Screen-print style poster of an LNG cargo weighing an Asian against a European route

CASE STUDIES / OPTIONALITY · MAY 2​025

Valuing optional Asian supply beyond forward prices.

The study compares an LNG portfolio with and without access to six optional Asian DES supply cargoes.

$8.6M

MEAN VALUE OF OPTIONAL ASIAN SUPPLY · REGULAR VOLATILITY

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Keep the portfolio otherwise unchanged.

01 · PORTFOLIO COMPARISON

Both models have the same contracts, vessels and price assumptions. Only the flexible version can source the six additional Asian cargoes.

REFERENCE PORTFOLIO · 2​026 TO 2​027

  • Supply: 24 FOB purchases from the US, 9 DES purchases into northwest Europe
  • Demand: 6 DES sales in Asia, 18 in northwest Europe, plus European spot sales
  • Fleet: 2 x 174K vessels · indexations HH and TTF

WITH OPTIONAL ASIAN SUPPLY

  • Everything above, plus 6 optional DES cargo purchases in Asia
  • Optional purchases: selected only when they increase portfolio profit
  • Adds JKM to the index set; nothing else changes

FORWARD CURVES AND SIMULATIONS FROM 21 MAY 2​025 · HORIZON 2​026 TO 2​027 · PER-MMBTU VALUES ON 22.2M MMBTU (6 X 3.7M)

Check the forward-price result.

02 · FORWARD PRICES

Both portfolios earn $188,895,430 at forwards. None of the optional Asian cargoes is selected in that plan.

$10$15$20$25$10$15$20$25$30$35JKM PRICE · $/MMBTUTTF PRICE · $/MMBTUPROFIT INDIFFERENCE LINEEXERCISE REGION: DES-MATCH ASIAOPTION UNUSED: SHIP US CARGOES TO CHINAMAY 2​025HISTORY FROM 2​023FUTURES TO 2​028BOUNDARY TRACED FROM THE ENGINE RUN · PRICE-ONLY VIEW, BEFORE SHIPPING AND VOLUME LOSSES
Price combinations where optional Asian supply is used. The study’s historical and forward prices fall outside that area.

Recalculate both portfolios on the same price paths.

03 · UNDER SIMULATION

Each volatility setting uses 1,000 paths. For each path, the model calculates profit with and without the optional Asian supply. The difference measures the value of that supply right.

$0M$100M$200M204.8205.4+$0.6MLOW VOL205.8214.4+$8.6MREGULAR210.2223.4+$13.3MHIGH VOLBASE BOOKASIA-FLEX BOOKAT FORWARD: $188.9M IN BOTH BOOKSMEAN MC PROFIT $M · 1,000 IDENTICAL PATHS PER REGIME · PER-PATH RE-OPTIMISATION
Profit with and without optional supply across the same simulated price paths.

Test three volatility settings.

04 · OPTION VALUE

Each setting uses 1,000 price paths, with both portfolios recalculated on every path. Mean flexibility value is $0.6M at low volatility, $8.6M at regular volatility and $13.3M at high volatility.

$0M$5M$10M$15M$0.6M$0.03/MMBTULOW VOLATILITY$8.63M$0.39/MMBTUREGULAR$13.28M$0.60/MMBTUHIGH VOLATILITYMEAN FLEX VALUE PER VOLATILITY REGIME · 1,000 PATHS EACH · AT THE FORWARD CURVE: $0PER-MMBTU ON 22.2M MMBTU (6 X 3.7M) OF MATCHABLE DES-LONG CARGOES
Mean value of optional supply at low, regular and high volatility. The median value is zero in all three cases.

Examine when the supply is used.

05 · CARGOES SELECTED

The model selects Asian supply only when it improves the portfolio result. Prices, shipping costs, volume losses and vessel availability all affect the decision.

0%10%20%30%40%50%012345650.9%26.1%27.3%DES-LONG ASIA CARGOES MATCHED PER PATHLOW VOLREGULARHIGH VOL · SHARE OF 1,000 PATHSALL SIX CARGOES ARE NEVER MATCHED · EXACT ENGINE FREQUENCIES
Number of optional cargoes selected across the simulated price paths, by volatility level.

06 · RESULT

$8.6M mean value at regular volatility, despite zero value at the forward curve.

The six cargoes are modelled rights, not compulsory purchases. Simulation values depend on the assumed price paths and operating constraints.

What this comparison shows.

07 · TAKEAWAYS

✓

Check the forward-price result

Both portfolios earn $188,895,430 at forwards. None of the optional Asian cargoes is selected in that plan.

✓

Examine when the supply is used

The model selects Asian supply only when it improves the portfolio result. Prices, shipping costs, volume losses and vessel availability all affect the decision.

!

Scope of the result

The six cargoes are modelled rights, not compulsory purchases. Simulation values depend on the assumed price paths and operating constraints.

How the study was calculated.

08 · CALCULATION

1

Set up the comparison

Both models have the same contracts, vessels and price assumptions. Only the flexible version can source the six additional Asian cargoes.

2

Calculate the alternatives

Each volatility setting uses 1,000 paths. For each path, the model calculates profit with and without the optional Asian supply. The difference measures the value of that supply right.

3

Review the result

$8.6M mean value at regular volatility, despite zero value at the forward curve.

Modelled results depend on the contracts, prices and operating assumptions used.