LNG Trading Workflow End-to-End

Executive summary

Few commodity markets combine commercial and operational complexity the way liquefied natural gas does. An LNG trade is not simply a price agreed between two parties; it is a physical cargo that must be produced, liquefied, loaded onto a specialised vessel, shipped across oceans, discharged at a terminal, regasified, and delivered into a pipeline grid, with pricing, risk, and settlement running alongside every step. Managing that end to end is what separates a real LNG trading operation from a spreadsheet.

Most ETRM vendors treat LNG as a variant of gas trading. It is not. LNG layers a maritime logistics problem, vessels, charters, laycans, boil-off, demurrage, terminal slots, on top of a global gas trading problem, index-linked pricing, destination flexibility, inter-regional arbitrage. A platform that supports the complete LNG value chain, rather than only its financial half, is a genuine differentiator.

This guide walks the full workflow: the LNG value chain, the trade lifecycle, commercial contracts, cargo scheduling, shipping and marine logistics, terminal and storage operations, regasification and delivery, risk and valuation, and settlement. It is the parent page for the LNG cluster and connects to trade capture, scheduling, storage, and market data, anchored to the modern ETRM guide.

Introduction to LNG trading

LNG is natural gas cooled to roughly minus 162 degrees Celsius until it becomes a liquid about 600 times denser than its gaseous form, which is what makes it economic to ship across oceans in specialised vessels. That single physical fact, that gas can be liquefied, transported by sea, and regasified, is what turns regional gas markets into a connected global market, and it is what makes LNG trading distinctive.

An LNG trade therefore has two inseparable dimensions. Commercially, it is a gas position priced against indices such as JKM (Asian spot), TTF (European), or Henry Hub (US), often with destination optionality that lets a trader divert a cargo to the highest-value market. Operationally, it is a discrete cargo on a specific vessel that must load in a window at one terminal and discharge in a slot at another. A capable LNG platform holds both dimensions on one governed model, so the commercial position and the physical cargo are never out of step.

The LNG value chain

LNG moves through a long chain of physical stages, and a trader may be exposed at any point along it. Understanding the chain is the foundation for understanding where value and risk arise.

The commercial trader typically engages from liquefaction through send-out, buying cargoes FOB (free on board, at the load port) or DES (delivered ex ship, at the discharge port), arranging or chartering shipping, and selling regasified gas into a downstream market. Each stage carries cost, timing, and risk that a platform must capture, because the profitability of an LNG trade is the delivered spread net of the full chain of shipping, terminal, boil-off, and financing costs, not the headline index differential alone.

The LNG trade lifecycle

An LNG trade follows a lifecycle that runs from commercial agreement to cash, and a modern platform manages each stage on one record.

The value of a single governed model is clearest here. On a fragmented landscape, each phase lives in a different system and every hand-off is a re-keying between trading, operations, and finance. On a modern platform, trade capture records the cargo once and scheduling, valuation, and settlement all read that same record, so the commercial deal and the physical cargo stay synchronised from origination to cash.

Commercial contracts

LNG trades are governed by contracts whose terms drive everything downstream, and modelling them faithfully is foundational. The main structures a platform must represent:

These terms are not paperwork to be filed; they are data that drives valuation, scheduling, and settlement. The pricing formula determines the mark; the delivery basis (FOB versus DES) determines who bears shipping cost and risk; the destination clause determines whether the cargo carries valuable optionality. A platform that holds contract terms as governed, structured data lets valuation price the exact formula, scheduling respect the delivery basis, and settlement invoice the correct index, without a human re-interpreting the contract at each step.

Cargo scheduling

Turning a commercial cargo into a delivered one is a scheduling problem with tight, unforgiving constraints. The scheduler must assign a vessel, agree a laycan (the loading window), secure loading and discharge slots at the terminals, and plan the voyage, all while respecting the contract and the physical realities of the fleet.

The distinctive challenge is that an LNG cargo is a large, discrete, time-and-place-specific event. A vessel must arrive within its laycan or face demurrage or lost slots; terminals have limited berths and strict windows; and a delay at one end cascades through the schedule. This is far more complex than a continuous pipeline nomination, and it is where scheduling discipline meets maritime logistics. A modern platform coordinates vessel, laycan, and terminal slots against the governed trade, so the schedule reflects the actual cargo and any change ripples through consistently.

Shipping and marine logistics

LNG shipping is a discipline in its own right, and the trader who arranges it carries real cost and risk. The key concepts a platform must handle include chartering (owning, time-chartering, or spot-chartering a vessel), boil-off (the small fraction of cargo that evaporates each day and is typically used as fuel or lost), demurrage (charges when a vessel is delayed beyond agreed laytime), and voyage planning (route, speed, and canal or weather constraints).

Each of these has a direct commercial effect. Boil-off steadily reduces the delivered quantity, so a long voyage delivers less than it loaded; demurrage can turn a profitable cargo marginal; charter cost is a major component of the delivered price. A platform that models the voyage, its boil-off, its charter cost, and its demurrage exposure lets the desk see the true delivered economics of a cargo and manage the shipping leg as the material position it is, rather than treating it as an operational afterthought.

Terminal and storage operations

At both ends of the voyage sit terminals with finite capacity and strict operating rules. At the export terminal, LNG is held in tanks awaiting loading; at the import terminal, it is stored after discharge and before regasification. Terminal operations cover berth and slot availability, tank capacity and inventory, boil-off management in storage, and the send-out schedule.

Terminal constraints shape what is physically possible. A discharge slot must be available when the vessel arrives; tank capacity must exist to receive the cargo; and regasified send-out must match downstream demand. These constraints connect LNG directly to the wider gas operation, because once regasified, the cargo becomes pipeline gas subject to the same storage and inventory logic as any other gas. A platform that models LNG terminals alongside pipeline gas lets a global desk manage the transition from cargo to grid on one model.

Regasification and delivery

Regasification is where LNG rejoins the gas grid. At the import terminal, the stored liquid is vaporised back into gas and delivered into the pipeline network, from which it flows to end users. The commercial position that began as an index-linked cargo now becomes a physical gas position at a delivery hub.

This transition matters because it links the global LNG market to the regional gas market. The value of a delivered cargo is realised as regasified gas sold into a local hub such as TTF or a downstream city gate, and the desk’s position must net that regasified gas against any hedges or physical gas commitments it holds. A platform that carries the cargo through regasification into the gas book, on one governed model, is what lets the desk see its true net position across LNG and pipeline gas rather than managing them as disconnected businesses.

Risk and valuation

LNG carries a distinctive stack of risks, and a modern platform must value and manage all of them on the live position. The principal exposures include price risk (movements in JKM, TTF, Henry Hub, or oil-linked formulas), basis and locational risk (the spread between the pricing index and the delivery market), shipping risk (freight rates, boil-off, demurrage), and the optionality embedded in destination-flexible cargoes.

Destination optionality is where LNG becomes genuinely interesting. A cargo that can be diverted between Asia and Europe carries a real option whose value depends on the spread between regional prices, and capturing it requires seeing all the relevant indices, freight costs, and delivery constraints together. Valuation therefore depends on governed forward curves for every relevant index, and risk requires the same VaR and scenario analysis the rest of the desk uses, applied to the LNG book. Treating LNG risk as part of the enterprise position, not a separate calculation, is what makes it honest.

Settlement and invoicing

An LNG trade concludes in settlement, and the size of a single cargo makes accuracy essential. Settlement invoices on the delivered quantity (loaded volume less boil-off, measured at discharge) and the applicable index prices, then reconciles against the counterparty and the terminal statements.

Because a single LNG cargo can be worth tens of millions, small errors in quantity measurement, index averaging, or cost allocation have large financial consequences. A platform that carries the governed trade, its contract pricing formula, and its measured delivered quantity through to settlement produces an invoice that ties out cleanly, and attributes shipping, terminal, and boil-off costs correctly. Clean settlement on a cargo of this value is one of the clearest returns on a single, governed LNG model.

Sample LNG trade

To make the workflow concrete, consider an illustrative destination-flexible cargo. (This is a representative example, not a real transaction.)

The workflow runs as follows: the desk originates the cargo and captures it once on the governed model; confirms terms and generates the contract; schedules a vessel, laycan, and terminal slots; monitors the voyage and boil-off during execution; continuously marks the position against JKM and TTF curves and values the diversion option; and, on discharge, settles on the delivered quantity and index. Because every step reads the same record, the diversion decision, if Europe outvalues Asia net of freight, is made on the live position rather than reconstructed from spreadsheets.

Best practices

Several practices separate a mature LNG operation from an improvised one. Capture each cargo once on a governed model so trading, operations, and finance share one record. Model contract terms, especially pricing formulas and destination clauses, as structured data rather than filed documents. Track boil-off, demurrage, and charter cost explicitly so delivered economics are honest. Value destination optionality against all relevant indices, not a single market. And carry the cargo through regasification into the gas book so the net position across LNG and pipeline gas is always visible.

Underlying all of these is the same principle that runs through modern ETRM generally: the quality of every decision depends on the integrity and unity of the data beneath it. LNG, with its long physical chain and high-value cargoes, punishes fragmentation more than most markets, which is exactly why a single governed model matters so much here.

Operational KPIs

An LNG operation can be measured across commercial and operational dimensions.

Schedule adherence and laycan compliance measure operational reliability; demurrage and boil-off measure cost control on the shipping leg; delivered-quantity and settlement accuracy protect the value of high-worth cargoes. Together they describe an operation that delivers reliably and captures the value its trading identified.

Why the Gravitas LNG module is different

Gravitas treats LNG as a complete value chain, commercial and operational, on one governed model.

Because the cargo, its contract, its voyage, and its regasified gas all sit on one model, the commercial position and the physical cargo never diverge, and delivered economics are honest. And it is delivered at economics that suit desks the incumbents priced out. See the LNG commodity page, who Gravitas is for, or request a demo.