Advisory firm of the year, Asia: Baringa Partners

Energy Risk Asia Awards 2019: Firm’s Asia office grows from zero to multi-million dollar practice in months

Nick Tallantyre, Baringa Partners

It is a measure of Baringa Partners that, 18 months ago, the UK-based advisory firm would not have qualified for the Energy Risk Asia Awards because it lacked a permanent presence in the region. But in early 2018, it opened offices in Singapore and Sydney, quickly establishing itself as one of the standout specialist energy consulting firms in the region.

“We’re delighted to have had an immediate impact on these markets,” says Nick Tallantyre, a London-based partner at the firm. “We’ve been winning business through the differentiating, deep sector knowledge we’re bringing from 20 years of consulting experience in Europe.”  

Baringa’s push into the Asia-Pacific region was part strategic and part opportunistic, Tallantyre says. “The Singapore operation is addressing the dramatic increase in commodities trading activity in the region, particularly in LNG [liquefied natural gas] … We’ve been drawn to that region partly by some global clients who have substantial operations there, and partly by new entrants that are setting up.” 

The launch of the Sydney office was triggered by the return home of two senior members of Baringa UK’s energy and resources practice. “We recognised that Australia is an energy market in rapid transition, and the deep market expertise we had built up in Europe helped us to immediately create a portfolio of clients,” says Peter Sherry, a Sydney-based partner and Australian business lead.

The types of business pursued by the two offices are somewhat different. Baringa in Singapore is focused primarily on energy trading and risk management (ETRM) software advisory, architecture, design and implementation services, while the Australia office focuses more on energy market, commercial, network and policy advisory services, producing market insights through quantitative modelling work.

Rapid wins for the Singapore team include: replacing an incumbent advisory firm at a local energy company on a project to define the company’s ETRM system strategy; completing a study for a global oil major to define its ETRM roadmap for LNG in Singapore; and providing various technology advisory services for a Malaysian oil company.  

Baringa can boast carrying out one of the fastest implementations of Ion Allegro’s commodity management software, for Jera Trading, the world’s largest buyer of LNG. The client was glowing in its appraisal of Baringa: “The Baringa team did an excellent job both in the ETRM selection process and in the implementation of the system against a very tight timeframe,” said Usman Khan, Jera Global Markets’ head of IT.

“This is a flagship delivery project both for the industry and for this vendor,” adds Tallantyre. “In parallel with this complex delivery, we set up our Singapore business infrastructure and broke into four other major trading clients in Singapore, meaning this office has gone from zero to being a multi-million dollar consulting practice in a matter of months.”

We’ve been winning business through the differentiating, deep sector knowledge we’re bringing from 20 years of consulting experience in Europe

Nick Tallantyre, Baringa Partners

The Australian office has seen an equally rapid rise. Standout projects there include assignments with key industry and government institutions, the Australian Energy Market Operator and the Australian Renewable Energy Agency. The former involved a cost-benefit analysis of future market frameworks to enable a transition to distributed system operation for the power market, while the latter looked at the technical, commercial and regulatory challenges associated with the creation of renewable energy zones in Australia’s National Electricity Market (NEM).

Crucially, Baringa has also replicated in Australia the success of the fundamental market models it has developed for European power markets. These provide a 20–30-year view of power market evolution, based on an assessment of capacity additions and phase-outs, technology developments such as the growth of electric vehicles and smart-grid penetration, and regulatory trends. Baringa’s Australian NEM ‘Reference Case’ market reports have found a ready audience, with more than 40 quarterly subscribers, Sherry says.   

Because the establishment of the businesses was “demand-led”, Tallantyre says the consultants in the region have hit the ground running, with “very high utilisation rates”, avoiding the usual costs involved in establishing a business. “Even absorbing the relatively significant setup costs, we’ve been able to return profit to the partnership,” he says.

The two markets bring different challenges in building Baringa’s business. In Australia, long-established deregulated power markets mean there is a deeper pool of individuals with broader understanding of the issues that the local energy companies face, although Sherry observes that “in Australia, we’re hiring deep energy expertise, which is relatively niche – those skills are few and far between”.

Singapore is more challenging, Tallantyre adds. “It’s a newer market, and there’s not a great depth of commodity trading expertise. The other side of that coin is that we feel we can differentiate and bring something new to that market.”

He stresses though, that although practitioners at some firms may lack experience, there is “plenty of capability” in the market. “We’re quite optimistic about being able to grow the business there,” he says.