As global demand for natural gas grows, supply alternatives and risk management expertise play a crucial role in maintaining market balance. Over the past year, Engie Global Markets (EGM) has expanded its own offering in both European and Asian trading, utilising market-leading risk management solutions.
In an August 2016 deal with UK oil and gas company Hague and London Oil (Halo), for example, the trading house will provide a gas offtake solution to support Halo’s acquisition of European gas reserves. “As larger players exit the North Sea, this kind of deal will be attractive to smaller players, private equity companies, family offices and others that still have the appetite to develop this area,” says Sébastien Delannoy, head of structured gas at EGM. Since such companies may lack the expertise and access to funds that larger exploration and production firms enjoy, EGM developed this offering, which it also hopes will bring more gas to the European market from alternative sources. “We have some similar opportunities that we are currently working on in the North Sea,” Delannoy says. “We are also active in developing other new areas for production, especially in Eastern Europe such as the Black Sea, which is a major basin for gas production.”
EGM has also undertaken a Ukrainian expansion project to support its parent company’s new subsidiary in the country. It has a similar aim of growing global gas markets in new regions and providing alternative sources of gas. “In an illiquid and challenging jurisdiction, having a physical footprint is key to being able to understand our clients’ needs and provide the necessary tools and solutions,” Delannoy says.
The company has also addressed the expansion of natural gas markets in Asia, where liquefied natural gas trading continues to grow in popularity due to increasing supply and new indexes from organisations such as the Singapore Exchange. EGM’s move to expand its derivatives offering to Singapore “will be key to offering hedging solutions to […] global gas markets,” Delannoy says. “It is also important given the move we are seeing from oil-linked contracts to more open contracts with some flexibility and gas-price indexation.”
In this way, EGM believes it can use the expertise gained in Western markets to foster growth in the Asian gas derivatives markets. “We want to be at the forefront of the development of these markets and to export our capabilities to develop our client franchise there,” Delannoy says.
The week on Risk.net, December 2–8, 2017Receive this by email