Trading and Analytics
3 Commodity Trading Insights from Gastech 2024
Gastech brought together the global energy community in Houston, Texas to discuss the challenges and opportunities facing the industry.
The 4-day conference explored key trends and initiatives across natural gas, LNG, hydrogen, climate technologies & AI, energy manufacturing, and low carbon solutions.
In this article we share 3 key commodity trading insights from Gastech.
1. The Global Energy Transition Continues to Make Progress
John Kerry, the former US Senator and Secretary of State took to the stage at Gastech to share in-depth views on energy policies, problems and prospects.
Kerry highlighted the unparalleled opportunities that have emerged during the energy transition, whilst also flagging the ongoing challenges of trying to achieve net zero. Kerry highlighted the vital role existing and emerging technologies are playing in understanding and resolving the climate crisis, encouraging organizations and governments to deploy technology that prioritizes decarbonization.
Kerry discussed the belief that many leaders in the industry do not feel that carbon capture and storage is scalable or affordable and went some way to debunk this idea by sharing the impressive progress China has made with renewable power capacity, as well as other countries including Vietnam and Indonesia.
Looking forward, Kerry shared his strong belief that climate change will continue to drive movement in the market, saying:
"You are going to see some imbalances here and there, but the basic direction is towards decarbonization and we have made progress in that. The reality is that people have now accepted a transitional understanding, and this transitional understanding requires new technology, as well as storage, solar and wind."
Finally, building on this belief, Kerry said: “The marketplace – at large – is investing and moving into this new energy future, with greater adoption of new technologies,” he said. “Everything is changing, and my judgement is that the marketplace is going to keep moving as it is now, with growing competition to decarbonize.”
2. AI Could Power the Evolution of the Energy Sector, Whilst Being a Key Customer
According to the International Energy Agency, global power demand from data centers could soar to over 1,000 TWh by 2026 – double the levels seen in 2022. With the exponential growth of AI, the growing need for electricity to power data centers and fuel the AI revolution is expected to drive a surge in natural gas demand.
Experts from both the energy and natural gas industries came together at Gastech to discuss this dynamic.
AI can be a driving force in the energy sector, aiding efficiency and sustainability. As demand for data centers grows due to increasing data volumes, natural gas is positioned as a critical energy source. Nasser Al Yafiei from ADNOC Gas emphasized how natural gas is already a viable solution for powering data centers, contributing to emissions reduction while offering scalability and flexibility. Al Yafei said:
"Current achievements in emission reductions and the potential increase in gas demand to power data centers is substantial in many regions of the world and we, as an industry, must be prepared”"
The Gastech panelists also stressed the benefits of natural gas in meeting the rising energy needs of AI and data centers, which require substantial power. Arun Kumar Singh from ONGC said that investments in AI and gas can make the planet greener, especially as India experiences significant energy demand increases. Gas offers the potential to meet these growing needs, especially as renewable sources may not yet meet the required energy scale.
Rebekah Eggers from IBM highlighted the symbiotic relationship between AI and energy, suggesting that innovation leadership is needed to ensure that the energy demand of AI is met. Ken West from Honeywell Energy & Sustainability pointed out the need for innovation, calling for faster solutions and improved designs to make AI more energy efficient.
AI could also help train and upskill professionals in the energy industry, particularly those transitioning into technology roles, helping the energy sector become more productive and efficient. Matt Babin from Palantir Technologies discussed the urgency of addressing the energy needs of data centers in line with AI advancements.
3. Large LNG contract deals are high on the agenda
2024 was off to a strong start for long-term LNG, with 58 million metric tonnes per annum worth of sales purchase agreements, capacity agreements and heads of agreements signed.
38 new long-term contracts have been signed in 2024 so far, which is set to surpass the record of the previous year. Middle Eastern sellers are leading in market share, capturing 60% of the volume signed, largely due to deals by QatarEnergy, Aramco and ADNOC.
Falling contract prices and the pause of North American LNG deals have given Middle Eastern and Asian sellers leverage to sign large deals, with Asian buyers showing particular interest in securing supply.
LNG supply tightness is expected as demand rises, and prices are projected to stay firm for the coming years, with new long-term deals continuing to carry premiums.
Impact on Talent
Proco Group’s North American Commodities team met energy executives from around the world to discuss decarbonization strategies across the LNG industry and are working with our partners to deliver in-demand talent to support their short- and long-term decarbonization plans.
At Gastech, we acknowledged a growing trend of clients who are looking to sophisticate their natural gas, LNG and power origination & trading desks. A common approach to this is investing heavily into strong analytical professionals who are proficient in coding Python and have the capabilities to commercialize big data sets, to direct better informed trading decisions
We also observed an increasing demand for private practice legal professionals in Houston, who can secure and negotiate complex LNG contract deals. This was particularly prominent with international LNG market participants, in particular organizations operating between North America and Asia Pacific, including Japan.
Finally, it was clear at Gastech that the demand for environmental products and carbon trading professionals has cooled, however, the need to have the optionality to invest and trade around a decarbonization strategy remains very evident across the market.
For a conversation about your organization’s decarbonization strategy and associated talent requirements, please don’t hesitate to get in touch.
Partner | Commodities | North America T: +1 646 876 0089 E: ross.gregory@weareprocogroup.com
Global Head of Commodities and Managing Partner | Global Team T: +1 646 707 2488 E: brad.knox@weareprocogroup.com
