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ENERGY TRADING RISK MANAGEMENT
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Most oil and gas companies do not like to consider
themselves “energy traders.” In their view, energy
trading is more closely associated with investment
banks and merchant energy companies. However, nearly all oil
and gas companies are exposed to conditions or are engaged
in activities that contribute to a risk profile that is very similar to
that of an energy trading concern.
Oil and gas companies have exposure to energy commodities,
whether it’s a natural long position of a producer or the
short position of a refiner. They are vulnerable to price volatilities,
as well as the credit worthiness of counterparties. They also
must face the logistic realities of managing diverse physical commodities,
the movement of which often represents significant
financial exposure that is only partially recognized.
Even large, vertically integrated companies that often view
themselves as naturally hedged with little to moderate overall
exposure many times can’t see how well their natural hedge
really works. They simply do not have the information necessary
to do so.
Don Stowers - Personal Name
NONE
ENERGY TRADING RISK MANAGEMENT
Management
English
Oil & Gas Financial Journal
2008
1-24
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