Course 09 of 20 · LNG Desk Academy

Pricing Formulae & Exposure Mapping

Stage C, Exposure, funding and hedging. Level 5 of 10.

Decomposing a pricing formula into index legs and mapping each leg to a dated exposure position on the book.

118 chapters · 12 modules · every chapter one 8 to 10 minute explainer · builds on: Course 03, Course 04, Course 08

Enrol or enquire See the 118 chapters
How a chapter is sized

One chapter is one idea taken to the point of use

Each chapter is a single self-contained explainer of 8 to 10 narrated minutes, covering one idea to the point where you can use it.

Chapters run in order. Each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

12 modules · 118 chapters

Open any module for its full chapter list, in teaching order.

M0 The Anatomy of an LNG Price Formula Ch 1-10
  1. What a Price Formula Has to Do
  2. The Four Parts Every Formula Contains
  3. Where the Pricing Clause Sits in the Contract
  4. The Unit the Formula Prices
  5. Reading a Formula Out Loud
  6. The Quantity the Formula Multiplies
  7. Published Quotations as Formula Inputs
  8. Why Both Parties Must Reach the Same Number
  9. A Formula That Cannot Be Computed
  10. Map of the Route From Clause to Exposure Line
M1 The Oil-Indexed Formula Ch 11-20
  1. The Slope as the Formula's Multiplier
  2. The Additive Term Beside the Slope
  3. A First Oil-Indexed Cargo Price, Computed
  4. Slope Sensitivity at Three Crude Levels
  5. What a Slope Was Meant to Represent
  6. Which Crude Quotation the Formula Points At
  7. Percentage Slopes and Decimal Slopes
  8. Two Offers, One Slope, Different Constants
  9. Checking a Seller's Price Calculation
  10. The Slope as a Statement About Who Carries Oil Risk
M2 Lag, Averaging and the Reference Window Ch 21-31
  1. The Index Period and the Delivery Month Are Different Things
  2. Defining the Averaging Window
  3. The Three-Month Average, Worked
  4. What a Lag Is and Why Formulae Carry One
  5. A Three-Month Lag Traced Through One Cargo
  6. Lag and Averaging Read Together
  7. Why Today's Cargo Prices Off Last Quarter's Market
  8. How Much of a Lagged Price Is Already Set
  9. Shifting the Window by One Month, Priced
  10. Holidays and Missing Publication Days
  11. Comparing Two Window Definitions Before Signature
M3 Hub-Indexed Formulae Ch 32-41
  1. The Shape of a Hub-Indexed Formula
  2. Which Gas Quotation a Cargo Formula Reads
  3. A Monthly Settlement Against a Daily Average
  4. A Hub-Indexed Cargo Price, Computed
  5. Short Windows and Concentrated Exposure
  6. The Differential to a Gas Quotation
  7. Indexing at the Load Port or at the Discharge Port
  8. Hub Indexation and the Month the Cargo Lands
  9. Two Offers for One Cargo, Crude-Linked and Gas-Linked
  10. What Gas Indexation Does to the Shape of Exposure
M4 Hybrid and Blended Formulae Ch 42-50
  1. Two Indices Inside One Price
  2. Fixed Weights Between a Crude Leg and a Gas Leg
  3. Weights That Step Through the Contract Term
  4. A Blended Formula, Computed Leg by Leg
  5. Formulae That Switch Index on a Trigger
  6. An Election Between Two Indices
  7. Three Legs: Crude, Gas and a Fixed Component
  8. Why a Blend Is Easier to Agree Than to Map
  9. Reading an Unfamiliar Hybrid Clause Cold
M5 Floors, Caps and S-Curves Ch 51-60
  1. A Floor Inside the Formula
  2. A Cap Inside the Formula
  3. The Collared Formula Across a Crude Range
  4. What an S-Curve Actually Is
  5. Building an S-Curve From Slopes and Kink Points
  6. An S-Curve Priced at Five Crude Levels
  7. Where an S-Curve Moves the Exposure
  8. The Exposure That Disappears and Comes Back
  9. Reopeners and Make-Up as Soft Limits
  10. Spotting Embedded Optionality Without Pricing It
M6 From Formula to Dated Exposure Ch 61-71
  1. What an Exposure Line Is
  2. Decomposing a Formula Into Index Legs
  3. Attaching a Quantity to Each Leg
  4. Dating Each Leg to Its Reference Months
  5. The Exposure Table: Index Down, Month Across
  6. One Cargo Turned Into Exposure Rows, Worked
  7. Signs: Which Legs Are Long and Which Are Short
  8. Fixed, Partly Fixed and Floating Cargoes
  9. When a Cargo First Appears in the Table
  10. Rolling the Table Forward One Day
  11. Checking the Table Against the Contract Set
M7 The Long-Dated Exposure of a Term Agreement Ch 72-81
  1. What a Twenty-Year Supply Agreement Puts on the Book
  2. Expanding an Annual Quantity Into Dated Rows
  3. The Exposure Profile of a Ramp-Up
  4. Where the Forward Curve Stops and Assumption Starts
  5. How Far Out an Exposure Number Means Anything
  6. Making a Distant Row Comparable to a Near One
  7. Collapsing Twenty Years Into Reportable Buckets
  8. Re-Dating the Table When the Programme Moves
  9. The Exposure of an Agreement Not Yet in Force
  10. Presenting a Twenty-Year Exposure to a Quarterly Audience
M8 Quantity Uncertainty as Exposure Ch 82-90
  1. Why the Quantity Is Not a Constant
  2. Tolerance Bands Read as Exposure Width
  3. Firm Cargoes, Expected Cargoes and Optional Cargoes
  4. An Exposure Stated as a Range, Not a Number
  5. Price and Quantity Uncertain at the Same Time
  6. A Cancelled Cargo and the Rows It Removes
  7. Counting Exposure in Energy, Not in Cargoes
  8. Mapping a Flexible Offtake Agreement
  9. Reporting Quantity Confidence Beside Every Row
M9 Currency and Unit Legs Ch 91-99
  1. When the Formula and the Sale Use Different Currencies
  2. The Currency Leg as a Row of Its Own
  3. A Yen-Linked Purchase Sold in Dollars, Worked
  4. The Date the Exchange Rate Is Read
  5. A Euro Gas Leg Under a Dollar Contract
  6. Energy Unit Mismatches Across a Trade
  7. Three Rows From One Contract
  8. Why a Currency Row Moves on Its Own
  9. Reporting Currency Exposure Without Double Counting
M10 Netting and the Portfolio Exposure Map Ch 100-109
  1. What Netting Means for an Exposure Table
  2. Netting Two Cargoes on One Index and Month
  3. Why Two Crude-Linked Contracts Do Not Fully Cancel
  4. Netting Across Different Slopes
  5. What a Crude Leg and a Gas Leg Cannot Do for Each Other
  6. Gross and Net Reported Side by Side
  7. The Portfolio Exposure Map on One Page
  8. Reading the Map Down an Index Column
  9. Reading the Map Across a Delivery Year
  10. The Questions the Map Cannot Answer
M11 A Book of Three Contracts, Mapped Ch 110-118
  1. The Book: Three Contracts Introduced
  2. Contract One: A Long-Dated Crude-Indexed Supply Agreement
  3. Contract Two: A Medium-Term Gas-Indexed Sale
  4. Contract Three: A Hybrid With an S-Curve and a Yen Leg
  5. Assembling the Three Into One Dated Table
  6. Netting the Book and Reading What Is Left
  7. Layering Currency and Quantity Onto the Netted Book
  8. What This Method Cannot Do
  9. Handing the Map to the People Who Act on It

The brochure gives each of these 118 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 9 of twenty

It stands alone, and it is also the entry point to the LNG Desk Academy pathway.

Enrol or enquire See the whole pathway