Over the course of his 33-year career, John Hattenberger, president and managing director of Gazprom Marketing & Trading (GM&T) USA, has seen the natural gas market evolve almost beyond recognition, from liberalisation in the 1980s, to huge shifts in global supply and demand, to the shale discoveries that have set the US market alight of late. But it was the development of the liquefied natural gas (LNG) market that has probably shaped his career – and the market – the most.
Starting out as a chemical engineer before moving into chemical marketing, Hattenberger made his move into energy in 1983 landing a job with BP where he stayed for 10 years. Here he built his knowledge of national and international pipeline gas, as well receiving what was to become a vital introduction to LNG.
“Back then, LNG was still a small business – it wasn’t growing very fast and was very regional,” says Hattenberger. “There was a lot of activity in the Pacific basin, but not really in the Atlantic basin, but it obviously had a huge amount of potential.”
Indeed, LNG was the shale market of 10 years ago, according to Hattenberger. As companies rushed to access new natural gas reserves in places like Indonesia, Oman and Qatar to address fears over dwindling North Sea and North American reserves, pipelines were no longer wholly sufficient as a method of transportation.
Leveraging his expertise in this burgeoning sector, Hattenberger left BP in 1992 to advise the government of Oman on the construction of its first LNG plant. He then returned to the US to work on the LNG operations of a range of companies, including El Paso and Marathon. Upon joining Gazprom in 2005 he was charged with two major tasks: building the company’s LNG capabilities and establishing a US-based marketing and trading unit.
Hattenberger set about building the LNG business in London and the first cargo was traded in September 2005. Almost two years ago, Hattenberger moved on to concentrate solely on establishing a firm foothold in the US natural gas market.
“On the US side it’s all about bringing the world’s biggest gas company to the world’s biggest gas market,” he explains. GM&T USA was established in 2006, the current office in Houston was opened in 2007 and 18 people were hired last year to build out the unit’s back-, front- and mid-office operations.
Hattenberger’s team in Houston now works closely with colleagues in the London LNG business to take advantage of the significant regasification capabilities that have been built up around North America in recent years.
GM&T USA will take cargoes from Russia’s Sakhalin-II project into a regasification plant in Baja, California. It also plans to take cargoes from the Shtokman field, another Russian project, as well as any others from which the London LNG team can secure offtake.
“The US has become much more connected with international markets because there is so much regasification capacity now. LNG can come here when the price is right, or it can go elsewhere when prices in other markets are higher,” Hattenberger says. “US regasification capacity is now probably more than 25% of US demand. That’s a huge gateway to bring LNG into the US market.”
In addition to importing Russian LNG through these regasification terminals, GM&T USA has developed a virtual route to bring Russian gas to the US. “We have done some swaps whereby we sell gas in Western Europe to a company that then sells gas to us here in North America. This is a good way for us to get some physical pipeline gas in our portfolio without buying an upstream company,” he says.
In October 2009, once the US unit had a portfolio of both LNG and pipeline gas, it started trading gas. It now has supply contracts with at least three companies for five to seven years, totalling roughly 380 million cubic feet per day, and hopes to boost this to 1 billion cubic feet per day over the course of 2010.
But Hattenberger is not content to stop there. Drawing on the London office’s carbon business, which has been up and running since 2007, Hattenberger’s team have an eye on impending legislation that could bring a national carbon trading market into being in America. “The US market is potentially huge, but we are waiting for legislation. We have a small foundation here and once we get a clearer view on US legislation we’ll build that into a much bigger business.”
Hattenberger says the company has already looked at the Regional Greenhouse Gas Initiative (RGGI) market – the only mandatory US carbon market at present – but has not completed any transactions yet. Again, the international links will come into play here, as Hattenberger explains: “We see the US market more as a downstream market, so we’re making a connection with our colleagues in London and looking at the upstream side – that is, sourcing carbon credits to resell them to US companies.”
Additional future plans include trading physical oil and foreign exchange from July 2010, as well as a move into the US power trading market in 2011. “We’ve got a big growth plan,” Hattenberger declares. “We’ll be a much bigger shop 12 months from now.”