Applied risk management series: gas storage valuation strategies

A look at the valuation of gas storage facilities and show how a deeper analysis of the value formation can offer insights for P&L optimisation and risk management

For organisations that structure and trade gas storage contracts, deriving the intrinsic and extrinsic values of the contracts is just one part of the analysis needed to support trading activity. Traders and originators are often tasked with explaining the sources of the value to senior management so they need to understand the hedging implications, and finance and back-office teams might need to understand the exposures and cashflows associated with the operation of a storage facility.

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