The following segment is one in a series by NGI’s LNG Insight focused on exploring how the global liquefied natural gas (LNG) market works. The conversations in this series will also analyze news and the issues that matter most to the industry in North America and beyond.

Brad Hitch is head of LNG for Pareto Commodities. He has worked in the energy sector for more than 20 years, holding various trading and origination positions at Barclays Capital, Enron Corp. and Merrill Lynch and as a consultant. Before joining Pareto, he was based in London as vice president of portfolio management for Cheniere Energy Inc. He holds a bachelor’s degree in accounting from the University of Kentucky and a master of business administration from the Wharton School of the University of Pennsylvania.

NGI: How has the LNG sector changed in recent years, and how different is it since you started working in the industry?

Hitch: It is a very different one from the market that I first encountered at the turn of the century. At that point, the market had been growing for a little over two decades in a very specific way. Liquefaction projects were built to monetize stranded gas by marketing LNG to power and gas utilities that otherwise had little or no access to natural gas. The finance for these projects was underpinned by long-term, take-or-pay sales contracts, which would typically last for 20 years or longer. Without traded natural gas markets, the buyers would agree to pay a contract price indexed to oil, which is logical as refined products would have been the alternative fuel.

NGI: Were those contracts more restrictive?

Hitch: Yes, they also greatly limited the ability to divert cargoes away from the intended market — effectively negating the possibility for re-trading cargoes and turning a potentially flexible form of transportation into a pipeline on water.

To read the full article, and gain access to more in-depth coverage of a fast-growing and increasingly important part of the North American natural gas industry, check out NGI’s LNG Insight.