Oil & products house of the year: Macquarie Group

Energy Risk Asia Awards 2021

ERAA21-Winner-web

An active participant in the oil and products space for more than 15 years – and in the broader commodities space for over 40 years – Macquarie Group’s oil and products team is now based across Houston, New York, Geneva, London, Minnesota, Singapore, Dubai and Sydney. The team’s rich and comprehensive expertise has allowed it to consistently integrate physical and financial aspects throughout the oil and products space, and deliver bespoke solutions to clients

“We provide financing for physical deals, as well as trading and structuring physical and financial products and, combined, these capabilities enable corporates in the oil and products space to grow as well as providing a platform to mitigate their exposure to price risk,” says Daniel Vizel, head of global oil, commodities and global markets at Macquarie.

Given this backdrop, Macquarie’s oil and products business has continued to demonstrate strong growth over the years, including throughout the turbulent market conditions experienced at the height of the Covid‑19 pandemic in 2020. Indeed, over that period – marked by broadly lower liquidity and higher volatility – Macquarie saw significantly increased activity levels, which demonstrated to its customers its ongoing commitment to the oil and products sector.

“Petrochemical derivative volumes traded with customers, as with our other activities in this operational space, is an example of where we take a customer-centric approach, offering a wide variety of underlying hedging indexes to help our customers manage the risks underlying their physical business,” says Chris Cusack, head of energy and agriculture, Asia. “At the same time, we also worked closely with a number of our airline customers during the pandemic to help restructure positions and to optimise cashflows to help with their working capital requirements, and this allowed Macquarie to partner with our customers in a very meaningful way during a difficult time.”

Macquarie’s activity in the physical financing and structured financing space in oil and oil products also enables it to provide a unique product offering to its customers. Its teams of highly experienced physical traders and operators – coupled with the expertise of its originators – offer an overall product suite regarded as being of the highest quality. This was robustly tested during the extreme moves along the curve seen last year in particular and, despite the new and challenging circumstances while working from home, this sector saw a dramatic increase in volumes, managing multiples of previous peak activity.

One example of this ability to continue to offer excellence under extreme market pressures was the execution by Macquarie of a large, credit-intensive and long-tenor transaction with a major market participant. Its expertise in the market and specialised structuring enabled Macquarie to provide an extremely long-term hedge of an oil product price exposure in such a way that provided it with a requisite degree of comfort for a relatively large exposure – which other banks would not offer – at extremely competitive pricing. A key aspect of this deal’s success was Macquarie’s ability to trade the physical underlying, which allowed it to see the whole picture and offer a unique solution to the customer.

“This is just one example of many high-quality solutions our oil and products team has delivered to clients over the past 12 months, and this has enabled our customers to more effectively achieve their goals across the oil and products space, from oil majors and trading-house financing barrels, to consumers hedging fuel needs, both simple and complex, and refineries seeking supply, offtake or financing,” says Daniel Mortleman, head of oil trading, Asia.

This drive to deliver high-level solutions with world-class execution not only underpinned Macquarie’s ability to navigate last year’s extreme market turbulence, but also lies at the heart of its future plans to achieve optimal outcomes for its customers. In this context, Macquarie sees that ongoing growth in emerging markets – such as petrochemicals and liquefied natural gas – which has complemented its existing offerings, prompted deeper conversations with customers and led to significant new bespoke transactions. Macquarie’s ability to provide liquidity and corollary services across the entire space from crude supply and feedstock financing facilities to long-term petrochemical and liquefied petroleum gas transactions means its customers will be able find the solution they need within Macquarie’s expertise and product suite.

“The constant drive to remain global experts in the assets we deal with has made our oil and products team adaptable to short- and long-term changes in the market … We are constantly reaching into new markets where customers have needs, and designing unique solutions for them with our ability to span the physical and financial spaces,” says Mortleman. “This adaptability and willingness to learn new things is something clients find invaluable.”

Judging from the feedback from its clients over the past year, Maquarie’s Oil & products house of the year win at the Energy Risk Asia Awards 2021 is well deserved and is a testament to the fact its oil and products team remains a core part of its business. Moreover, the team’s rich history of involvement in commodities has equipped it with an extensive understanding of the oil and products sector, and its desire to broaden its knowledge base has enabled the team to deliver innovative client solutions, even during the most challenging of market environments seen last year.

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