LNG arbitrage is the trade of redirecting an LNG cargo from one basin to another to capture a price differential. The most-watched spread is JKM (North Asia delivered) versus TTF (Dutch hub) — but the real economics depend on a stack of additional costs.
The components
- FOB price at the loading terminal (often Henry Hub + liquefaction fee + tolling).
- Shipping cost: charter rate × voyage days, plus boil-off, port and canal fees.
- Regas slot: the right to discharge — capacity, schedule and fees vary by terminal.
- Optionality: diversion clauses, destination flexibility and any profit-share with the seller.
- Time value: forward curves matter as much as spot — the arb is dynamic.
How NetbackBeacon prices it
The platform takes the FOB-equivalent at every loading terminal, layers freight using the live tanker matrix and applies regas / canal costs to compute a delivered netback at each candidate port. Sort the result by netback and you have a ranked, executable arbitrage board — see Arbitrage Signals.
Pitfalls
- Term contracts limit destination flex — not every cargo is divertible.
- JKM-TTF can flip mid-voyage; charterers re-optimise constantly.
- Panama and Suez delays can erase a window before the cargo arrives.
- Liquefaction outages re-rate freight overnight.