According to reports, after more than a decade of observation, JPMorgan Chase (JPM.US) is in talks to resume spot trading of liquefied natural gas (LNG), a move that aligns with CEO Jamie Dimon's call to increase domestic production and energy exports in the United States.
Sources familiar with the matter have revealed that JPMorgan Chase has been negotiating with at least three projects under development along the Gulf Coast to secure long-term LNG supplies. This initiative is part of a broader effort by JPMorgan Chase in recent years to restart trading in some physical commodities that it abandoned in 2014.
The global demand for liquefied natural gas is surging, with many countries seeking a cleaner alternative to oil and coal as they transition to renewable energy sources. The United States has become the world's largest natural gas exporter, thanks to its abundant natural gas supply and large liquefaction and transportation terminals along the Gulf Coast.
Insiders have indicated that since 2022, JPMorgan Chase has expanded its physical natural gas trading business in the United States and has set its sights on power trading in the U.S. as well as natural gas and power trading in Europe, with the company recently applying for a natural gas transportation license in Europe. However, the company has no plans to transport LNG on the water itself, opting instead to continue engaging in financing and hedging activities.
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It is understood that the Russia-Ukraine conflict, which erupted nearly three years ago, has led to a significant shift in global energy trade, followed by market frenzy. Goldman Sachs Group has long dominated the commodity trading sector, with its division's revenue exceeding $3 billion in 2022, more than ten times that of 2017.
In recent years, U.S. companies have accelerated the construction of LNG facilities, with JPMorgan Chase having long provided financing for such projects. Additionally, Claudia Jury and Scott Hamilton, co-heads of global sales and research at JPMorgan Chase, stated earlier this year that the construction of artificial intelligence infrastructure has triggered higher demand for commodities among clients.
In his annual letter to shareholders, Dimon discussed the economic and geopolitical advantages brought by U.S. energy production. He stated that LNG exports are a tremendous economic boon for the United States, but most importantly, they serve the practical political goal: allies need secure and affordable energy.
He condemned the Biden administration's suspension of U.S. LNG permits, calling the efforts to halt oil and gas production "extremely naive."
Glenn Stevens, chairman of one of North America's largest energy traders, Macquarie, also agreed with Dimon's viewpoint. Stevens stated in July: "We do believe that natural gas is an important component on the world's transition path."