Trade deals, Asian energy transition to boost natural gas market - ICE

Speaking as the US group reported second quarter revenue up a tenth to $2.5bn (£1.9bn), driven partly by a 25% jump in energy derivatives earnings, ICE’s president said the global natural gas market has huge potential.

Ben Jackson told an earnings call: “One development we see continuing to create a long-tailwind for the growth of natural gas globally is the resolution to the tariffs and trade discussions that have been going on. In many of these settlements, forward commitments to purchase US energy are key elements.”

Jackson cited the example of the US-South Korean trade deal signed early on Thursday ahead of the August 1 deadline for the imposition of blanket tariffs.

The ICE president said the group’s JKM (Japan Korea Marker) natural gas futures are perfectly positioned to allow firms to trade imports into those Asian countries.

Asia, more broadly, is also interesting for the natural gas markets as the world’s fastest growing region moves away from coal to cleaner energy sources, Jackson added.

“There’s an opportunity in the transition to cleaner fuels, moving from coal to natural gas, the size of that opportunity in the Asia Pacific alone is the size of North American energy demand across all sources,” the ICE president said.

Other factors in play are the disruption to global supply chains which has boosted demand for US energy while firms around the world want more energy to support new technologies such as artificial intelligence.

Jackson said there is strong growth potential in natural gas when that market is compared to the larger global crude oil business.

“If you look at TTF relative to Brent in term of active market participants it’s roughly half, so the world’s global benchmark for oil is roughly double the number of active market participants that TTF has as the global benchmark for the movement of natural gas.”

ICE Endex, the group’s European gas and power venue, traded 8.67 million lots of Dutch TTF gas futures last month, which was up 56.8% on June last year, according to FIA data.

Speaking on the same call, ICE chair and chief executive officer Jeff Sprecher was asked about the firm’s appetite for large takeovers in light of recent media reports that ICE is in advanced talks to acquire energy data and analytics provider Enverus for about $6bn.

Sprecher said: “We meet regularly on strategy and look at our ability to buy into businesses to accelerate that strategy or invest organically to move into these various strategies. We are disciplined about how we do it in terms of the best way to deploy capital.”

The ICE chair and chief exec added: “Within that mix is the conversation about share buybacks and dividends, and the return of capital to shareholders as the highest value use of funds. Nothing has changed there.”

Sprecher and his chief financial officer Warren Gardiner said on the call ICE is in a strong position financially after paying off sooner than expected the debt on its last big deal, the $11.7bn acquisition of Black Knight in 2023.

The chair and chief exec told the call: “Paying down the debt ahead of schedule puts ourselves in a position where we have maximum flexibility under these market conditions to execute a long-term strategy.”