CASE STUDIES / ORIGINATION · ANALYSIS · AUG 2024
Australia beats Middle East under demand skews.
Expanding a Sabine Pass to Gate base book with new supply and demand, then stress-testing Australian against Middle Eastern FOB length across demand swings, a Red Sea closure and seasonal spreads.
$238.4M
BASE PORTFOLIO PROFIT · SABINE PASS TO GATE
The base book and two suitors.
01 · THE SETUP
The base book ships 22 Sabine Pass cargoes to Gate on two 174k vessels. It is expanded with a NWE DES-Long strip plus Portuguese and Korean demand, then offered four cargoes of new supply from either Australia or the Middle East.
At the curve, a near tie.
02 · FIRST SIGHT
Adding the four new cargoes, both sources land within two percent of each other. First-sight P&L says the choice barely matters. The stress tests say otherwise.
Demand skews pick Australia.
03 · STRESS
When demand shifts between Portugal and Korea, Australia wins most scenarios because it serves Korean demand better. A Red Sea closure costs the Australian book $4.6M and the Middle East book $3.9M whenever Europe is the heavy side.
Australian supply
Middle East supply
PORTUGAL-HEAVY
KOREA-HEAVY
One index towers over the rest.
04 · VOLATILITY
A one-standard-deviation move in TTF swings this book by over half a billion dollars, five times the Henry Hub range. JKM exposure is naturally hedged by the Korean leg. The seasonal JKM-Brent spread decides the winter winner.
05 · THE VERDICT
Australia wins most demand scenarios, the Middle East wins the winter skew, and TTF is the risk that towers over both.
FORWARD CURVES HH/TTF/JKM/BRENT · DEMAND SKEWS AS 6-VS-2 SPLITS · STD DEVS YTD
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