often include complex flexibility mechanisms, typically with price, volume and delivery point optionality. KYOS has a lot of expertise to value LNG contracts from spot deals to long-term contracts. A key element is our Monte Carlo simulation engine KySim, to create realistic price simulations for multiple locations and commodities simultaneously. We combine this with our advanced models to value price and volume flexibility. Furthermore, the results can be integrated with our risk models KyRisk. Using our Advanced Analytics, customers will have access to all price and simulation results and use this to value contracts using Python scripts.
LNG storages are important assets in the LNG value chain and provide the link between LNG contracts and the down-stream market. KYOS has in-depth experience with price and valuing gas storage contracts. The methodology KYOS developed for the market standard KyStore gas storage pricing and optimization model can be utilized for LNG storage contract. Market players can raise their revenues from LNG storage trading operations. The software module provides accurate valuations, and reduces risk with adequate hedge recommendations. It uses advanced stochastics including Least Squares Monte Carlo techniques to capture the full optionality for storage facilities.
The value of flexibility in LNG contracts depends on your combined portfolio. For instance, stand-alone storage capacity may have little market value, but it unlocks additional value of a portfolio of LNG supply contracts. Elements like hedging potential and liquidity of the market are all taken into consideration in an overall portfolio valuation and optimization approach. KYOS can support you with getting this overview. Moreover – Identify which elements of your portfolio add additional value and/or provide a price or volume hedge!
KYOS offers a flexible web-based software package to effectively capture and risk manage LNG contracts. This package is part of the KYOS Analytical Platform, a user-friendly and intuitive system for energy market players.
The backbone of the system contains a market price and forward curve database. Furthermore it contains an advanced Monte Carlo simulation engine and various reporting and risk management tools, including earnings-at-risk.
Of course owners of liquefaction plants or regas terminals will greatly benefit from the insights and valuations our software module gives. For multiple valuations, it is more beneficial to take out a licence. However, we do offer our consulting services to all players in the energy industry. Not only energy companies, but also consulting firms, financial institutions, governments and other partners in (renewable) asset consortia – we can assist you with your projects, requests-for-proposals (RFPs) or inquiries. In addition, use our services for one-off deal valuation, benchmarking or in arbitration cases.
The LNG module lets the user create and capture any type of LNG contract. KYOS put a lot of effort to find the right balance between offering a robust deal capture system and a fully flexible spreadsheet solution. On one hand, we include standard LNG contract structures. On the other hand, we offer the unique feature that users can add their own pricing and flexibility structures to the system. For this purpose we offer an easy-to-use Python programming interface.
In short, the LNG valuation and price risk management system provides a complete picture of your LNG portfolio. Reporting includes volumetric position, mark-to-market value, value-at-risk and earnings-at-risk.
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