BY LINE BRUUN
It’s quiet. If you expect to meet the Wolf of Wall Street when you enter Maersk Global Energy Trading, you’ll be disappointed.
”We will have the next cargo from Algeria ready, and I will contact you next week to see where your bid is,” says one of the oil traders as he finishes yet another conversation with a potential customer. He always notifies customers when a new portion of crude from Algeria will be ready for sale.
Brent, Dubai or WTI?
The three global benchmarks for oil are Brent, Dubai and WTI (West Texas Intermediate). They serve as a global reference price for buyers and sellers of crude oil, and usually oil is sold at a premium or discount to one of these benchmarks, based on the quality of the oil.
“As an upstream oil company we cannot do much to affect the benchmark price, and the macro-economic factors that drive it. To get the best price for our barrels, we analyse the local markets to understand who needs what crude. We consider different variables such as freight rates, refinery margins and product cracks that affect our customers and use the information to time when we release our oil for sale,” says Anne Jensen, Head of Global Energy Trading at Maersk Oil.
Experts with the right connections
“In 2015, Maersk Oil had an entitlement production just below 100 million barrels of oil (including gas). Despite newspaper headlines telling the world that oil stocks are full and that global demand is shrinking, Global Energy Trading has not had difficulties finding buyers for our oil,” Jensen explains.
”Our strategy is to target refineries. What matters to them is the difference between the price they pay for the crude, and the price they get for the refined product. The refinery margins were positive all through 2015. In fact, it was the best year ever recorded for refineries.”
Not all oil is the same
Refineries are specialised in producing certain end-products and their production facilities can therefore only handle and process specific crude oils.
“To achieve the best price, we need to understand which refineries can run the different types of crude. The traders are responsible for specific assets to become experts on oil characteristics, potential customer requirements and which markets would be interested in purchasing our oil,” says Jensen.
A large part of Maersk Oil crudes are niche oil with special characteristics such as high TAN (acid in the crude) which is only feasible for a handful of refineries. That requires technical experience in the trading team to constantly try to expand the number of potential customers.
Having the right logistics in place for bringing the oil to the customer also has a huge impact on the price, and can discount the price heavily if it is wrong. Therefore it’s key to find the right buyer with easy access.
Making a difference
When Global Energy Trading are included early in exploration or growth projects, they are able to provide advice that can influence the price of all oil from the entire asset. This can impact the quality of the oil, and make it attractive to local refineries.
“We were involved early in the Culzean project, and were able to advise the team to change two parts of the facilities which processes the oil to improve the quality of the oil, making it less salty and waxy,” explains Lasse Andersson, Senior Crude Oil Trader.
“Rather than being a crude oil that would primarily have buyers in the U.S. Gulf of Mexico, the changes will make the Culzean oil also suited for European refineries. This might save us up to USD10 dollars per barrel in transportation costs,” says Andersson.
The collaboration between the Culzean team and Global Energy Trading has, in oil terms, impacted the Culzean oil from being a Brent discount oil to becoming a Brent premium oil.