introduction of oil derivatives marketszdecision to hold position or to hedge. commodities capital...
TRANSCRIPT
Introduction of Oil Derivatives MarketsHangzhou, China
21 June 2004
Jeffrey Chen
Director, Energy Risk Management
Page 3
COMMODITIES CAPITAL MARKET
Overview of the oil marketFundamental imbalances
Prod
uctio
n
Ref
inin
g
Con
sum
ptio
n
North AmericaPr
oduc
tion
Ref
inin
g
Con
sum
ptio
n
Europe
Prod
uctio
n
Ref
inin
g
Con
sum
ptio
n
Asia Pacific
Prod
uctio
n
Ref
inin
g
Con
sum
ptio
n
Latin America
Prod
uctio
n
Ref
inin
g
Con
sum
ptio
n
FSU
Prod
uctio
n
Ref
inin
g
Con
sum
ptio
n
Middle EastPr
oduc
tion
Ref
inin
g
Con
sum
ptio
n
Africa
World Production: 75.1 mb/dRefining capacity:80.4 mb/dConsumption: 74.1 mb/d
Page 4
COMMODITIES CAPITAL MARKET
Overview of the oil marketFundamental imbalances
2 000
2 500
3 000
3 500
4 000
4 500
Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04
US d
istil
late
s de
man
d ('0
00 b
bl)
6 000
6 500
7 000
7 500
8 000
8 500
9 000
9 500
10 000
US gasoline demand ('000 bbl)
Gasoline
Distillates
Page 5
COMMODITIES CAPITAL MARKET
Overview of the oil marketPrice markers
West Texas Intermediate400,000 bbl/dayCushing, Oklahoma
Brent Blend326,000 bbl/daySullom Voe, Shetlands
Dubai166,000 bbl/dayFatah, UAE Tapis
696,000 bbl/dayKerteh, Malaysia
Page 6
COMMODITIES CAPITAL MARKET
Overview of the oil marketPrice markers
US Gulf Coast7,807,948 bbl/day
Rotterdam-Amsterdam-Antwerp2,038,000 bbl/day
Singapore1,255,000 bbl/day
Page 7
COMMODITIES CAPITAL MARKET
Overview of the oil marketWhat moves the market?
Political factorsOPEC decisionsTension (Terrorists attack) in the Middle-EastCivil unrest in AfricaInternal situation in RussiaIraq
Weather patternsWinter in the northern hemisphereHurricane seasonHeatwaves in southern USA/northern Asia
Economic outlookGrowth prospectsComparative price of competing energy sources
Page 8
COMMODITIES CAPITAL MARKET
Overview of the oil marketWhat moves the market?
-80
-60
-40
-20
20
40
60
80
100
01/ 94 01/ 95 01/ 96 01/ 97 01/ 98 02/ 99 02/ 00 02/ 01 02/ 02 03/ 03 03/ 04$10
$14
$18
$22
$26
$30
$34
$38
$42Funds net posit ion on WTI (Mb)WTI price ($/ b)
Page 9
COMMODITIES CAPITAL MARKET
Traded marketsDefinitions
Spot Forward Future OTC
Physical Yes Yes Yes No
Bookout No ? Yes No
Regulated No No Yes No
Margin ? No Yes ?
Liquidity Low High High ?
Options No No Yes Yes
Page 10
COMMODITIES CAPITAL MARKET
Traded marketsThe paper markets
Spot Forward Future OTC
Trader Yes Yes Yes Yes
Refiner Yes Yes Yes Yes
Producer ? ? Yes Yes
Consumer ? No Yes Yes
Bank No No Yes Yes
Fund No No Yes No
Page 11
COMMODITIES CAPITAL MARKET
Traded marketsBrokers and principals
Brokers can specialize on physical markets, forwards, futures or OTC.
They execute orders on an exchange or offer to find a counterparty for a desired trade. They can have a market assessment function.
They do not take risk and normally do not trade on their account. Rather, they charge commission on a volume basis.
Principals run their own books. They take opposite sides of a trade and manage price and credit risks. Sometimes they “make a market”.
Deals can be done through brokers or directly from principal to principal.
Page 12
COMMODITIES CAPITAL MARKET
The OTC marketPhysical traders and financial players
A physical trader will use the paper market:as a complement to his physical deals.as a way to leverage his privileged information.
Markets were developed initially by this community:Russian Roulette gasoil market in RotterdamBrent 15-day market in LondonSingapore swaps market
Financial players look only at the paper side from a very theoretical point of view. They aim to:
leverage their risk management expertise.Build on their extensive customer portfolio.Secure financial transactions.
Page 13
COMMODITIES CAPITAL MARKET
The OTC marketHow is the market organised?
A lot of preparation is involved:Clearing credit.Finalizing documentation.
The life of a deal is in three steps:Deals are traded over the telephone. Conversations are taped and legally binding in case of dispute.Written confirmation follows within a few days, and should be returned executed by the counterparty for approval of terms.Cash settlement is undertaken at expiry.
The legal framework consists of:Master agreement: ISDA is becoming the norm.Margin agreement.Confirmation.
Page 14
COMMODITIES CAPITAL MARKET
The OTC marketCredit risk assessment
Counterparty risk is an evaluation of the average amount of money that may be due by the counterparty to the trade at settlement. It depends on the following parameters:
Volatility of underlying price referenceTime to expiryRelative position of spot and strike pricesSize of the deal
Country risk is an assessment of the cost of insurance against the risk that the counterparty to the trade may not be in a position tohonor its financial obligations at settlement:
Foreign exchange constraintsLegal changesWar, disaster...
Page 15
COMMODITIES CAPITAL MARKET
Applications to hedgingHedging or speculation?
Hedging...
…or speculation?
Page 17
COMMODITIES CAPITAL MARKET
Market organisationMarket organisation
Physical MarketPhysical Market
Forward MarketForward Market
Futures MarketFutures Market
Derivatives Derivatives MarketMarket Financial Financial
MarketsMarketsFundsFunds
Page 18
COMMODITIES CAPITAL MARKET
Oil derivatives: General features
Derivatives are financially settled and do not usually imply physical delivery.
Settlements are based on recognized international benchmark prices (Platt's Marketscan, IPE, Nymex or other references)
Contracts can last from a few months to several years.
Page 19
COMMODITIES CAPITAL MARKET
Why use oil derivatives ?
Short term exposure management :Short term exposure management :flexibilityflexibility
in applicationin applicationin timingin timing
Long term exposure management:Long term exposure management:Balance sheet managementBalance sheet managementrevenue managementrevenue management
Page 20
COMMODITIES CAPITAL MARKET
Why use oil derivatives ?
Risk management : Starting point :Risk management : Starting point :Risk identification:Risk identification:
Actual or contingent on commodities, currencies or Actual or contingent on commodities, currencies or interest ratesinterest rates
Risk quantification:Risk quantification:Sensitivity of profit to the considered variablesSensitivity of profit to the considered variables
Evaluate desirable level of riskEvaluate desirable level of riskDecision to hold position or to hedgeDecision to hold position or to hedge
COMMODITIES CAPITAL MARKET
The measure of risk The measure of risk The risk chain in the oil industryThe risk chain in the oil industry
ProducerProducer
TraderTraderRefinerRefiner DistributorDistributor
ConsumerConsumer
AbsoluteAbsoluteprice levelprice levelRelativeRelative
price levelprice level
Inventory ManagementInventory Management
Page 22
COMMODITIES CAPITAL MARKET
Who use oil derivatives ?
Commercial participantsCommercial participantsProducers :Producers :
crude, natural gascrude, natural gasRefiners:Refiners:
crude, gasoline, crude, gasoline, gasoilgasoil, jet, fuel, jet, fuelTransport companies (airlines, shipping, trucking companies, touTransport companies (airlines, shipping, trucking companies, tour r operators) :operators) :
crude, gasoline, crude, gasoline, gasoilgasoil, jet fuel, jet fuelIndustry:Industry:
crude, natural gas, crude, natural gas, gasoilgasoil, fuel, fuelUtilities:Utilities:
crude, natural gas, crude, natural gas, gasoilgasoil, fuel, fuelNon Commercial participantsNon Commercial participants
•• Speculators, Investors, Funds, ….Speculators, Investors, Funds, ….
Page 23
COMMODITIES CAPITAL MARKET
Which oil derivatives?
ForwardsForwards
SwapsSwaps
OptionsOptions
Spread optionsSpread options
Exotic optionsExotic options
Structured productsStructured products
Page 25
COMMODITIES CAPITAL MARKET
NYMEX Futures ContractsNYMEX Futures Contracts
NYMEXNYMEX
Heating Oil N°2
Unit: 42,000 GallonsMaturities: 18 monthlyDelivery: FOB NY Harbour
Light Sweet Crude (WTI)
Unit: 1,000 BarrelsMaturities: 30 monthly
2 quarterly4 yearly
Delivery: Pipe Cushing, Ok
Unleaded GasolineUnleaded Gasoline
Unit: 42,000 GallonsMaturities: 18 monthlyDelivery: FOB NY Harbour
Natural Gas
Unit: 10,000 MMBtusMaturities: 36 monthlyDelivery: Henry Hub, La
ElectricityElectricity
Unit: 736 Unit: 736 MWhMWhMaturities: 18 MonthlyMaturities: 18 MonthlyDelivery: CaliforniaDelivery: California--Oregon Oregon Border or Paolo Verde, Border or Paolo Verde, ArAr
Page 26
COMMODITIES CAPITAL MARKET
IPE Futures ContractsIPE Futures Contracts
IPEIPE
Brent Blend
Unit: 10,000 BarrelsMaturities: 12 monthly
4 quarterly2 semi annual
Delivery: Cash Settlement
Gasoil
Unit: 100 TonsMaturities: 12 monthly
2 quarterlyDelivery: barges ARA
Natural Gas
Unit: 5,000 Th per dayMaturities: 12 monthlyDelivery: National Balancing Point
COMMODITIES CAPITAL MARKET
The OverThe Over--TheThe--Counter instrumentsCounter instruments
Jet fuelJet fuel
Crude oilCrude oil GasoilGasoil
Fuel oilFuel oil
RefiningRefiningTradingTrading
DistributionDistribution
COMMODITIES CAPITAL MARKET
OTC European references (Platt’s)OTC European references (Platt’s)FOB
bargesRott.
FOBcargoes
Med.
CIFcargoes
Med.
FOBcargoes
NWE
CIFcargoes
NWE
Brent IPEBrent IPEBrent datedBrent dated
Fuel oil 1.0%Fuel oil 1.0%Fuel oil 3.5%Fuel oil 3.5%
Jet FuelJet FuelEN590EN590GasoilGasoil 0.2%0.2%
LPGLPGGasolineGasolineNaphthaNaphtha
Page 29
COMMODITIES CAPITAL MARKET
SwapSwap
Swap allows the consumer (producer) to obtain a fixed Swap allows the consumer (producer) to obtain a fixed purchasing (selling) price, whatever the prices variations may purchasing (selling) price, whatever the prices variations may be.be.
It like a forward except that, on expiration, the fixed price It like a forward except that, on expiration, the fixed price (swap price) is compared to an average spot price over a (swap price) is compared to an average spot price over a period which is agreed upon in advance.period which is agreed upon in advance.
The difference is settle in cashThe difference is settle in cash..
Page 30
COMMODITIES CAPITAL MARKET
Principle of SwapIt is the exchange at a future date of a fixed price (known) for a floating price (unknown) between two counterparties.
The fixed price payer is buying the swap.
The floating price payer is selling the swap.
Only the netted amount (fixed over floating or floating over fixed) is actually settled by the counterparties.
Fixedprice
Floatingprice
Page 31
COMMODITIES CAPITAL MARKET
OTC Options OTC Options
Most of the OTC option is Asian Style. it is cash-settled against the average of a specified period (usually one month). The Asian option has an automatic exercise. The followings are the popular strategies on oil market:
The CollarThe CollarThe Ratio CollarThe Ratio CollarThe Call & Put spreadsThe Call & Put spreadsThe Put The Put vsvs Call spread & the Call & Put spreadCall spread & the Call & Put spreadThe Capped SwapThe Capped Swap
Page 32
COMMODITIES CAPITAL MARKET
Exotic OptionsApplying leverage
The most popular products include:“one-by-two” collars: for every cap, two floors are sold, with the net effect of lowering the floor level.“range” swaps: the swap disappears when the settlement price is above a set trigger, with the net effect of lowering the initial swap level.“extendable” swaps: the bank has the option of extending the swap for a further period upon expiry, with the net effect of lowering the swap value.“escalator” swaps: the swap level is reset when it reaches one or several trigger levels, with the net effect of lowering the initial swap level.
SG can offer any other combination of swaps and options on demand.
Page 34
COMMODITIES CAPITAL MARKET
Our goals, our servicesSG CIB Commodities capital market Division is relationship driven and aims at
providing an integrated approach to the commodities sector. Our goals is to offer a tailor-made approach with customised solutions enabling SG CIB to meet your
expectations
Services provided include:Risk management services / Brokerage / Metal & Energy physical off-take.
Sales teams broken down by type of customer and region providing advises and strategy for your needs.
Fund raising on capital markets
Market-making on precious and base metals derivatives and gold spot
Market-making on energy derivatives
Strategic partnerships
Economic and strategy research
Strong innovation and structuring of complex trasactions
Exotic pricing : research on products suited to market environment
Page 35
COMMODITIES CAPITAL MARKET
Commodities Capital Market Front-office Teams
New yorkParis
Singapore
Sydney
Precious MetalsBase MetalsEnergy
Precious MetalsBase MetalsEnergy
Precious MetalsElectricity
Energy
America 13 Sales & TradersEurope : 47 Sales & Traders
ASIA : 12 Sales & Traders
LondonBase Metals
Page 36
COMMODITIES CAPITAL MARKET
Our Top Awards & Rankings
N 3 : Gasoline - Options Europe
N 3 : Fuel Oil - Options
N 1 : Gold - Forward/Averages/Swap to five years
N 1 : Fuel Oil - Swap Singapore
“Oil Products House of the Year - 2003”
“Energy/Commodity House of the Year - 2003”“Energy/Commodity House of the Year - 2001”
Page 37
COMMODITIES CAPITAL MARKET
We offer our customers top class services to meet their expectations as bestas we can. To meet this goal, we propose our customers several services:
Regular Indicative price sending
Mark-to Market
Indicative quotes
A high quality services for your needs.
14-Aug-2003
SWAPS
Bid Offer Bid Offer Bid Offer Bid Offer Bid Of fer Bid Of fer Bid OfferIn USD / Mt onne 1st Nearby and Spot # #### # #### # #### # #### ### ## ### ## ### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAME? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
Sour ce SG
CALL PREMUMFUEL 3.5% FOB BARGES ROTT
In USD / Mt onne Bid Offer Bid Offer Bid Offer Bid Offer Bid Of fer Bid Of fer Bid Offer#NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
180 Cst SingaporeStr ike Bid Offer Bid Offer Bid Offer Bid Offer Bid Of fer Bid Of fer Bid Offer#NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
3.5% fob med cargoesStr ike Bid Offer Bid Offer Bid Offer Bid Offer Bid Of fer Bid Of fer Bid Offer#NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
#NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### ##NAM E? # #### #### # # #### #### # # #### ### ## # #### #### ### ## # #### ### ## # #### ### # #### #
COLLAR str ikeFUEL 3.5% FOB BARGES ROTT
YOUR COMPANYOPEN POSITION AND MTM AT 31/12/03
Your position with us
Company Suff Way Quantity Type price Trade date Start date Settlement date Maturity date Cur Mtm USDXXX Dated Brent Sale 500 Swap 22 01/16/52 12/7/27 12/31/04 01/07/05 USD 100,000.00XXX Dated Brent Sale 500 Swap 22 01/17/52 12/8/27 12/31/04 01/07/05 USD 100,000.00XXX Dated Brent Sale 500 Swap 22 01/18/52 12/9/27 03/31/03 04/07/03 USD 100,000.00XXX Dated Brent Sale 450 Swap 22 01/19/52 12/10/27 06/30/03 07/08/03 USD 100,000.00XXX Dated Brent Sale 200 Swap 22 01/20/52 12/11/27 12/31/02 01/08/03 USD 100,000.00XXX Dated Brent Sale 500 Swap 22 01/21/52 12/12/27 06/30/04 07/08/04 USD 100,000.00XXX Dated Brent Sale 500 Swap 22 01/22/52 12/13/27 09/30/04 10/07/04 USD 100,000.00XXX Dated Brent Sale 500 Swap 22 01/23/52 12/14/27 12/31/02 01/08/03 USD 100,000.00XXX Dated Brent Sale 500 Swap 22 01/24/52 12/15/27 06/30/04 07/08/04 USD 100,000.00
USD 900,000.00PURCHASE OF AN ASIAN CALLSales T eam - Commodit ies Capital Mark et
C OR POR A T E & INV ESTM EN T B A NKIN G
Pur pose
Main featur es
Cash Sett lement Ter m
1 4 August 20 0 3Buyer of the call
Seller of the call
Commodity r efer enceQuant ity 100,000 Bar rels
Per iod June-03 Q104 Q204 Q204 UnitSet llement Monthly Monthly Quater ly Monthly
Str ike Pr ice 30 18 24 23 in USD/ Bar rel
Up fr ont Pr emium 4.10 7.00 4.00 in USD/ Bar relTotal Premium 410,000 700,000 400,000 USD
Pr emium paymentCommodity r efer ence Pr ice
Calcu lation AgentSet tlement date Five Business Days following the Ex piration Date.
Unhedged Str ike of Call 30 Unit in USD / Barre l
Hedged with Call Gr ah Per iod June-03
Sydney in U SD / B arrel
M etals : (612) 9232 3811
LondonM etals : (44) 207 650 62 84
New -Yor kM etals : 1 212 278 567
Energy : 1 212 278 5608
Singapor eEnergy : +64 326 7790
Par isEnergy : +33 1 42 13 90 35
Base & Precious M etals +33 1 42 13 88 10
in U SD / B arrel
Société Générale
Protect ion with a guaranteed max imum purchase price, with the full profit on the downside price
If the Reference Price is below the Str ike Pr ice, no amount shall be paid by either par ty to the other (without prejudice to any amount otherwise due and unpaid).
With a payment of premium cash, a call opt ion gives the buyer the right but not the obligat ion to buy at a determined price a f ix ed quantity over a per iod of t ime.
If the Reference Price is above the Str ike Pr ice, The Cash Sett lement Amount shall be paid by the Seller to the Buyer on the Sett lement Date.
SG
SG Corporate & investment Banking / DEFI-CTY Tour Société Générale 92972 Paris La défense Cédex France
Premium has to be paid in two full working days after the trade date
All pricing is indicat ive and subject to market condit ions. Société Générale assumes no f iduciary responsability or liability for any consequences, f inancialor otherwise arinsing from relying on this informat ion. The informat ion herein is not a solicitat ion of an offer to buy or sell, any securit ies or derivat ives. Youshould consult , to the extend necessary, with your own independent , competent ,intended to be an of fer to buy or sell, legal, f inancial and other professional advisors, to ensure that any decision you make is suitable for you in the light of your circumstances and f inancial posit ion
The unweighted ar ithmetic mean of the Sett lement price per bar rel ofBRENT - IPE, for each Commodity Business Day dur ing the Calculationper iod. The Commodity reference pr ice will be rounded to the thirddecimal.
BRENT IPE
Société Générale
Strategy Profile
1 5
2 5
3 5
4 5
5 5
1 5 2 5 3 5 4 5 5 5Reference pr ice
Rea
lise
d p
rice
Page 38
COMMODITIES CAPITAL MARKET
SG is a leader in advising, structuring and executing risk management strategies(swaps, options and exotics) for producers, consumers and refiners of oil and petroleum
products.
DEFI/CTY/MAR/NRJEnergy Trading Highlights
Established in 1989 as Inter-Bank market-maker and used derivatives expertise to evolve into a premier customer orientedspecialist.
Global Trading Book on Crude Oil and Products Derivatives.Paris, New York, Singapore, Sydney.Over $ 90 billion of notional value traded in 2002; a volume equivalent to 4,200 Mios bbls.
Strong experience in Physical Gas trading.Total sales of over 300 Twh in 2002.Strong expertise in commodity nominations procedures.
SG Energy Derivatives Group serves 350 corporate clients in over 50 countries.
Page 39
COMMODITIES CAPITAL MARKET
Energy services capacity
SG has been an active player in energy derivatives in Europe, Asia and the United States since 1988. SG is a member of the International Petroleum Exchange (IPE) and the New York Mercantile Exchange (NYMEX).
We offer highly competitive quotes around the clock for derivatives with maturities of up to fifteen years, denominated in US dollars or any other major currency.
SG's teams in Paris, New York, Singapore and Sydney are available to assist in designing hedging and investment strategies to ensure :
Competitive prices for producersOptimum margins for refinersAttractive costs for end-usersQuick identification of market opportunities.
Page 40
COMMODITIES CAPITAL MARKET
Electricity through affiliate Gaselys
Natural Gas through affiliate Gaselys & LPGs
Crude oil
IPE BrentDated Brent
Bacton Beach Bacton Interconnector
National Balancing Point Zeebrugge Hub
Petroleum Argus Propane CIF ARA
UK NETA Nord Pool
Emden, Oude-Bunde
Powernext EEX
ENERGY TRADING HIGHLIGHTS : EUROPEAN REFERENCES
Page 41
COMMODITIES CAPITAL MARKET
ENERGY TRADING HIGHLIGHTS : EUROPEAN REFERENCES
Distillates
Fuel Oil
Gasoline
RotterdamFOB
Barges
NorthWest EuropeFOB CIF
Cargoes Cargoes
MediterraneanFOB CIFCargoes Cargoes
Fuel 3.5%Fuel 1%Fuel Rheinschiene
IPE GasoilGasoil 0.2%
EN 590
Jet Fuel
Premium unleaded
PLATT ’S
Current Market Benchmarks
Page 42
COMMODITIES CAPITAL MARKET
Singapore
Dubai Singapore JapanCIF
ARAB GulfFOB
Gasoil 0.5%
Distillates
Fuel Oil
Crude oil
Tapis Platt ’sDubaî Platt ’s
HSFO 380 CSTHSFO 180 CST
Jet Kero
PLATT ’S Tapis
Australia
ElectricityNew South Wales Pool Victoria Pool Queensland Pool
ENERGY TRADING HIGHLIGHTS : ASIAN REFERENCES
South Australia
Current Market Benchmarks
Page 43
COMMODITIES CAPITAL MARKET
US GulfCoast
New York Harbor
Westcoast
Group 3Midcont.
Heating Oil
Distillates
Fuel Oil
Gasoline
N°6 High Sulphur ( 3% )
N°6 Low Sulphur ( 1% )
NYMEX Heating Oil
Diesel OilJet Fuel
NYMEX Unleaded GasolineGasoline
PLATT ’S
ENERGY TRADING HIGHLIGHTS : AMERICAN REFERENCES
Page 44
COMMODITIES CAPITAL MARKET
Natural Gas & LPGs
Crude oil
WTI Platt ’sNYMEX WTI
Henry Hub Natural Gas Ethane/Propane Mix Mt Belvieu
LLS Platt ’s Canadian Grades Platt ’s
ENERGY TRADING HIGHLIGHTS : AMERICAN REFERENCES
Page 45
COMMODITIES CAPITAL MARKET
A high quality Energy research for your needs.
ECONOMIC RESEARCHWeekly PublicationEnergy SpecialDOE/API Commentary
Frederic LASSERREDebbie WHITE
TECHNICAL RESEARCHDaily PublicationWeekly publication
Hugues NAKAStéphane BILLIOUD
An dedicated team of specialists provided services : Customer presentations and direct answers to questions, regular publications transmitted by e-mail, fax or mail and available
on the internet.Our publications combine continuous market attention and in-depth analysis
Page 46
COMMODITIES CAPITAL MARKET
+
SG and Mizuho co-operate in the field of energy risk management
Aiming to become the benchmark for quality management,both in terms of impeccable service and competitive pricing,the alliance will serve Japanese corporates eager to managetheir exposure to energy price fluctuations with cutting-edgeinnovative financial instruments. Mizuho and SG will provide riskhedging products for consumers of oil-related products in thechemical, air transportation, shipping and land transportationindustries as well as for energy-related industries.
A Landmark Partnership :
COPORATE &INVESTMENT BANKING
Page 47
COMMODITIES CAPITAL MARKET
+ =Société Générale and Gaz de France have signed a partnership agreement in 1999 to foster the development of Gaz de France’s trading activities, with a view to extend its commercial offer to large industrial gas consumers.
In 2001, they decided to create GASELYS a joint venture between Gaz de France and Société Générale. Gaselys is a trading company which operates on the european energy markets –namely natural gas, electricity and oil.
Gaselys is 51% owned by Gaz de france and 49% awned by Société Générale
a 80-strong team ( Q3 2003 )
A Landmark Partnership :
COPORATE &INVESTMENT BANKING
Page 48
COMMODITIES CAPITAL MARKET
Powernext is an optional and anonymous organized exchange for the delivery of electricity into the French hub.
Powernext offers standard hourly contracts negotiable by French generators and foreign players acting on their own behalf. Members must have signed a Balance Responsible contract with RTE.
Powernext organizes transaction liquidity by concentrating orders on an auction.
Powernext guarantees transaction security with real-time monitoring and by the implementation of a partnership withsecurity and act as the guarantor of transaction anonymity.
The physical delivery of the electricity is under the responsibility of RTE (standing for "Electricity transmission grid")
Shareholder and one of Initial Partners of Powernext
A Landmark Partnership :
Page 49
COMMODITIES CAPITAL MARKET
IntercontinentalExchange is the largest Internet-based marketplace forthe trading of over-the-counter (OTC) energy, metal and other commodity products; it represents a partnership of world leading financial institutions with some of the world ’s largest diversified energy and natural resource firms.
IntercontinentalExchange based in Atlanta, with offices in Chicago, Houston, London, New York and Singapore IntercontinentalExchangealso owns the International Petroleum Exchange of London (IPE), Europe's leading energy futures and options exchange
DERIVATIVES EXCHANGE OF THE YEAR, 2002DERIVATIVES EXCHANGE OF THE YEAR, 2002ENERGY BUSINESS AWARDS, 2002-2003FORBES.COM BEST OF THE WEB, FALL 2002
Shareholder and one of Initial Partners of IntercontinentalExchange
A Landmark Partnership :