TRADING RISK MANAGEMENT TECHNOLOGY

Commodities SuperCycle a myth?

2011-05-08T21:28:00.001-07:00

Full article. http://financialriskstoday.com/supercycle_superderivatives.php Market watchers would be forgiven for thinking that commodities have broken out from the traditional wisdom of cyclical markets and are heading for the heavens. Anyone remember some guy called Gordon Brown taking a similar view on ending boom and bust market activity. Anyone remember him? Investors and hedgers have bought into the received wisdom that commodity prices are only going in one direction – up – as part of a super cycle but with inclusive peaks and troughs. But is a commodities super cycle really underway or are we actually in a normal cycle? And in which case, is the received wisdom wrong and could commodities prices start to fall in the short to medium term?

CFTC’s Division of Market Oversight Issues Advisory Regarding Intraday Speculative Position Limits

2010-05-18T15:21:00.000-07:00

On May 7th, the CFTC Division of Market Oversight issued an advisory regarding compliance with speculative positions limits emphasizing compliance during intra-day. This advisory clarifies that CFTC intends to use its regulatory authority to enforce ‘real time’ risk monitoring for compliance. This ruling will have implications for commodity trading firms, FCMs, algorithmic trading funds, hedge funds, and their risk managers. They must have real time risk management systems to ensure that they comply with the law. It will not be merely sufficient to just apply position limits at the pre execution phase. In the world of using algorithms for high frequency trading, this becomes even more important and necessary as witnessed in events of last Thursday (May 6, 2010) when high frequency trading caused precipitous downfall in equity markets.

In my opinion, monitoring risk in real time is an indispensible tool to ensure market stability. My recently written white paper on 4^th Quadrant commodity trading, I show that concepts applied to commodity trading emphasize the need for organizations to manage risk in real time. This recent CFTC advisory is an attempt to create external discipline to ensure that trading entities not have such concentration risk. Such concentration risk not only puts an entity out of business but also disrupts the market as a whole. Many FCMs enforce ‘pre execution’ position limits to limit order beyond a certain size. That is fine but it does not view overall position in conjunction with the trades already on an entity’s book. This requires a real time trading and risk system that monitors each trader’s total position along with the entity’s total position in real time. And it ensures that positions not only comply with the law but also comply with the internal risk policy and risk management’s best practices. Companies should have a risk system that can ensure real time position keeping and alerts. Companies need to develop a way to ensure connectivity with exchanges and FCMs to get positions in real time, or they buy risk systems from vendors.

I think that this ruling should start conversations in the IT, Risk Departments, and with the Principles of commodity trading funds (Algo funds, CTA, or hedge funds) about installing such systems. It can be a very low cost insurance policy to avoid liquidity squeeze. For further information and to share ideas, feel free to contact me at directly at SunGard Energy and Commodities:

Moazzam Khoja, CFA
SVP Strategy
SunGard Energy and Commodities
Moazzam.khoja@sungard.com
713-210-8136

Kiodex Real Time provides a complete solution for monitoring intra-day compliance, please contact us for a free consultation :
Free Whitepaper and Intra-Day Compliance Monitoring Consultation

About Moazzam Khoja, CFA
Moazzam is senior vice president of strategy for SunGard Kiodex. He has worked for the past thirteen years in the commodity risk management area including issues related to commodity derivatives valuations, structuring of complex energy and credit derivatives, and hedging process and analysis. He has authored several articles in leading industry publications to address these issues. He obtained his MBA from the Columbia Business School in 1996 and his chartered financial analyst designation in 2003.

Webinar: Successful Commodities Hedging - Making Intelligent Hedging Decisions

2009-11-17T09:04:00.001-08:00

CLICK HERE TO REGISTER NOW to learn more about an effective hedging process.

Successful Commodities Hedging- Making Intelligent Hedging Decisions

Do you know how to measure the success of your hedging program? Uncertain how much of your exposure to hedge?

Join SunGard Energy and Commodities and host speaker Moazzam Khoja for this complimentary 60-minute Web Seminar. Learn more about commodity hedging and it's strategic importance.

Risk methodologies have been employed by the corporations for several decades to protect cash flows. However, the issue of how to set a hedge policy and whether to hedge or not baffle many corporations. A lack of familiarity with hedging tools and strategies compounds this confusion.

See how an effective hedging program helps you to transform confusion into clarity. Learn more about the five step hedging process designed to help hedgers to make informed hedging decisions and whether or not their companies stand to benefit from a hedging program.

REGISTER NOW to learn more about an effective hedging process.

Featured Speaker: Moazzam Khoja, senior vice president, SE&C
Date: December 3, 2009
Time: US: 10:00am CST, Europe: 5:00pm CET

About Moazzam Khoja

Moazzam Khoja, CFA is the senior vice president at SunGard Energy and Commodities. In this capacity he looks at the strategic issues facing SunGard customers in particular and commodity derivatives industry in general. He presents SunGard's Kiodex risk management solutions to enterprises that take commodity risks. He has worked for the past thirteen years in the commodity risk management area including issues related to commodity derivatives valuations, structuring of complex energy and credit derivatives, and hedging process and analysis. He has authored several articles in leading industry publications to address these issues. He obtained his MBA from the Columbia Business School in 1996 and his chartered financial analyst designation in 2003.

Best regards,

Sean Carnahan

Invitation to SunGard Web Seminar: New Regulatory Changes for the Gas Market: NAESB 1.9

2009-11-17T08:22:00.001-08:00

CLICK HERE TO REGISTER NOW for NAESB 1.9 : part 1

New Regulatory Changes for the Gas Market: NAESB 1.9

Is your gas business impacted by the NAESB 1.9 regulations? Are you prepared for compliance? Ready to utilize new capabilities?

Join SunGard Energy and Commodities and host speaker Sylvia Munson for two complimentary 60-minute Web Seminars. Learn more about the specific changes that come along with NAESB 1.9. We like to hear from you how these changes will impact your business.

NAESB 1.9 part 1: Learn more about the nominations, flowing gas, and invoicing changes. NAESB 1.9 contains a new standard 1.3.80 which requires pipelines to support flexible receipt and delivery points for existing nominations. This standard alone has the potential to be implemented differently by every pipeline. Our goal in this session is to find a small set of solutions that will meet all of your needs.

NAESB 1.9 part 2: This sessions will explore capacity release, electronic delivery mechanism (EDM) and additional standards changes. You will learn about new requirement for pipelines to support index based transportation pricing and an extensive set of rules goes with those requirements. See, how new gas quality reporting requirements help you and learn how those should be implemented.

REGISTER NOW for NAESB 1.9 part 1:

Featured Speaker: Sylvia Munson, director, product management, SE&C
Date: December 1, 2009

Time: 1:00pm CST

REGISTER NOW for NAESB 1.9 part 2:

Featured Speaker: Sylvia Munson, director, product management, SE&C
Date: December 8, 2009
Time: 1:00pm CST

About Sylvia Munson

Ms. Munson directs gas operations and pipeline product management for SunGard Energy and Commodities. She has participated in the North American Energy Standards Board (NAESB) since its inception as GISB in 1995 and has served on its Board of Directors, Executive Committee and as chair of various sub-committees. Ms. Munson is a highly regarded speaker and author who has written various articles and contributed several to NAESB published books.

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Best regards,

Sean Carnahan

SunGard Energy & Commodities Web Seminar: Lessons for Financial Risk Management from the Great Recession

2009-10-16T08:58:00.001-07:00

Register for this free SunGard Energy & Commodities Webinar
http://bit.ly/financialriskwebinar

What has the financial crisis taught us about risk management? Do you think the "reach for yield" distort the market's risk preferences?

Join SunGard Energy & Commodities and Dr. David Rowe in this complimentary 60-minute Web Seminar. Learn about the evolution of risk management, where it failed during the credit crisis and the lessons we learn from it. See, how these lessons impact the energy markets.

Learn from this expert in the risk management industry about:

Statistical entropy - the inherent limits of quantitative tools

Importance of structural imagination - why we neglected dimension of risk analysis
Self-Referential Feedback - the danger of corrosive feedback loops in pricing and risk management
Complexity and Dark Risk - intransparency breeds hidden dangers

Alternate Means of Valuation - ignore a possible failure of liquidity at your peril

Discuss with David the attention which has been paid to Value-at-Risk (VaR) as a tool for risk estimation and his definition for VaR not being the "worst case loss".

Below link is to register for this free SunGard Energy & Commodities Webinar
http://bit.ly/financialriskwebinar

o Featured Speaker: Dr. David Rowe, EVP, SunGard Adaptiv
o Date: October 29, 2009
o Time: 10:00am CST (4:00pm CET*)

Best regards,

Sean Carnahan

Invitation to SunGard Web Seminar: New Directions in Trading Carbon and Energy Efficiency

2009-10-02T15:00:00.001-07:00

New Directions in Carbon Trading and Energy Efficiency

Do you want to know how your business can contribute to cutting carbon? Is carbon trading the right way forward?

Join SunGard Energy and host speaker Tom Bainbridge in this complimentary 60-minute Web Seminar. Learn about the 'Carbon Reduction Commitment', a hybrid emissions trading scheme for energy consumption related emission which will be first introduced in the UK. This scheme applies to larger energy consumers in the public and private sectors, across the whole range of business and public sector activities, from April 2010. Get to know more about the interrelationship with other carbon trading schemes, and programmatic CDM.

See how this scheme has already gained traction in India (where similar arrangements are to be introduced) and interest by legislators in North America and in the European Commission.

REGISTER NOW to learn more about the Carbon Reduction Commitment.

Featured Speaker: Tom Bainbridge, partner & head of energy group, Nabarro
Date: October 21, 2009
Time: 10:00am CST* (5:00pm CEST)

About Tom Bainbridge

Tom is partner and the head of the Climate Change & Energy group of Nabarro, a major UK commercial law firm, where he focuses on sustainable energy and other climate change matters. He advises private and public sector clients on various aspects of climate change policy, low and zero carbon energy and energy efficiency schemes, the carbon financing of other emissions reduction projects and emissions trading arrangements. He is deeply involved in scrutiny of the Carbon Reduction Commitment, lobbying for clarification of problem aspects of the policy, advising clients how it will impact upon them and helping them to develop business strategies to minimise risks and maximise the benefits of the scheme.

Tom has authored numerous articles and spoken on various aspects of environmental and energy law. He gave evidence before a Commons Select Committee on the then draft Climate Change Bill and he chairs the climate change working party of the UK Environmental Law Association.

* For all Asia-Pacific customers: We will record this Web Seminar.

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Webinar: The New Paradigm for Value at Risk

2009-09-04T09:15:00.001-07:00

To view this email as a web page, go here.

The New Paradigm for Value at Risk

Does the global financial crisis have you questioning the use of Value at Risk as a risk management tool? How might the new Basle II regulations help prevent future disasters?

Join SunGard Energy Solutions and Chris Coovrey in this complimentary 60-minute Web Seminar. Learn about emerging new paradigms in Value at Risk arising from the unexpected and massive losses suffered by sophisticated financial institutions in the global economic crisis that began in 2007. In this Web Seminar, Mr. Coovrey will present this paradigm shift and its affect on many risk management best practices including the new changes in Basle II requirements.

REGISTER NOW to learn more about the shift in Value at Risk.

Featured Speaker: Chris Coovrey, senior quantitative developer, SES
Date: September 16, 2009
Time: 10:00am CST* (5:00pm CEST)

About Chris Coovrey

Mr. Coovrey is the senior quantitative developer for SunGard Energy Solutions where he focuses his efforts around risk and complex option valuation and development. He is a graduate of the US Air Force Academy and has a master of science in financial mathematics from the University of Chicago.

Mr. Coovrey brings more than 15 years of experience in the commodity and fixed income industries, working for both private and public institutions in the investment and merchant space. His numerous roles have included: physical commodity trader; commodity derivatives trader; commodity structurer; desk manager fixed income and currencies trading and head of structuring/quantitative modeling for renewables and emissions.

* For all Asia-Pacific customers: We will record this Webinar.

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SunGard Energy Solutions • 1331 Lamar Street, Suite 950 • Houston, TX 77010 USA
www.sungard.com • Subscription Preferences

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Solar Energy from Space? yes please.

2009-08-27T13:18:00.001-07:00

From Energy Matters A blog exploring IT efficiency, energy and sustainability

The Energy Cloud

A good deal of opinionating on Cloud Computing is slowly transformed to real substance: standardized services over the net. They range from Google search to salesforce.com to EMC's Mozy offering of on-line backup.

During a customer forum last week, one gray-haired IT director asserted that these ideas were nothing new but just a new twist on Mainframe time sharing.

Perhaps. I never argue with a Mainframe guy.

But the twist is that we can accomplish this now in ways that were not available before. What was lumbering and expensive can be fast, elegant and cost-effective.

That's where new technologies, or new application of old technologies become the innovation drivers.

So, apply the same principles to energy. Think of it as the energy cloud. Solar, and wind and wave energy generation are not new, but the refinement of the means and the changes in economics and the consciousness of environment, make them much more appealing and realistic.

Of course there is also the profit motive.

Wind Power

T. Boone Pickens, the US billionaire oilman, testified before Congress last week about his campaign to create a wind-energy grid in the Midwestern US. He wants to replace gas-fired power plants with windmills.

Pickens expects to spend tens of millions of his own money promoting the idea in television and Internet advertising. In ten years he sees it as feasible to replace as much as 38% of US oil imports by using wind energy.

This is not an altruistic initiative.

Pickens is a billionaire. He says he's in the energy business, not the oil business. And economically and technically the opportunities are there to ramp wind while oil is dialed back.

In his testimony he cited national security as a primary motivation. But he's also a businessman and is investing huge amounts of money to build a windfarm in West Texas that will produce 4000 megawatts, the equivalent of two and a half Nuclear power plants.

Pickens noted that a number of other nations..."such as Germany, are ahead of the United States when it comes to using wind power for electricity."And Germany doesn't even have good wind. We have fabulous wind"

The U.S. wind industry has been seeing phenomenal growth in the last few years - 45% in 2007, and more than half of that is already in Texas where there are already 5,300 installed megawatts. That's enough for more than a million Texas homes. And I thought they only did coal.

Of course there are lots of other places where wind is already a well developed energy source. In Ireland, for example, there is nationwide program for wind and solar power.

And an enterprise called Airtricity is developing a "European Offshore Supergrid, bringing together the latest technology in wind generation and electricity transmission to provide a secure, sustainable and uninterrupted supply of electricity to EU member states."

I was in Britain last week and saw an Ad for "npower" promoting a program called "Juice" that produces energy from solar, tidal and wind; mostly wind. They promote it to customers, giving them the choice of fossil or renewable at the same price:

"Juice is generated from a number of renewable energy sources, primarily at North Hoyle Offshore Wind Farm. As a Juice customer, npower matches every unit of normal electricity that you use and feeds the same amount, generated from renewable sources, into the electricity network*.
It's as simple as that."

Waves and Tides

Off the Cornish coast they are also developing the world's first wave farm which is expected to come on line within three years.

Talk about a refresh of old technology concepts; some of the principles involved here can be traced back to Archimedes. Older than Mainframes!

Here's the other not-so-surprising note on this project, it's partly financed by Shell Oil. Pickens isn't the only one that isn't just in the oil business any more.

There are also a number of practical applications already on line to harness wave power.

Tidal energy generators are large underwater turbines placed that capture energy from high tidal movements in order to produce electricity.

Already operational on the coast of Wales, tidal power has terrific potential for future power and electricity generation.

Solar

Germany is already the worlds leading power producer from the Sun. About 55% of the world's solar energy is harnessed in Germany. Spurred on by a renewable energy law passed in 2000, about 3 percent of Germany's electricity now comes from the sun. By 2020 the government wants 27% to come from all renewables, up from 13%.

In large part the solar farms are modest compared to the heavy investments aimed at becoming the leading producer of advanced solar energy technology. The industry has created tens of thousands of jobs and is "posting growth rates that surpassed the optimistic forecasts made by the fathers of a pioneering 2000 renewable energy law."

They may too far from the equator, and too overcast and rainy to be the best solar location, but they intend to profit from supplying those who are.

Solar from Space

Here is one that may sound like science fiction: solar power from space.

Collect solar energy in space and beam it back to earth for an endless supply of relatively cheap and secure power.

How cool is that?

Apparently this concept is also not new and according to an article in the International Herald Tribune last week there is quite a lot of serious investigation and development already underway to test feasibility.

The idea is to build large solar energy collectors that will orbit the Earth. Unlike land-based stations they are not hampered by weather, angle of the sun or darkness.

The collected solar energy is beamed to Earth using wireless radio transmission to receiving stations near cities and points of primary use. There it's converted to conventional electric power. Cost per kilowatt-hour is projected to be about the same as today's common consumer rate.

Now they still need to get efficient collectors up there. NASA is working on a public-private launch service initiative that may get the job done. And you can expect that future thinking businesses will be looking at this as a new way to turn a profit.

How about Exxon Space Energy? Wouldn't be surprised to see Pickens in on this after the windmills are all spinning.

Energy Cloud

Wind. Wave. Water. Solar. Renewable and feasible.

So back to the Cloud analogy. All of these can feed power to the grid. You may have excess power from your own sources that you can feed into the grid. Like Utility or Cloud computing, we have choices and potential that we didn't have before.

It's all progress. It's an environmental improvement opportunity. It's an economic opportunity too. Just ask T. Boone.

Best regards,

Sean Carnahan

GWPC, DOE to host first water-energy sustainability symposium

2009-08-22T19:46:00.001-07:00

Sept. 13-16: The Ground Water Protection Council and the US Department of Energy will host the first water-energy sustainability symposium to address challenges in meeting future water and energy needs. It will be held in conjunction with the GWPC’s 2009 annual forum in Salt Lake City.

Aimed at both state and national policymakers, the symposium will bring together more than 60 top water and energy experts to discuss water use and its energy development impacts; water needs for unconventional oil, gas, solar, hydropower, and nuclear power production; integrated water-energy planning, and other hot topics, GWPC said. For a full agenda and registration information, go online to www.gwpc.org.

Why it matters: Policymakers outside the western United States, where water can be scarce, have begun to recognize in the past year that water and energy issues often converge. Large, predictable quantities of water are required to produce various kinds of energy. Hydraulic fracturing, which has been used to recover natural gas from the Barnett and Haynesville shales, is being considered for the Marcellus Shale underlying parts of New York, Pennsylvania, and West Virginia. The technology’s use is currently regulated by states, but US Reps. Diana DeGette (D-Colo.) and Maurice D. Hinchey (D-NY) introduced a bill in June to federally regulate it under the Safe Drinking Water Act.

Treating and distributing water also relies on easily accessible, affordable energy. The interdependence of energy and water, and the need for policy collaboration, has become clear as experts in both fields search for ways to meet demand for both resources. Co-sponsors for the symposium include the Petroleum Technology Transfer Council, the National Ground Water Association, the Association of State Drinking Water Officials, and the National Rural Water Association.

Contact Nick Snow at nicks@pennwell.com

Best regards,

Sean Carnahan

MARKET WATCH: Gas drops to 7-year low of under $3/MMbt

2009-08-22T19:44:00.001-07:00

Published: Aug 21, 2009

Sam Fletcher
OGJ Senior Writer

HOUSTON, Aug. 21 -- Natural gas dropped to a 7-year low to less than $3/MMbtu Aug. 20 in New York market despite the US Energy Information Administration reporting a lower-than-expected injection of gas into US storage; the expiring September contract for benchmark US crude crept higher in mixed and volatile trading.

In New Orleans, analysts at Pritchard Capital Partners LLC said, “Over the past 12 weeks finished [gasoline] demand, as reported by the EIA, has been well below its 5-year average and last week freight traffic across North America was down nearly 18% year-over-year. Crude prices have been range-bound for nearly 3 months between $60-73/bbl and, as we expect demand for crude products to remain below their 5-year average through 2009, prices will continue to trade in this range unless the US dollar is materially devalued or investor sentiment regarding a global economic recovery changes, impacting crude demand in 2010.”

Analysts in the Houston office of Raymond James & Associates Inc. advised, “Expect [gas] prices to trend even lower as the market realizes that we are headed for full storage in the coming months,” In early trading Aug. 21, oil prices increased to the highest levels of this year, “likely due to a slightly weaker dollar,” they said.

In a speech at an annual Federal Reserve conference in Jackson Hole, Wyo., Fed Chairman Ben Bernanke said economic activity appears to be “leveling out” in both the US and around the world and “prospects for a return to growth in the near term appear good.” As a result, the central bank has taken steps to pull back some economic emergency programs.

Meanwhile, the National Association of Realtors said home sales rose 7.2% to a seasonally adjusted annual rate of 5.24 million in July, from 4.89 million in June. It was the largest monthly increase in at least 10 years as first-time home buyers rushed to take advantage of a tax credit that expires this fall. It marked the fourth consecutive monthly increase and the highest level of sales since August 2007.

On Aug. 20, the US Department of Labor said the number of first-time unemployment claims rose unexpectedly for the second consecutive week. Moreover, the Mortgage Bankers Association reported more than 13% of homeowners with a mortgage are either behind on their payments or in foreclosure. Mortgage delinquencies hit another record high in the second quarter, said Pritchard Capital Partners.

EIA said commercial US inventories of benchmark crudes plunged a whopping 8.4 million bbl to 343.6 million bbl in the week ended Aug. 14. Gasoline stocks fell 2.1 million bbl to 209.8 million bbl in the same period. Distillate fuel inventories declined by 700,000 bbl to 161.6 million bbl (OGJ Online, Aug. 19, 2009).

Olivier Jakob at Petromatrix in Zug, Switzerland, said, “Despite the high level of [crude] stocks in Cushing, [Okla.,] the expiring West Texas Intermediate spread (September-October) closed at the narrowest contango of the year and in a lesser contango than the September-October expiry of last year, even if Cushing stocks are almost double the levels of a year ago. Stocks in Cushing are high, but if they are filled up with heavy Canadian crude oil that cannot be delivered, then the only thing that really matters is the stock-to-tank capacity ratio, and since Cushing has seen an increase of shell capacity over last year, it is difficult to determine if its capacity utilization is any higher than a year or 2 years ago.”

Jakob cautioned, “Hurricane Bill will hit Canada over the weekend, probably still with Category 1 strength. The main risk exposure will be on the Dartmouth Halifax 90,000 b/d and the Come By Chance 115,000 b/d refineries.”

Adam Sieminski, chief energy economist, Deutsche Bank, Washington, DC, said, “There is a very strong rise in negative correlation between the gasoline pump price and demand at prices above $3.50/gal, equivalent to around $3/gal on the New York Mercantile Exchange gasoline contract. With prices still well under this threshold, as the economy starts to recover, income elasticities may begin to dominate and offer some positive support to gasoline demand.”

Net electricity generation in the US dropped more than 4% in May from year-ago levels. Sieminski noted, “Preliminary data for June and July suggest the trend continued with year-over-year declines in the 5-6% range, driven by falling gross domestic product, declining industrial production, and below-average summer temperatures across most of the US. Gas use for electricity rose and coal use fell. This pattern is expected to continue into the second half and eventually will help improve gas supply-demand balances.”

Energy prices
The expiring September contract for benchmark US sweet, light crudes rose 12¢ to $72.54/bbl Aug. 20 on NYMEX. However, the October contract dropped 92¢ to $72.91/bbl. On the US spot market, WTI at Cushing was up 12¢ to $72.54/bbl. Heating oil for September delivery lost 3.35¢ to $1.89/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month fell 5.24¢ to $1.98/gal, wiping out much of the gains from the previous short rally.

The September contract for natural gas fell 17.4¢ to $2.95/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 2¢ to $3.02/MMbtu.

In London, the September IPE contract for North Sea Brent declined $1.26 to $73.33/bbl. Gas oil for September was up $3.25 to $603.75/tonne

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes gained $1.44 to $72.57/bbl on Aug. 20.

Best regards,

Sean Carnahan

PE Magazine article: "Commodity STP: Clearing, Transparency, Control" an Interview with Sharon Fortmeyer-Selan

2009-08-19T13:58:00.001-07:00

SunGard Energy Solutions www.sungard.com/energy

Interview with Sharon Fortmeyer-Selan

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What began as a banking crisis has changed the capital markets and shaken energy commodity markets as well. P&E asked Sharon Fortmeyer-Selan of SunGard Energy Solutions about the trends are emerging from the crisis, and what tools can help to address them.

How is the global financial crisis impacting commodity transactions and what trends do you see emerging as a result of this?
Sharon Fortmeyer-Selan. Barely two years ago, we heralded the hedge funds and financial institutions for the liquidity they brought to commodity markets. The widespread financial crisis has dampened this liquidity as some participants retrenched or withdrew from commodities markets. More significantly, it has brought extreme volatility and fueled deep concern, some might even say fear, about counterparty risk.

These impacts are in turn giving rise to several key themes or trends. One trend is a significant shift of volumes of over-the-counter (OTC) trades to exchange-backed clearing or clearing houses. Another is a trend toward independent validation of positions and books which translates into an increased need for price and valuation transparency. A third trend is toward tighter internal controls and increased regulatory oversight.

How will the shift to cleared trades impact processes and systems?
SFS. Clearing requires a sufficient number of participants and liquidity to work. Nymex introduced its clearing platform and began offering OTC cleared products in 2002. Since then, the number of OTC products Nymex offers has grown to over 600. One element of achieving this is to develop standardized products and an efficient way to price and settle them. To handle the complexities of more exotic trades, we will need to implement new processes for price discovery and upgrade technology to support the unique characteristics of these trades.

Systems like SunGard’s Aligne that incorporate grid-technology, service-oriented architectures, configuration flexibility and scalable performance provide a platform for clearing OTC trades. Today’s ability to connect and settle directly with exchanges like Nymex and ICE and clearing houses will be complemented by the ability to present an aggregated view of the data across transactions and operations for immediate decision-making.

What is the best way for businesses to achieve transparency and control?
SFS. Speed and accessibility of reliable, timely market data is a key success factor for commodity traders and other market participants. Aggregating price, volume and other key transaction data from multiple sources including exchanges, pools, counterparties and partners and applying analytics against the results enables transparency. The automated capture of data from the exchange cleared transactions in conjunction with clearly defined processes for price discovery helps support the requirement for transparency. Increasingly available with low latency, this data enables more immediate decision-making.

Defining and documenting transaction processes from deal capture to expiration is a critical element of controls. Establishing the rules based on roles, risk tolerances, or other parameters, monitoring adherence to them, and setting alert thresholds is also key. Automating the associated process workflow strengthens and streamlines the controls.

How can technology help address these challenges?
SFS. Automating the flow of information from the initial transaction initiation through to its execution and expiration helps to remove the human element of operational risk. This seamless information flow provides straight-through processing that may be facilitated by workflow automation tools for greater accuracy and speed. Service-oriented architectures with enterprise messaging and business process automation are foundational technologies to enable the transparency, controls, and agility needed to navigate challenging business environments.

Standardized contracts and processes, real-time transactions, accurate market data and configurable risk toolkits combine with direct market and exchange clearing to help commodity market participants rise above economic challenges. SunGard’s Aligne provides an advanced set of risk assessment and risk management tools designed specifically for energy traders, risk managers and credit officers, to help them measure and manage a number of key energy exposures. Aligne delivers these capabilities through one fully integrated solution suite, deployed and supported by one collaborative team of experts.

Sharon Fortmeyer-Selan is Senior Vice President, Marketing for SunGard Energy Solutions. She brings over 25 years of experience in software solutions marketing to her role. Fortmeyer-Selan has served as Chief Marketing Officer for several start-up software companies and held leadership positions in solutions marketing for Compaq, AT&T, and NCR specializing in transaction processing, business intelligence and emerging technologies.

Less May Be More for Wind Turbines

2009-08-03T13:11:00.001-07:00

Monday, August 03, 2009

Nordic Windpower's two-bladed rotors depart from conventional wind-power design.

By Peter Fairley

One of the first R&D grants to a renewable-energy developer from the economic-stimulus funds approved by Congress this spring could have a dramatic impact on the design of wind turbines. The $16 million loan guarantee offered by the U.S. Department of Energy (DOE) to Berkeley, CA-based Nordic Windpower will accelerate commercialization of the company's Swedish-designed, two-bladed wind turbines, marking the first utility-scale alternative to the industry's dominant three-bladed design in over a decade.

In recent years, wind-energy entrepreneurs have already been pushing beyond the standard design. Blue H Technologies of the Netherlands and Norway's SWAY, for example, are testing unorthodox turbine designs tailored for placement on offshore platforms anchored in deep water far offshore. Blue H is testing two-bladed turbines akin to Nordic's, while SWAY has a three-bladed design that faces the rotor downwind, bucking the industry's conventional into-the-wind orientation.

The attraction for all three companies to pursue innovative approaches is essentially the same: their designs could be substantially lighter than today's turbines, and could thus produce energy at much lower cost. That remains an important goal for wind power, which, though presently the cheapest form of renewable-power generation, remains dependent on government incentives.

What sets Nordic apart from others rethinking wind-turbine architecture is that its prototypes have been operating successfully for over a decade. Backed by Goldman Sachs since 2007 and now by the DOE, the company plans to begin shipping commercial models later this year. Nordic's experience should help overcome skepticism that such alternative designs can be robust in megawatt-scale machines--skepticism that was reinforced by earlier, failed experiments with two-bladed and downwind turbines.

Nordic Windpower CEO Tom Carbone, who formerly led the U.S. operations of Danish wind-turbine giant Vestas, says that Nordic's key technology is the "teetered hub" that the two blades use. Nordic's hub provides a flexible link between the rotor and the generator driveshaft, enabling the blades to move in and out of the plane of rotation in response to gusts or turbulence. Carbone says Nordic's lightweight design can deliver a whopping 20-25 percent cost reduction relative to three-bladed turbines.

Bumpers constrain the hinging to just two degrees in either direction, but that is enough to shed unwanted forces that would otherwise strain the turbine's gearbox. Shedding unwanted forces also means that the entire structure, from tower to generator to blades, can be built lighter and cheaper. "You're reducing the amount of material normally used to strengthen the structure against those loads," says Carbone.

Delivering on the promise of savings, however, is harder than it sounds. Nordic's design, Carbone says, "is pretty simple in function. It's a just a hinge that's perpendicular to the rotor. But perfecting that simplicity took a lot of time and effort."

Larry Miles has spent the last decade trying to develop a flexible two-bladed wind turbine with individually hinged blades. Miles's Wind Turbine Company, based in Bellevue, WA, was preparing to push a 500-kilowatt prototype of its hinged-blade turbine to 750 kilowatts when a control-system error allowed one blade to swing too far and strike the tower. The resulting damage ultimately caused the DOE to withdraw support for the firm's research program.

Carbone says that such setbacks have not tarnished Nordic because its teetered design is already well proven. Since the mid-1970s, the Swedish government has poured close to $75 million into Nordic's Swedish predecessor, producing a string of prototypes. Four of the five one-megawatt turbines Nordic has installed since 1995 are still running, demonstrating an average mechanical reliability of 98 percent. "We can catapult off that experience and use today's control [systems] and materials to make an even better product," says Carbone.

Nordic's plan is to first validate its design by selling turbines to community-scale wind-energy developments with up to 20 turbines--projects that are too small to support a dedicated maintenance staff and therefore need reliability. Nordic says it already has orders for 19 turbines for small installations at a military base in Arizona, a housing development in Minneapolis, and a power project in Uruguay. The primary use of the DOE loan guarantee will be expansion of the company's assembly plant in Pocatello, ID.

Carbone says Nordic will ramp up carefully to assure reliability and customer satisfaction before engineering its next step: a 2.5- to 3-megawatt turbine to compete for use by large, utility-scale wind farms. "In 2012 we will prototype a 2.5 to 3-megawatt machine, which will take us to a $1 billion company in roughly seven years from now," promises Carbone.

Miles estimates that the savings from Nordic's design might be closer to 10 percent. But Miles says that could still make an important difference: "If their machine works reliably, they're going to have a definite cost advantage over a three-blade machine."

Best regards,

Sean Carnahan

IBM to buy SPSS for $1.2bn

2009-07-28T20:03:00.001-07:00

IBM has agreed to buy Chicago-based predictive analytics software and services firm SPSS in a cash deal worth around $1.2 billion.

The companies have entered into a definitive merger agreement that will see Big Blue pay $50 a share, a 42% premium on SPSS's closing price on Monday of $35.09.

SPSS technology helps firms - including banks like Lloyds TSB, Credit Suisse and Rabobank - forecast future trends and spot shifts in consumer patterns or behaviour, assisting with customer acquisition and retention.

IBM says the deal will help expand its Information on Demand software portfolio and business analytics capabilities which will help clients cut costs, reduce risk, and increase profitability through data capture, data mining and statistical analysis.

The technology can also help firms, such as banks, reduce credit risk, increase customer loyalty and detect and prevent fraud, says the vendor.

IBM cites research from IDC estimating that the worldwide market for business analytics software will swell to $25 billion this year, growing four per cent over 2008.

Ambuj Goyal, general manager, information management, IBM, says: "With this acquisition, we are extending our capabilities around a new level of analytics that not only provides clients with greater insight - but true foresight."

The deal is expected to close in the second half, subject to SPSS shareholder approval, applicable regulatory clearances and other customary closing conditions.

Best regards,

Sean Carnahan

ICE Trust sets out plans for buy-side participation in CDS clearing

2009-07-28T20:02:00.001-07:00

IntercontinentalExchange (ICE) says it will introduce a solution that will enable buy-side participation in credit default swap clearing by October.

The move follows growing regulatory pressure for broker-backed clearing counterparties to make provisions for direct buy-side involvement in central clearing of OTC transactions.

In June, BlueMountain Capital COO Samuel Cole accused major derivatives dealers of "filibustering" to protect their ogilopoly by withholding support from buy-side-friendly rivals to the ICE Trust credit default swaps clearing house.

Earlier this month, the New York Federal Reserve said it expected market participants to strengthen the foundations for buy-side clearing and start clearing customer trades by 15 December, 2009.

ICE says that its solution will provide segregation of customer funds and positions, as well as enhanced position and margin portability. The expanded legal framework is expected to protect customer positions and collateral in the event that a clearing member defaults on its obligations to the clearing house, offering increased security for buy-side market participants.

Jeffrey Sprecher, chairman and CEO of ICE, says: "Our segregated funds solution has been designed to provide robust protections for buy-side firms and to ensure our CDS clearing offering serves the needs of the entire CDS market."

He says the company is also working with relevant supervisory authorities in Europe to introduce similar provisions as it gears up to begin clearing European CDS transactions by the end of this month.

Best regards,

Sean Carnahan

SunGard Launches Aligne Data Management Toolkit

2009-07-23T15:58:00.001-07:00

Houston, TX and Singapore – July 22, 2009 –

SunGard has launched a new suite of energy data management tools for Aligne, a multi-commodity software solution suite that integrates data management, trading, risk, credit, fuels procurement, emissions compliance, back-office, treasury/finance and management information needs. SunGard’s Aligne Data Management Toolkit (DMT) helps decision makers achieve business agility through analysis of market and transaction data from multiple sources.

In volatile energy commodity markets, speed and accuracy of information are critical to effective energy trading decision making. Aligne DMT is a flexible and scalable data management framework for processing, analyzing and leveraging energy information across the enterprise. It aggregates energy information from multiple sources, validates the data and presents it within a consistent framework to help companies achieve speed and accuracy in data interpretation and decisioning. Aligne DMT provides a Web-based application to help users of all technical levels navigate, chart and analyze energy market data.

Matt Mandalinci, president of SunGard’s energy solutions business unit, said, “Aligne DMT will provide companies with a robust tool to manage their data through the provision of timely and accurate energy market data.”

Aligne DMT’s “plug and play” functionality allows organizations to purchase and use only those tools and functionality needed, helping simplify deployment and avoiding unnecessary cost. Each tool is developed to be highly customizable and configurable without the need for custom consulting work, helping to save both time and money.

Designed for the full spectrum of commodity trading markets (oil, power, gas, emissions, metals, biofuels, and others), Aligne DMT helps customers manage their own data, and to integrate it with components in SunGard’s Aligne solution suite as well as with customer-specific and downstream systems. This functionality helps companies streamline processes and integrate information across multiple business operations for enterprise-wide decision support. Aligne DMT also includes tools for decision support and analysis such as a charting tool for data visualization with 3D charts, and a drag-and-drop formula tool for creating complex data formulas and functors.

About SunGard’s Aligne
SunGard’s Aligne is a multi-commodity software solution suite that helps energy companies to more efficiently and profitably trade and market energy, process transactions, manage risk, and optimize operational and financial decisions. Leveraging a service-oriented architecture based integration framework, Aligne is a configurable, modular solution. It integrates trading, risk and control, credit, fuels procurement, emissions compliance, back-office, and treasury and finance for straight-through processing of commodity transactions. For more information, visit www.sungard.com/energy.

About SunGard
SunGard is one of the world’s leading software and IT services companies. SunGard serves more than 25,000 customers in more than 70 countries, including the world’s 25 largest financial services companies. SunGard provides software and processing solutions for financial services, higher education and the public sector. SunGard also provides disaster recovery services, managed IT services, information availability consulting services and business continuity management software. With annual revenue exceeding $5 billion, SunGard is ranked 435 on the Fortune 500 and is the largest privately held business software and services company on the Forbes list of private businesses. Based on information compiled by Datamonitor*, SunGard is the third largest provider of business applications software after Oracle and SAP. Continuity, Insurance & Risk has recognized SunGard as service provider of the year an unprecedented six times. For more information, please visit SunGard at www.sungard.com.

*January 2009 Technology Vendors Financial Database Tracker http://www.datamonitor.com

Trademark Information: SunGard, the SunGard logo and Aligne and are trademarks or registered trademarks of SunGard Data Systems Inc. or its subsidiaries in the U.S. and other countries. All other trade names are trademarks or registered trademarks of their respective holders.

SunGard Launches Aligne Data Management Toolkit

2009-07-23T15:24:00.001-07:00

Houston, TX and Singapore – July 22, 2009 –

Researchers Say Planes, Not Cars, Are Best For Biofuels

2009-07-23T09:34:00.001-07:00

There’s an interesting idea being batted around by a United Kingdom think tank called the Policy Exchange: that planes should use all the available supply of biofuels, and other alternatives should be used for cars.

The reasoning in the study is pretty simple, at least as reported by the BBC. First, it’s argued that supplying the fuel needs of cars would require biofuel crops to cover an area probably too large to be practical. The second reason is that planes, unlike cars, can’t run on other alternatives like batteries or compressed natural gas. The high energy needs of a plane demands liquid fuel.

In the European Union, rules mandating 10 percent biofuels for all transport have already been reversed, and there has been plenty of acknowledgement elsewhere that biofuels probably won’t be the perfect solution for cars — except, of course, from the biofuel industry, which lobbies actively to sell more auto fuel. So this study can join many others sharing a common theme — that biofuels are just one small piece of the transportation puzzle.

But the Policy Exchange also seems to be overlooking one big problem, which is that planes tend to run on specialized fuels with high energy content. At least in the United States, the most common biofuel produced is ethanol, which has a much lower energy content than gasoline, and wouldn’t be suitable for any commercial plane.

The fuels that would work in aircraft are mostly up-and-coming. Fuels made from algae and jatropha, a berry-growing plant that is still being domesticated, have both been successfully tested on flights. But neither one of those sources currently accounts for a noticeable portion of the market.

So for the future, it probably makes sense to pay attention to the Policy Exchange, and start thinking about how new biofuel production can be directed to applications that require a liquid fuel. But what about existing biofuel capacity — the many ethanol plants in the United States and elsewhere, that aren’t going away any time soon?

One possibility, in the event that ground transportation starts switching off gasoline and its surrogates, is moving today’s ethanol plants over to chemical production, a change that some startups as well as bigger companies like Dow Chemical are already looking at. As much as the biofuel industry seems tied to the idea of powering the cars of the future, there may be a number of better alternatives.Best regards,

Sean Carnahan

Free WebCast - Evolution to the Intelligent Grid - A Change in Paradigm

2009-07-22T22:23:00.001-07:00

This webcast will define an organization for and the relationships between the fundamental components of the emerging Smart Grid solutions.

The discussion will include:

Transmission stability and synchrophasors
Changing strategies in distribution planning and operations management
Distribution automation
Advanced metering infrastructures
Meter data management systems
Incorporating distributed energy resources
Demand side management and response
Total solution integration
The related benefits and value proposition

	Date:	Tuesday, August 11th
	Time:	1:00-2:00pm Eastern
	Register:	Click Here

Attend to hear a summary of the concepts and approach necessary to define a Smart Grid roadmap and develop a plan to transform your energy delivery grid in cost-effective, well-managed stages.

Overall, this webcast will attempt to clarify many of the fuzzy aspects of potential Smart Grid solutions.

Who Should Attend this Event:

This event is specifically geared towards Operations, Planning, and Maintenance management and staff, IT and Asset Management staff and those responsible for leading their company's Smart Grid transformation.

About
Our Speaker:

Ken Geisler
Smart Grid Chief Architect
Siemens Energy, Inc.

	Ken has over 28 years of management and technical experience in defining, designing, developing and implementing large integrated solutions in the Energy Industry. His background covers real-time analysis, control and integration for systems addressing both operations and planning for transmission and distribution systems, as well as wind generation, substation automation and protection, and distribution automation.

Anticipating the Climate Black Swan

2009-07-22T22:09:00.001-07:00

01.15.09

information service focused only on Energy Trading. There is no better way to stay informed.

While the idea has been the central thesis of many of Nassim Taleb's writings over the last several years, the publication of TheBlackSwan¹ could not be more timely. Further, the more we look around us, the more we see Black Swans in today's global commercial and financial complex, as well as in the world at large. Many readers in the commodities sector are no doubt familiar with Taleb's popularization of Black Swans. For those who are not, the premise goes back to the formerly accepted Euro-centric idea that all swans are white. That is until the Europeans first traveled to Australia and discovered this was not the case. Contemporary economics, short-term thinking, and the need to quantify and compartmentalize our ideas in order to make sense of them, all serve to remove the 'gray area' from our sense of reasoning; unfortunately, the gray area is the source material from where the highest potential for discovery lies. Saying all swans are white was correct, until the first documentation of a black-colored species. Previous models become useless, and the world view changes in an instant. Extending this to other areas of contemporary markets, most of the major financial risks were assumed to be properly hedged, until the recent collapse of the banking system. Weather has these Black Swans too. It follows that blindly assuming continued warming climate trends will lead to the observation of slightly warmer temperatures year over year may work for a while, until a cold snap like the one that hit the eastern US at the beginning of last winter produces one of the coldest starts to winter in many years. This is the example that will be discussed in this brief paper.

Observations show that the globally averaged surface air temperature has increased +0.6*C +/-0.2*C, over the last 100 years². This is documented through a careful analysis of the surface temperature recordings obtained from tens of thousands of locations around the world. But what does a globally averaged increase in surface temperature really mean? As it turns out, not very much. An increasing linear trend is, just that: a line drawn through a series of data points. Most of the data points will fall somewhere in the vicinity of the trend line. Some, those within one standard deviation, will be slightly above the trend line, while others will be slightly below. These cases will still be considered by most to be part of the normal distribution. Other data points, fewer in number, will be found further above and below the trend line; these, depending on location and time of year that the observation took place, may raise some eyebrows, but will still be included in them. Finally, we get to what statisticians love to describe as the outliers; those data points that are well outside of the distribution, and therefore conveniently 'ignored'.

With climatological analysis, there will always be extreme cases that will be recorded and will appear well outside of the majority of the histogram. Ignoring these data points, however, is the absolute last thing a careful observational scientist should do. The most interesting answers are usually found in the tails. When we are trying to understand the physical mechanisms that lead to these values, it is plain foolishness to smooth the data, minimizing peaks and troughs, and in the process diminishing the importance of these outliers; doing this masks the opportunity to learn something new about climate behavior.

A few examples follow. The 1993 floods in the Midwest were a once in a lifetime weather event; that is until the spring of 2008. Ice cover for the Northern Hemisphere has been steadily decreasing³, which has been more pronounced since the early 1990s; that is until the winter of 2007/08 saw the largest build in ice cover over the last 30 years.

Here is another similar example with snow cover. The areal extent of Northern Hemisphere snow cover has been reduced since around 2001⁴, but every once in a while, nature evens things out and shows a build, even in the midst of a broader warming trend.

If we assume trend line climatology, we might get away with being right by extending a line via regression for a few consecutive years, or even decades. But when the pattern changes for reasons that are unexpected, we are not usually prepared to react. This can be viewed as a risk, but a proper and proactive risk management strategy may be able to use these events as opportunities.

Regardless of the causes of climate change, one factor is not subject for debate: year over year global climatic variability is getting more unpredictable and more extreme. Speculating on these extremes (via directly in weather futures, or indirectly in the energy and agricultural futures space) may be dangerous, but disregarding them as unlikely events can lead to financial disaster.

A simple yet very clear example can be described by arecent weather event that influenced the US energy market, and this scenario should be relevant to many readers. The figure below displays November Heating Degree Day (HDD) values for New York City, between 1992 and 2007. HDDs are a measure of heating energy demand, and are calculated as a deviation of the average temperature below 65*F. For example, if the average daily temperature on November 1st was 60*F, the HDDs for that day would be five. If the average daily temperature on November 2nd was 55*F, then the HDDs for that day would be 10, and the cumulative November HDDs would be 15. Therefore, the lower the average temperature, the higher the HDD value (cooling degree days, or CDDs, work in a similar fashion with respect to temperatures above 65*F).

Now even though the temperature trend for New York since the early 1990s has been warmer, a closer look reveals a cyclical heating demand pattern. While it can not be modeled precisely, every few years, a cold November in the east bucks the trend of early warm winters, and this leads to spikes in HDD (as well as energy futures) which are much higher than what was seen during the winter transition of the previous year (eg., 1992, 1995, 2000, 2002, 2004 and 2007).

Not anticipating these spikes can blindside the energy market. Many energy analysts and risk managers do one of two things when setting upcoming seasonal energy demand estimates: (1)they look at the broader trend and extend their projections, or (2)they plan demand requirements off of last year's observations. Both approaches are dangerous, and can lead to losses when an 'unexpected' weather event materializes.

A demand manager who may have used either of these approaches entering into the 2007/08 winter would have been wrong, and depending on how well they were hedged (if at all), a look at the change in energy futures over the subsequent months highlights the magnitude of financial risk. As a quick analysis of the last 17 years demonstrates, these pattern changing events occur at somewhat regular intervals, and anticipating these changes can make the difference between staggering losses for buyers forced to purchase at spot market prices, and healthy gains resulting from early strategic pricing or long term weather hedging.

The figure below highlights this danger of following the trend from a futures perspective. We are certainly not advocating that the run in energy prices that we have seen over the last year was solely a result of weather, but it should be noted that crude oil and heating oil futures were approximately 30% higher at the end of last winter than they were before the 2007/08 heating season started. The early season demand in the central and eastern US was certainly a constructive factor in supporting these markets during and following the 07/08 heating season.

To summarize, regardless of the broader climate trends, nature has a way of correcting herself. The Earth is a complex system, demonstrating properties of balance, emergence, and resilience. Climate does change -- it always has and always will, so even though we may be in a warming period with lower trending winter HDDs, we should not be surprised when we witness a change in the pattern that does not neatly fit an analysis via linear regression. Empirically, these patterns should not be considered Black Swans. But as we all (should) know, the true efficient market is a myth, and subjectivity will always lead to inefficiencies that can be exploited by those who are looking for opportunities via nontraditional analysis.

References: 1 The Black Swan, by Nassim Taleb, 2007. 2 Intergovernmental Panel on Climate Change (IPCC), 2007. 3 University of Illinois, Urbana - Champaign, Polar Research Group 4 Rutgers University Global Snow Lab 5 Ino.com

Best regards,

Sean Carnahan

Emerson launches Quick Ship program for combustion analyzers

2009-07-22T21:51:00.001-07:00

SOLON, OHIO - July 21, 2009 (News Release)

Analyzer replacement is not always a planned event, so Emerson Process Management announces the X-STREAM® O2 combustion analyzer Quick Ship program to help customers get up-and-running quickly when the unforeseen occurs. Under the new program, select Rosemount® Analytical X-STREAM O2 analyzers are inventoried by Emerson’s Process Analytic division and are available to ship within 24-hours of order from Houston, Texas, helping customers minimize the downtime of a critical measurement for combustion optimization.

“The Quick Ship program supports customers who need an O2 combustion analyzer immediately to satisfy an application, or for quick replacement of an existing analyzer,” said George Keeler, director of marketing for the Rosemount Analytical Process Analytic division of Emerson. “Many companies rely on accurate O2 measurements to ensure optimal combustion efficiency. Having quick access to X-STREAM O2 analyzers ensures high reliability and durability for these vital measurements.”

Rosemount Analytical X-STREAM O2 combustion analyzers feature the company’s AccuMax™ technology for enhanced system performance and are proven in the field for reliability and accuracy (accuracy ±0.75 percent of reading or ±0.05 percent O2). Additionally, standard X-STREAM O2 analyzers feature HART® communications and are adaptable to most existing O2 probe installations for boilers, process heaters, kilns, recovery boilers and reheat furnaces, among others.

For a full list of X-STREAM O2 analyzers available via the Quick Ship program, please contact a Rosemount Analytical Process Analytic division sales representative or call customer service at 800.433.6076. Some conditions may apply.

More information about the Rosemount Analytical line of X-STREAM O2 analyzers can be found at http://www.emersonprocess.com/Raihome/Gas/products/model_XS-O2.asp

Best regards,

Sean Carnahan

Suncor: What's Next For the World's Newest Oil Supermajor?

2009-07-22T21:47:00.001-07:00

By Kirsten Korosec | July 22nd, 2009 @ 5:45 pm

Suncor Energy has been given the official OK to merge with Petro-Canada, a deal that will create Canada’s largest integrated oil company with market value of more than $43.3 billion and adds one more giant to the world’s supermajor club. But what will the new and improved Suncor look like?

In short, the strategy of the new Suncor will look a lot like the old Suncor, according to CEO Rick George.

George did offer a few more tidbits during Suncor’s second-quarter conference call — and its last as a standalone company before the merger closes Aug. 1 — about what to expect including how it views Petro-Canada’s North Sea and East Coast assets; and which projects will move forward.

“You’re going to see us very focused on oil,” said George, who will maintain the CEO position with the merged company. From there, Suncor will give priority to those projects with the lowest risk and the highest return on capital and near-term cash-flow, he said.

The merged Suncor will have the largest oilsands resource position, and considering the large amounts of capital already invested in various oilsands projects, it’s safe to assume it will be a priority.

Of course, that doesn’t mean every oilsands project will be given the thumbs up. Take the company’s Voyager upgrader project, which is designed to process the heavy oilsands bitumen it extracts and later sells it to U.S. refiners. From there refiners can further refine the heavy oil into gasoline.

Construction on Voyager was stopped in January and based on the few hints George provided during Wednesday’s conference call, it doesn’t appear it will start back up anytime soon.

Right now there is increasing demand for heavy oil from U.S. refiners. This places Suncor in a nice position if it can produce more bitumen than it’s able to upgrade and passes that job and the cost onto refiners.

“We want to be long on bitumen,” George said during the conference call. “There’s no need to build the upgrader if you don’t have the bitumen to fill it. Given the environment we’re in and given the demand out there for heavy oil, make sure you have bitumen long, get volumes up and then take a look at finishing the upgrader.”

Suncor is open to taking on a partner for the upgrader project for up to half of its 200,000 barrels a day processing ability, he said, adding the first priority is to increase production.

Petro-Canada’s assets in the North Sea and on the Canadian east coast are “key long-term keepers” for Suncor, George said.

Suncor may continue to invest in those assets if the risk and return on capital numbers are adequate, he said.

Natural gas may be another story. Suncor could look at divestments in natural gas, if that’s what is required to get the company to a low cost structure, said George without providing further detail.

Or the company may simply not invest in natural gas at the same rate Suncor and Petro-Canada did as separate companies, he said.

George did not discuss potential layoffs once the companies consolidate. He said those numbers will be revealed in late August or September.

Highlights of the merger:

Canada’s Competition Bureau — which approved the merger Tuesday — stipulated the combined company must sell 104 gas stations in Ontario in an effort to maintain competition within that particular market.
Under the agreement, Suncor must sell 1.1 billion liters of wholesale terminal storage and distribution capacity annually to competitors for 10 years. And the company has to supply 98 million liters a year to independent gasoline marketers for the same amount of time.
Suncor shareholders approved the C$15 billion all-stock deal to takeover Petro-Canada in June.

Best regards,

Sean Carnahan

Put biomass to use to help reduce your plant’s carbon footprint

2009-07-10T10:18:00.001-07:00

Not All Carbon Dioxide Is Created Equal

By Gary Faagau, Energy Columnist

Most of the time, I try to give tips on how to make your plant energy efficient. However, with expected new government regulations, we now have to be concerned about carbon efficiency. As state and federal regulators start discussing carbon credits, it’s an absolute certainty it will cost your plant more money. No matter how you try to avoid it, you’ll probably have to pay for energy production with a carbon-related tax.

“Corn husks, straw, and organic waste (from a renewable source) can all be used.”

However, by incorporating biomass into the equation, you may be able to reduce your carbon footprint. The argument for biomass is simple. Trees capture carbon, so if you cut down a tree and burn it, it’s OK as long as you plant another. Some states already have passed laws making biomass energy a “carbon neutral” source.

So, how will that help your plant? The most efficient use of biomass is for heating, not power. Replacing current natural-gas or fuel-oil steam boilers with wood burning boilers reduces net carbon footprint without actually reducing energy use. Switching to more steam-heated equipment and away from direct fire can drastically reduce entire plant net greenhouse gas production.

Biomass also can be used in process heaters, but the nature of the firing may create too much swing and would make it difficult for a quick shutdown. Steam production is safer because excess steam can be vented and leaks wouldn’t fuel the flame.

Although talking about wood-burning stoves seems like a step backwards, today’s systems have been made efficient. In addition, there can be various sources of natural feed for your unit and you can design the system with a natural-gas, or fuel-oil backup system in case of supply or equipment problems.

This is necessary for those already in the wood processing industry. Carbon credits generated from either using unwanted byproducts or selling that waste to a close-by industrial plant may lead to an industry all by itself. Now trees can be harvested to produce carbon credits and in areas where annual forest fires can be a problem, creating wide firebreaks can be profitable.

Economics of a biomass boiler depends on a few key factors. First, you must have a renewable source within good proximity to the plant and a method of transporting the energy supply. Trees needn’t be the only source. Corn husks, straw, and organic waste (from a renewable source) can all be used. Trees are usually processed into wood chips while other biomasses are made into pellets. The raw material can be dried with low level heating sources to increase overall efficiency. It’s essential to minimize transportation energy because it may be counted against the carbon credit. A plan must exist to replant what was removed, or else the carbon dioxide created isn’t being removed.

The boiler itself is a straightforward design. Biomass boilers are easy to maintain and operate. The latest designs have integrated advanced control systems that keep the boiler at optimum efficiency. Biomass is automatically fed into the boiler when demanded.

If you have a very old or inefficient oil or gas boiler or one that needs replacement, you also can gain an overall energy and NO_x savings. Biomass boilers with integrated scrubbers can be highly efficient. Also, the net benefit to the community, because it will add jobs and use local products, will be great for the company’s image.

The downside is that these systems have greater capital costs. However, current energy-related credits might make them cheaper. You also will need a place to store biomass and have the equipment to create the chips and pellets. A joint venture or deal with an energy-related company could be possible. I‘ve heard that certain companies that supply steam or steam-related equipment may be looking at this as a natural extension of their business. The third party would require a long-term deal for steam, but this would relieve your plant of having to operate a new system.

For those who don’t need as much steam, these plants also come in a Cogen variety where high pressure steam produces electric power through topping turbines.

Gary Faagau is Chemical Processing's Energy Columnist.

Best regards,

Sean Carnahan

Sun-powered device converts CO2 into fuel

2009-07-10T04:57:00.001-07:00

Sun-powered device converts CO2 into fuel

http://www.newscientist.com/article/dn1662...

Powered only by natural sunlight, an array of nanotubes is able to convert a mixture of carbon dioxide and water vapour into natural gas at unprecedented rates.

Such devices offer a new way to take carbon dioxide from the atmosphere and convert it into fuel or other chemicals to cut the effect of fossil fuel emissions on global climate, says Craig Grimes, from Pennsylvania State University, whose team came up with the device.

Although other research groups have developed methods for converting carbon dioxide into organic compounds like methane, often using titanium-dioxide nanoparticles as catalysts, they have needed ultraviolet light to power the reactions.

The researchers' breakthrough has been to develop a method that works with the wider range of visible frequencies within sunlight.
Enhanced activity

The team found it could enhance the catalytic abilities of titanium dioxide by forming it into nanotubes each around 135 nanometres wide and 40 microns long to increase surface area. Coating the nanotubes with catalytic copper and platinum particles also boosted their activity.

The researchers housed a 2-centimetre-square section of material bristling with the tubes inside a metal chamber with a quartz window. They then pumped in a mixture of carbon dioxide and water vapour and placed it in sunlight for three hours.

The energy provided by the sunlight transformed the carbon dioxide and water vapour into methane and related organic compounds, such as ethane and propane, at rates as high as 160 microlitres an hour per gram of nanotubes. This is 20 times higher than published results achieved using any previous method, but still too low to be immediately practical.

If the reaction is halted early the device produces a mixture of carbon monoxide and hydrogen known as syngas, which can be converted into diesel.
Copper boost

"If you tried to build a commercial system using what we have accomplished to date, you'd go broke," admits Grimes. But he is confident that commercially viable results are possible.

"We are now working on uniformly sensitising the entire nanotube array surface with copper nanoparticles, which should dramatically increase conversion rates," says Grimes, by at least two orders of magnitude for a given area of tubes.

This work suggests a "potentially very exciting" application for titanium-dioxide nanotubes, says Milo Shaffer, a nanotube researcher at Imperial College, London. "The high surface area, small critical dimensions, and open structure [of these nanotubes] apparently provide a relatively high activity," he says.

Journal Reference: Nano Letters (DOI: 10.1021/nl803258p)
Best regards,

Sean Carnahan

Exelon raises hostile bid for NRG to $7.5 billion

2009-07-04T20:25:00.001-07:00

Thu Jul 2, 2009 9:47am EDT
By Michael Erman and Matt Daily

NEW YORK (Reuters) - Exelon Corp (EXC.N: Quote, Profile, Research, Stock Buzz) raised its hostile takeover bid for independent power producer NRG Energy Inc (NRG.N: Quote, Profile, Research, Stock Buzz) by more than 12 percent to $7.45 billion on Thursday to sway investors ahead of NRG's annual meeting.

But the new offer failed to trigger investor excitement, and NRG shares fell nearly 4 percent in premarket trade.

The new offer comes more than eight months after Exelon first announced its intention to buy NRG and create the nation's biggest electricity generator with the largest fleet of nuclear power plants.

"This is our best and final offer, and we will use the time leading up to the NRG annual meeting on July 21 to communicate the value of our new offer to NRG shareholders," Exelon Chief Executive John Rowe said in a statement.

Exelon is offering 0.545 Exelon share -- currently worth about $28.10 -- for each NRG share. That amounts to a premium of nearly 8 percent above NRG's closing share price of $26.05 on Wednesday.

At Wednesday's close, Exelon's previous bid valued NRG shares at $25.01.

NRG, which has said Exelon's previous offer was too low, did not immediately comment on the sweetened bid. One analyst was not convinced Exelon's higher offer would get the deal done.

"May be a case of too little, too late ... we don't think the small premium gets the deal to the finish line," Tudor Pickering Holt & Co analyst Rebecca Followill said in a note to investors.

Exelon said $1.5 billion of newly identified cost savings as well as value created by NRG's recent acquisition of Reliant Energy's (RRI.N: Quote, Profile, Research, Stock Buzz) retail business justified the raised bid.

Exelon made its previous bid last October, when the global economy was in shambles. That bid, which offered 0.485 Exelon share for each NRG share, came under fire from analysts and investors as NRG's stock price rose above the Exelon offer.

POWER COUPLE

A combined Exelon and NRG would own about 48,000 megawatts of power generating capacity, enough to supply electricity to nearly 40 million homes, and put the company in a strong position to adapt to proposed legislation capping carbon dioxide emissions, Exelon said.

That legislation -- approved by the U.S. House of Representatives and pending in the U.S. Senate -- would establish the first U.S. regulations on emissions of the gas that is blamed for contributing to global warming.

The value of the revised Exelon bid -- $7.45 billion -- is based on Exelon's closing price on Wednesday of $51.56 a share and about 265 million NRG shares outstanding.

Exelon said it is confident, based on discussions with its outside advisers, that it will be able to meet all financing needs associated with the deal, including the refinancing of $4.7 billion of NRG's senior notes and other debt.

Exelon said if it was successful in closing the deal, it would sell $1.6 billion in assets, issue $1.1 billion in mandatory convertibles or common equity, and finance about $4.2 billion of the cost.

Exelon has nominated a slate of directors to stand for election at NRG's annual meeting.

NRG shares were down 3.8 percent, or 99 cents, to $25.06 in premarket trading, while Exelon shares were little changed.

(Additional reporting by Hezron Selvi in Bangalore; Editing by Derek Caney and John Wallace)

© Thomson Reuters 2009.

Best regards,

Sean Carnahan

Feds, Colo. hash out agreement on oil, gas rules

2009-07-04T20:24:00.001-07:00

BY THE ASSOCIATED PRESS:DENVER — Colorado's new oil and gas rules, denounced by the industry as the most burdensome in the country, now apply to federal land as well as private and state land.

Stricter oil and gas regulations took effect on private and state land in Colorado on April 1. Enforcement of the rules was delayed on federal land to give state and federal officials time to sort through any conflicts.

Last week, state regulators approved agreements with the Bureau of Land Management and U.S. Forest Service. The rules took effect on federal land in Colorado on Wednesday.

Dave Neslin, director of the Colorado Oil and Gas Conservation Commission, said the agreements recognize that energy development on federal land is subject to both federal and state rules. He said companies will be encouraged to consult with both state and federal agencies. Decisions on projects where state and federal rules overlap or conflict will be made case by case.

The state commission regulates the industry and issues all oil and gas permits, including those on federal land. Roughly 15 percent of the oil and gas wells in Colorado are on federal lands.

Industry groups and companies have questioned the state's authority to regulate development on federal and have said they could wind up not knowing which regulations to follow.

Neslin said court decisions support a state's right to apply environmental laws on federal land. He said the state commission has consulted with the state attorney general's office.

The Colorado Oil and Gas Association, a trade group, said in written comments June 23 that the state-federal agreement “is a meaningless document, solving no problem created by the new rules.”

The trade group has filed a lawsuit seeking to throw out the rules.

“As we go through it, we'll be smoothing it out. There's no doubt about that,” Jamie Sellar-Baker, acting branch chief for the fluid minerals division of the Colorado BLM, said of her agency's agreement with the state.

Sellar-Baker said state and federal agencies will continue to follow their own planning processes and environmental reviews and discuss any potential disagreements early on. She said the agreement is intended to provide an opportunity for “clear and open dialogue.”

The new regulations include dozens of new or modified rules meant to fulfill 2007 laws requiring more consideration of the environment, wildlife and public health and safety when approving oil and gas development.

The laws were passed during Colorado's natural gas boom. Industry officials have blamed Colorado's declining oil and gas production in part on the new regulations, which they say are the most restrictive in the country.

State regulators and the rules' proponents, including environmental, hunting and angling groups, say the recession, low natural gas prices and tight credit are behind the decline, not the regulations.

Colorado had 39,394 active oil and gas wells through June 6.

Best regards,

Sean Carnahan

Swift switches on central matching for brokers and hedge funds

2009-06-12T08:53:00.001-07:00

Banking co-operative Swift has adapted its Accord matching system to handle the pre-settlement processing of securities trade flows between prime and executing brokers and hedge funds.

Swift won a competitive tender from a coalition of prime and executing brokers - including Citi, Credit Suisse, Deutsche Bank, Goldman Sachs and Bank of America Merrill Lynch - to develop the platform in August last year.

The system matches trade and settlement information using the MT515 trade confirmation message, and can be used not only for automated trade-date matching between prime and executing brokers for hedge fund trades, but also for matching between executing brokers for over-the-counter securities trades, and between prime brokers for transition management.

The system went live last month with a subset of pilot participants. The remaining brokers are scheduled to come onstream in the coming weeks. A further wave of executing brokers is expected to join towards the end of the year.

Swift says the brokers may extend the system to match confirmations for additional asset classes, such as securities financing and commodities trades.

Earlier this week, post-trade utility Omgeo and clearing house EuroCCP announced plans to develop a pan-European equities central counterparty (CCP) service for hedge fund transactions. The new service, which will be based on Omgeo Central Trade Manager, is expected to enter pilot testing later this year, with a live launch anticipated in 2010.
Best regards,

Sean Carnahan

IT Software ships risk management suite

2009-06-12T07:51:00.001-07:00

IT Software ships risk management suite

IT Software, a company specialized in the development of financial trading services and applications, launches Easy Trade Risk Manager (ETRM) a multi-currency, multi-asset, real-time Position Keeping and Risk Management Suite covering most exchange traded instruments, including complex derivatives.

After having developed for many years efficient Real Time Calculators embedded in the Easy Trade Platform to support its clients trading activities (On Line, Agency and Primary Brokers), IT Software has reorganized its Risk offer in a new module that is Trading Platform and Back Office independent and benefits from the company's long experience in the Risk Area.

ETRM aims to satisfy the different needs of Pre, During and Post Trade activity in an Open, Complete and Flexible environment.

"Being Open" is a key element of ETRM suite. In order to satisfy this mandate ETRM was built from the beginning with a rich set of APIs to support easy integration with Trading Platforms/OMS, Exchanges Feeds and Middle/Back office systems. ETRM calculation engines can also be embedded in client proprietary systems to deliver specific tasks.

"Complete" coverage of Margin Calculations is insured by a dedicated engine able to support the major Official Margin Calculation methodologies (SPAN®, TIMS®, ...) or Client Proprietary ones. The appropriate algorithm is linked to the type of derivative instrument within client portfolios according to Market definitions and/or the rules qualified by the Risk Department. ETRM gives Risk Manager the tool to easily create new rules or import them from the IT SOFTWARE development centre and apply them without switching off the system.

ETRM "Flexibility" allows clients to use different sets of Risk Parameters and Trading Limits in pre-trade validation. Rules are organized in risk, operational and monitoring profiles and are associated to accounts and portfolios. Different rules can be defined for different time-frames, margin limits could be lower for example near to the closing of the trading session.

At the heart of ETRM is the pre-trade portfolio margining risk engine, built to deliver realtime calculations on complex portfolios with different assets on different markets and currencies. The engine takes into account not only deals done but calculates also Worst Net Position relative to outstanding orders to give end users a more realistic picture of global position and risk exposure.

ETRM provides functions to support traders, sales and back office operators in advanced what-if simulations.

"With ETRM IT Software clients for the first time can have a really easy to use dashboard to control in Real Time their risks also in volatile market conditions and with multi-asset and multi-market portfolios" said Mirko Marcadella, IT Software Managing Director, "In today latency-sensitive market ETRM supports effective pre-trade risk control with Worst Net Position, margins and many risk parameters evaluated in near real-time".

Best regards,

Sean Carnahan

Should Shell Be Excluded From Environmental Discussions?

2009-06-01T09:54:00.001-07:00

By Chris Morrison | May 26th, 2009 @ 10:25 pm

High-level international talks are increasingly about curbing the effects of climate change. Governments of all stripes should certainly be involved, no matter what their status as polluters is. But who else should be present? What about the oil, gas and coal businesses whose success rests on years of pouring greenhouse gases into the atmosphere?

So far the feeling among environmental leaders like Al Gore has been that these large multinational companies should be included if they’re willing; their behavior, after all, is part of what must change. But a group called the Corporate Europe Observatory is pushing against the inclusion of Shell and several other companies in meetings, according to The Guardian:

“The Danish government appears to be under the impression that some of the world’s most polluting companies are going to put forward tough measures to tackle climate change,” said Kenneth Haar, a researcher with CEO. “But unfortunately this doesn’t seem likely to be the case. The majority of the corporations attending the World Business Summit on Climate Change seem more intent on pursuing business as usual – with the promise that future technologies will resolve the problem at a later date.

“Corporate lobbyists have been trying to influence the UN climate talks from the start. But now they are being invited to set the agenda before the negotiators have even sat down. If their demands are listened to, we might as well give up the fight against climate change now.”

CEO certainly has a point. Of the oil majors like BP, Chevron and Exxon, few have made serious efforts to expand their business beyond oil (except into natural gas). The difference between them is mainly in how extensive their talk is, versus efforts. Both Exxon and Shell continue business as usual, for the most part — yet Shell makes a show of changing, running a remarkably straightforward climate change blog even as it pushes to develop resources like the Canadian tar sands.

So while Exxon is a stubborn hold-out, companies like Shell and Duke Energy, which fess up to their part in climate change, are earning more enemies for trying to influence policy in a way that preserves their businesses. The problem is that once various business interests have been protected, there’s little room left for rapid change — which is exactly what most of those companies were happy to point out, before the pressure on them rose.

I think that we do need to have hydrocarbon developers involved in climate talks, for their experience and knowledge if nothing else. But they’ll need to be careful of how they spin their message. If environmentalists have their way, these companies will end up excluded altogether.

Best regards,

Sean Carnahan

SunGard Launches Aligne: Integrated Solution Suite for Commodity Transaction and Risk Management

2009-05-29T17:56:00.001-07:00

Houston, TX – April 29, 2009

SunGard has launched Aligne, a service-oriented architecture (SOA) based, straight-through processing solution suite that helps energy companies optimize decision making and quickly adapt to business change by streamlining processes and integrating information across multiple business operations. Energy traders, utilities, midstream gas companies and large industrial consumers of energy can use Aligne to process energy financial and physical transactions across front-, middle- and back-office operations, and utilize configurable components for risk management and compliance. Inflexible legacy systems, rising costs and inadequate technology infrastructures hinder growth, driving energy companies to seek new technology solutions from fewer vendors. Aligne integrates functional components across SunGard’s suite of energy solutions and combines them in an SOA environment with business process management. Aligne gives customers flexibility to choose capabilities specific to business requirements, and includes new deal types, new functional modules, and new data management offerings. Aligne also allows customers to integrate other in-house or vendor applications, and provides an extensible, scalable infrastructure to help sustain business growth in terms of volumes and supported transactions types and commodities.

In addition, companies are under more pressure to address sustainability concerns and initiatives to reduce their carbon footprint through trading and inventory of emissions instruments, managing renewable energy transactions, and optimizing fuel mixes for lower emissions. Aligne helps companies conducting business in physical energy to achieve sustainability, growth and improved control by linking asset management, emissions management, real-time data and trading positions. Aligne provides a data mart, advanced data cubes, library of standard reports, ad hoc reporting tools, and support for dashboards and online analytical processing (OLAP) queries to help customers gain the business intelligence to support commercial decisions. Aligne’s real-time alerts, messaging and dashboards help traders and mid-office personnel make informed decisions faster while maintaining the financial precision required for reporting.

Matt Mandalinci, president of SunGard’s energy solutions business unit, said, “Streamlining the flow of information can help energy companies make better decisions faster, reduce costs, and achieve greater flexibility and control across the full range of enterprise commercial implications. SunGard’s Aligne helps companies to addresses their functional requirements across the energy transaction value chain using a single vendor; improve the flexibility and extensibility of their systems; and provide access to aggregate information across these systems.”

Two customers are already implementing Aligne. One new customer, a major midwest utility, is implementing the full range of trading, risk, gas and power operations, and fuels management functionality for enterprise-wide, straight-through processing. An existing customer in the northwest is currently upgrading its Zainet solution to Aligne, via the addition of the Aligne integration framework, and pre-integrated gas operations components. Aligne’s SOA means that existing users of the point solutions can continue to use them standalone or they can choose to gain the benefits of Aligne as they upgrade to the next release of their application.

About SunGard’s Aligne

SunGard’s Aligne is a multi-commodity software solution suite that helps energy companies to more efficiently and profitably trade and market energy, process transactions, manage risk, and optimize operational and financial decisions. Leveraging a service-oriented architecture based integration framework, Aligne is a configurable, modular solution. It integrates trading, risk and control, credit, fuels procurement, emissions compliance, back-office, and treasury and finance for straight-through processing of commodity transactions. For more information, visit www.sungard.com/energy.

About SunGard

SunGard is one of the world’s leading software and IT services companies. SunGard serves more than 25,000 customers in more than 70 countries, including the world’s 25 largest financial services companies. SunGard provides software and processing solutions for financial services, higher education and the public sector. SunGard also provides disaster recovery services, managed IT services, information availability consulting services and business continuity management software. With annual revenue exceeding $5 billion, SunGard is ranked 435 on the Fortune 500 and is the largest privately held business software and services company on the Forbes list of private businesses. Based on information compiled by Datamonitor*, SunGard is the third largest provider of business applications software after Oracle and SAP. Continuity, Insurance & Risk has recognized SunGard as service provider of the year an unprecedented five times. For more information, please visit SunGard at www.sungard.com.

Best regards,

Sean Carnahan

SunGard Launches New Clearing Gateways for Derivatives

2009-05-29T10:33:00.001-07:00

Paris, 28th May 2009 - SunGard is launching a series of new clearing gateways for listed derivatives markets. These smart gateways will be integrated with SunGard’s post-trade derivatives processing solutions, including, GL Clearvision, GL Ubix and GMI, helping SunGard customers to improve performance and efficiency.

Developed in Java and based on industry standards such as FIX messaging, SunGard’s smart gateways can be rolled out in a number of different technical environments including Windows, UNIX and Linux. This new architecture is scalable so that multiple gateways can be installed for a single exchange to help support increased trading volumes. The smart gateways will be launched throughout 2009, replacing SunGard’s existing clearing gateways by early 2010.

GL Clearvision, SunGard’s solution for matching and clearing, has been integrated with the first smart gateway, NYSE-Liffe US (cleared by the OCC). Four SunGard customers are already using the NYSE-Liffe US smart gateway.

Vincent Burzynski, chief product officer for SunGard’s global trading business, said, “SunGard customers in the post-trade derivatives environment continue to face challenges in terms of scalability, performance and efficiency. We are confident that our investment in a new technical architecture, based on industry standard frameworks, will help support our customers’ future business growth.”

To hear more commentary on SunGard and the listed derivatives space, or to join our online “What Happens Next?” conversation, please click here.

About SunGard Global Trading

SunGard provides multi-asset, front- to back-office trading solutions for equities, fixed income, derivatives, FX and commodities on exchanges worldwide. These solutions support full lifecycle trading and trade processing activities including information services, market connectivity and order management that help improve trade efficiency and risk monitoring.

About SunGard

SunGard provides software and processing solutions for financial services, higher education and the public sector. SunGard also provides disaster recovery services, managed IT services, information availability consulting services and business continuity management software.

With annual revenue exceeding $5 billion, SunGard is ranked 435 on the Fortune 500 and is the largest privately held business software and services company on the Forbes list of private businesses. Based on information compiled by Datamonitor*, SunGard is the third largest provider of business applications software after Oracle and SAP. Continuity, Insurance & Risk has recognized SunGard as service provider of the year an unprecedented five times. For more information, please visit SunGard at www.sungard.com.

*January 2009 Technology Vendors Financial Database Tracker http://www.datamonitor.com

Trademark Information: SunGard, the SunGard logo, GL Clearvision, GL Ubix and GMI are trademarks or registered trademarks of SunGard Data Systems Inc. or its subsidiaries in the U.S. and other countries. All other trade names are trademarks or registered trademarks of their respective holders.

Best regards,

Sean Carnahan

US experts see Qatar becoming major energy hub

2009-01-28T14:11:00.002-08:00

By Pratap John
QATAR
has the possibility to emerge as a major energy trading hub with the
proposed Energy City and International Mercantile Exchange taking
shape, two US-based experts have said.
Susan L Sakmar, adjunct
professor of law, University of San Francisco School of Law and Donald
R Kendall, managing director, Kenmont Capital Partners, Houston, in
their paper that will be presented at the 1st Annual Gas Processing
Symposium here next week, said the planned flagship contract for Imex
will be the first LNG contract in the world, which will provide a
“unique platform” to manage gas risk and further catalyse the
development of the spot LNG market.

The development of an active
trading market for LNG will allow users, producers and investors to
better hedge their costs and/or revenue. While fundamentally supply and
demand over the long term will dictate pricing, the development of a
true global LNG market will provide better transparency and over time,
will lead to a better information and development of LNG projects and
LNG infrastructure, Sakmar and Kendall said.
The combination of end
markets willing to pay premium prices for LNG and Qatar’s ability to
provide both supply and market flexibility enhances Qatar’s position as
the world’s leading LNG supplier.
In their paper entitled ‘The
globalisation of LNG markets- historical context, current trends and
prospects for future’, Sakmar and Kendall said that over the past five
years, LNG has grown to become a significant component of the worldwide
energy supply mix and recent reports suggest that LNG demand growth
will remain strong with global LNG demand predicted to increase 10% a
year through 2015.
New projects in Qatar will be the key drivers for
LNG growth and are expected to add almost 5.4bn cubic feet a day of
incremental LNG by 2011. Qatar’s expansion of LNG handling capacity
will enable the country to continue to capitalise on the benefits of
its resources and further diversify its client base.
Qatar is
already the largest single supplier to the Asian market and additional
handling capacity will enable Qatar to increase exports to other
growing markets around the world. An additional benefit to the Qatari
LNG industry is the fact that Qatar is equidistant in shipping terms
between the Atlantic and Asia/Pacific markets.
This geographical
benefit will enable Qatar to become the world’s largest LNG swing
producer in the near future, Sakmar and Kendall said.
The growing
demand for liquefied natural gas, coupled with current supply
constraints, has shifted the LNG market from a buyer’s to a seller’s
market. At the same time, LNG is evolving into a global, market-driven
commodity, linking gas markets around the world; much like crude oil
did some 50 years ago.
Sakmar and Kendall said in the coming
decades the world must meet the challenge of producing more energy to
meet growing global demand while at the same time limiting and even
reducing greenhouse gas emissions.
This will create unprecedented
challenges but also unprecedented opportunities, especially in the LNG
markets. As a clean burning fossil fuel, the demand for LNG is
projected to grow in all regions of the world.
Increased LNG trade
will cause the historically distinct regional markets to become more
integrated and pricing and contract terms more flexible.
While
safety and environmental issues will limit import option in some
markets including the US, liquefied natural gas will nonetheless become
an important component in the worldwide energy supply mix. The dynamics
of the evolving LNG markets dictate that liquefied natural gas will
indeed become the fuel for the 21st century, Sakmar and Kendall added.

Old problem, new theme: What will China's warning on bribes do to trading in US 2009?

2009-01-28T14:11:00.001-08:00

By Mark McDonald

Tuesday, December 30, 2008

HONG KONG: It has become one of the New Year traditions in the New China: a stern, old-school warning from the Communist Party about corruption.The party's Central Commission for Discipline Inspection issued its
annual broadside to government and party officials this week, a
mind-your-manners reminder about bribes and malfeasance. The warning
this year focuses on illegal business deals, and it is hardly a
coincidence that the state-run news media are now full of stories about
public officials brought low by shady schemes.

Fancy cigarettes were Zhou Jiugeng's undoing.

Zhou, a government real estate manager in the city of Nanjing, was
spotted smoking Nanjing Imperial 95 cigarettes, which go for 150 yuan a
pack, or about $22 - certainly an extravagance for a midlevel official
like him.

The state-run China Daily newspaper said Internet sleuths - using
what is known in China as a "human flesh search engine" - posted
photographs online of Zhou smoking the luxury cigarettes. He also
appeared to be wearing a $14,600 Vacheron Constantin watch, and the
paper reported that "Zhou was also found to be driving a Cadillac to
work."

Zhou, 48, was fired from his post on suspicion of "embezzling public
funds to pursue a luxurious personal lifestyle," according to China
Daily.

The upcoming Chinese Lunar New Year, inaugurating the Year of the
Ox, falls on Jan. 26, 2009. The holiday season is a time for traveling,
visiting friends and relatives, holding elaborate dinners, and giving
gifts, particularly red-and-gold envelopes containing cash.

The official Chinese news agency, Xinhua, quoted the party
commission's new circular that reminds officials to "live a frugal life
and rule out extravagance and waste."

"Feasts, sightseeing and gift-giving with government money are absolutely forbidden."

That advisory was followed by a report Monday in China Daily that 40
government officials in Nanjing are under investigation over
accusations that they accepted gifts worth $21,000 from a local toy
company during the last New Year holiday.

The scandal came to light, a Nanjing newspaper said, when unpaid
suppliers stormed and ransacked the offices of the toy company, which
had gone bankrupt. A list of the government officials and their gifts
was found by chance in a drawer. The gifts reportedly included cash,
shopping cards and designer clothing.

Each New Year's corruption circular seems to strike a different
theme. In 2005, officials were cautioned about gambling overseas. In
2006, it was bribes through wedding or funeral gifts. Last year,
sightseeing tours at public expense.

The party also announced last week that nearly 151,000 government
officials had been penalized in the year ending in November on various
corruption and bribery charges.

Gan Yisheng, deputy secretary of the discipline inspection
commission, said at a news conference last Friday that 4,960 of these
were senior officials, Xinhua reported.

Among those whose ox was gored: a deputy mayor of Beijing, the
former general manager of the oil and chemical giant Sinopec, the vice
chairman of the Communist Party in Henan Province, and the vice
chairman of Guangxi Zhuang Autonomous Region.

Cai Wenlong, 55, a senior government official and the board chairman
of several state-owned companies in Anhui Province, received a
suspended death sentence last week for embezzlement. State media
reported that Cai had stolen or mishandled about $5 million, and that
he had lost more than $43.8 million investing state funds in the stock
and futures markets.

Two senior Communist Party members also have been expelled from the
party for overstaying their visas in France, according to Xinhua. One
of the officials has returned to China; the other has not.

In addition, Huang Songyou, a former vice president of the Supreme
People's Court, also remained under investigation, said Gan, of the
discipline inspection commission. Huang was removed in October for
taking bribes, Xinhua reported, making him the highest-ranking judicial
official to be fired for corruption since 1949.

Clinton: Energy security a major US foreign policy element

2009-01-26T21:04:00.000-08:00

Nick Snow, the Washington Editor of OGJ, writes energy security must be an important and integrated element of US foreign policy, US Secretary of State Hillary R. Clinton said as the Senate considered her nomination.

Noting that President Barack H. Obama identified energy as one of his top national security priorities during his presidential campaign, Clinton said she has considered energy security and climate change among the most pressing challenges facing the US and the world.

"These are issues on which I will personally engage, and they will consistently receive high-level attention at the [State] Department. I will work with our friends and partners around the world, who are facing the same challenges. I also intend to ensure that the department works vigorously through the interagency process on these issues," she said in a written response to questions Sen. Richard D. Lugar (R-Ind.) submitted to her following her Jan. 13 confirmation hearing before the Senate Foreign Relations Committee.

In opening remarks at that hearing, Lugar, the committee's ranking minority member, said that Russia's cutting off natural gas supplies was only the most recent example of how energy supply vulnerability constrains US foreign policy options.

Lugar said he looked forward to supporting Obama's efforts to reduce US dependence on foreign oil. "Yet domestic reform alone will not be sufficient to meet the global threats to our national security, economic health, and climate. In my judgment, energy security must be at the top of our agenda with nearly every country. Progress will require persona engagement by the secretary of state," Lugar maintained.

'Not just a cartel'
Lugar said in a speech he delivered at a 2006 North Atlantic Treaty Organization summit in Riga, Latvia, that a country's halting gas exports in midwinter violated Article 5 of the NATO agreements as surely as tanks and aircraft crossing a country's border. Clinton agreed, adding: "I think we have learned the hard way that the [Organization of Petroleum Exporting Countries] cartel is not just a cartel, but a security geopolitical strategic effort." Russia is trying to create a gas equivalent of OPEC, which would give it a much greater multilateral international reach on gas in addition to the bilateral powers it currently has, she said.

"Specifically with respect to Russia and its interactions with Ukraine, Georgia, and other European countries, and its recent purchase of the Serbian gas utility, I hope we can make progress with our friends in NATO and the [European Union] to understand that we do need a broader framework in which we can talk about energy security issues. It may or may not be Article 5, but I think it certainly is a significant energy challenge that we ignore at our peril," Clinton said.

Sen. George V. Voinovich (R-Ohio) also expressed concern over impacts on European countries' decision-making of potential Russian gas cutoffs. "It seems to me that we ought to really raise the issue of energy independence in terms of our national security, and also be able to make the right decisions in the world when some of our allies may not be able to because they're frightened that somebody is going to shut off their gas," he said.

Clinton responded that this was one reason why Obama has talked about an energy partnership with Latin America, "looking to find ways through technology and other activities we can work together to become more energy independent in this hemisphere." She said that includes meeting challenges posed by presidents of some energy exporting nations such as Venezuela's Hugo Chavez and Bolivian's Juan Evo Morales, as well as concerns expressed by other countries over their energy supplies.

"As you and Sen. Lugar have pointed out, that becomes even more acute in Europe. So I think this deserves a lot of attention," she told Voinovich. She said she intends to follow a recommendation Lugar originally proposed in 2006 that was signed into law as a provision of the 2007 Energy Independence and Security Act to appoint an international energy affairs coordinator within the department. (Lugar noted, in his written questions, that Clinton's predecessor, Condoleezza Rice, placed the position within the undersecretary for economic, energy and business affairs' office. "Thus, the highest ranking State Department official devoted to energy issues remains at the level of office director," the senator said.)

Caspian pipelines
Lugar also said in his written questions that on Mar. 21, 2008, then-US President George W. Bush appointed a presidential envoy for Eurasian Energy amid new opportunities for US engagement in Central Asia as Russian authorities made a strong effort to exert further control over Caspian region energy supplies. He then asked Clinton what level of US engagement she felt would be helpful to opening trans-Caspian energy trade and investment.

"Vigorous US engagement to promote opening of trans-Caspian energy trade is an important priority for US interests. Russia's cutoff of gas shipments to Ukraine (and by extension to much of the rest of Europe) in early 2009 (following a similar move in 2006) served as a sharp reminder of how dependent Europe is on energy imports from Russia. That energy dependence can create a degree of political dependence that we should seek to help the Europeans avoid," she responded.

Noting that the administration of her husband, President Bill Clinton, helped promote the Baku-Ceyhan-Tbilisi pipeline in the 1990s, Hillary Clinton said the US currently "should be heavily engaged in helping to promote stable and transparent energy trade in Europe, including between Russia and Ukraine, and energy diversification for Europe, a goal that requires more energy trade with producers in the Caspian region." The Eurasian energy issue is complex and requires high-level US attention and engagement, she said, and she intends to consult with the president "and with our energy and national security teams to determine the best way to devote that attention."

The proposed Nabucco gas pipeline could be a critical element in efforts to diversify European energy supplies, she observed. "Completing such an expensive, complicated, multinational project, however, will require painstaking alignment between commercial and governmental actors. An essential element of such a project will be the commercial fundamentals. A successful strategy to promote Nabucco or other pipelines along the southern corridor to European markets will require consistent, high-level engagement, including by the United States," Clinton said.

Turkey will be a critical partner in such efforts, and Clinton said she would seek to restore and develop the longstanding US strategic relationship with that country "which has come under strain in recent years." She said, "Supporting Turkey's effort to develop and implement sound and sustainable energy policies is in the interest of Turkey, all of Europe and the United States because it will help Turkey be a reliable partner and transit country for gas flowing to other European markets."

China initiatives
Clinton also said US economic and foreign policies toward China should be closely coordinated, and that the US will press the Chinese government to live up to its commitments in trade agreements and to meet its international responsibilities. Because the Obama administration considers energy security and climate change one of the most pressing challenges facing the US and the world, she said that it would ask countries which emit the most carbon to join a new Global Energy Forum to lay the foundation for new climate protocols.

"We need to work with China on agreeing to a global carbon cap. We also need to work closely with China and other countries on the development of low-carbon energy technologies to reduce our shared reliance on carbon-intensive technology," she said in response to Lugar's written questions.

During the hearing, Clinton noted in a response to Voinovich that Senate Foreign Relations Committee Chairman John F. Kerry (D-Mass.) has a longstanding interest in effective global climate change agreements, and understands that China, India, Russia and other major nations need to be part of the process leading up to the next major discussions in Copenhagen. "I think, as I say, this can be both included but also independently given attention to by emphasizing energy security, which I intend to do," she said.

In one of her written responses to Lugar, she said the International Energy Agency should be laying the groundwork now for eventual Chinese and Indian membership to increase energy policy coordination with countries where energy consumption is growing rapidly, to maximize the opportunity for agreeing on energy standards and principles such as transparent energy markets, to ensure the coordinated release of strategic petroleum reserves during a major market disruption, and to maintain IEA's position as the voice of the world's major energy consuming nations.

"The center of energy demand growth is shifting away from the [Organization for Economic Cooperation and Development] countries to many of the world's developing countries. The IEA was created as an institution that represents the interest of the major energy consuming nations. If its membership does not change to reflect who those nations are today, its authority and effectiveness will erode," Clinton said.

Growing market weight
"The great majority of increased global energy demand in coming years will come from emerging economies, in particular China and India. Both are also building strategic petroleum reserves. Given their growing weight in international energy markets, it is in our interest to include them as members of the [IEA] and to coordinate closely with them on usage of strategic petroleum reserves in case of an oil supply emergency. Global energy security will benefit from the integration of their potentially large strategic reserves into the IEA system," she continued.

Full membership for China and India in the IEA probably would require modifying the original 1974 International Energy Program treaty agreement which created IEA, but the range of options for potentially integrating the two countries into the organization has not been fully explored, according to Clinton.

"The IEA makes decisions by consensus among the member states, and consensus can and will be reached on how to prepare the IEA for eventual Chinese and Indian membership, even as China and India must also commit themselves to and prepare for IEA membership. The State Department will support these efforts, up to and including revision of the International Energy Program," she said.

She also said the US should do all that it can to promote adoption of clean energy technology and best practices as developing countries address energy challenges. "The full suite of energy sources (oil, gas, coal, nuclear and all renewables, in tandem with conservation and efficiency improvements) will be necessary to meet projected global and domestic energy demand over the next 25 years," she said.

"US foreign assistance that promotes energy access in the developing world should focus on clean energy technology, which includes renewable energy [and] energy efficiency as well as clean coal technology. The United States leads in research, development, and deployment of renewable energy," Clinton observed.

Bigger expenditures
She said that "a very substantial increase in US assistance" would be needed if the US set a priority of eliminating "energy poverty" with a focus on reliable, affordable, and clean energy.

"Most of the required investment, however, must come from the private sector. In order to mobilize that investment, major policy and regulatory reforms are needed in many countries. Neither public nor private utilities and their investors can generate the capital required to expand access to clean, sustainable energy supplies, for example, when regulatory regimes prevent them from recovering their direct and indirect operating costs," Clinton said.

"Developing countries must bear primary responsibility for moving the reform process forward. When they do, US assistance can support them in two major ways. First, our technical assistance can help to establish the overall regulatory and policy environment to stimulate new public and private investments. And second, our project-based financial guarantees can help to reduce the perceived risks and costs of mobilizing the much larger flows of private sector financing [which would be] required," she maintained.

MMS reports results of Lease Sale 207 in western gulf

2009-01-26T20:36:00.001-08:00

OGJ editors state that the US Minerals Management Service has awarded 313 oil and gas
leases in the Western Gulf of Mexico in its Lease Sale 207 held Aug.
20, 2008.

Fifty-three companies submitted a total of 423 bids on 319 tracts in
the Western Gulf of Mexico. MMS accepted high bids totaling
$483,959,404. Total high bids submitted on all tracts was $487,297,676,
but MMS rejected high bids totaling $3,338,272 on 6 tracts as
"insufficient for fair market value."

Statoil Gulf of Mexico LLC's bid of $61,110,000 for deepwater Alaminos
Canyon Block 380 was the highest bid accepted on a single tract. The
parcel, which received 3 bids, is in deep water (greater than 6,562 ft
or 2,000 m).

The top five companies with the highest number of accepted high bids
for Sale 207 were ExxonMobil Corp., which bid on 128 tracts totaling
$125,264,000; Hess Corp., 22 tracts totaling $14,162,407; Chevron USA
Inc., 20 tracts totaling $127,281,322; Devon Energy Production Co. LP,
20 tracts totaling $6,671,461; and Anadarko E&P Co. LP, 19 tracts
for a total of $14,806,839.

The top five companies with the highest total bonus amount accepted for
Sale 207 were Chevron USA Inc., 20 tracts with bonus amounts totaling
$127,281,322; ExxonMobil Corp., 128 tracts for $125,264,000; Statoil
Gulf of Mexico LLC, 5 tracts for $87,352,000; LLOG Exploration Offshore
Inc., 11 tracts for $23,172,800; and Shell Gulf of Mexico Inc., 15
tracts for a total of $20,199,985.

MMS said funds received from the sale will be "distributed to the U S
Treasury's general fund, shared with the affected states, and set aside
for special uses that benefit all 50 states."

Petrobras may develop Abreu e Lima refinery without PDVSA

2009-01-26T20:30:00.000-08:00

Eric Watkins, Oil Diplomacy Editor at OGJ, states that Brazil's Petroleo Brasileiro SA (Petrobras) is considering plans to proceed unilaterally with building a new refinery in Pernambuco state in Brazil if Venezuela's Petroleos de Venezuela SA (PDVSA) does not agree soon on a price for supplying Venezuelan crude.

"We have already concluded the shareholders accord and the (company) statute, but not the supply contract," said Petrobras executive Paulo Roberto Costa. "If we delay in concluding the contract, the project will not stop, since Petrobras has enough heavy crude [to supply the refinery on its own]."

Last September, Petrobras began work on the 200,000 b/d Abreu e Lima refinery, under a plan that called for a 60-40 partnership, with the Brazilian firm as the facility's majority shareholder.

Under the agreement, each state oil company would supply half of the required crude oil to the refinery: 50% from Brazil's Marlim Sul field in the Campos basin and 50% from Venezuela's Carabobo 1.

However, PDVSA wants to supply its share of the crude at above-market prices, while Petrobras wants the supply contract tied to the prices of benchmark crudes such as Brent or West Texas Intermediate.

Despite the lack of agreement with PDVSA, Petrobras has been moving forward with the refinery and its supporting infrastructure.

Last week, Brazil's hydrocarbons regulator Agencia Nacional do Petroleo (ANP) authorized Petrobras to build a 9 km pipeline linking the proposed refinery to Suape port in Pernambuco state.

Construction on the pipeline, which also would link the refinery to the Transpetro terminal and distributors based in the harbor complex, is due to begin in the first half of 2009 and complete in 2 years.

In mid-December, Petrobras opened offers for four operating systems for the refinery, including a coking unit, an atmospheric distillation unit, a hydrotreater, and services for interconnection among the various units.

Earlier, in August 2008, Petrobras and the Pernambuco state government signed an investment contract for 475 million reais ($288 million) to develop Suape port and industrial complex, according to a report in financial newspaper Valor Economico.

The paper said Petrobras would provide the state with some 310 million reais to carry out improvements to the port structure, while the remaining 165 million reais would be invested by the company in its own preparations for the refinery.

Once completed in 2010, the Abreu e Lima refinery will produce 814,000 cu m/year of naphtha, 322,000 tonnes/year of LPG, 8.8 million tpy of diesel fuel, and 1.4 million tpy of petroleum coke.

Gazprom head comments on Ukraine gas issue

2009-01-08T13:54:00.001-08:00

Uchenna Izundu
International Editor

LONDON, Jan. 7

-- Europe has stopped receiving gas supplies from Russia via Ukraine amid the bitter dispute that Russia's OAO Gazprom is embroiled with Ukraine over unpaid bills and prices for deliveries in 2009.

Alexander Medvedev, Gazprom's deputy chief executive, told journalists that Naftogaz, the Ukrainian company had shut in the fourth export pipeline, stopping all transit supplies to Europe. On Jan. 6, Gazprom accused Ukraine of closing three pipelines.

"We continue to do our utmost to use alternative routes," he added,with gas being delivered via the 4,100-km Yamal-Europe pipeline andunderground storage. Gazprom has delivered more than 170 million cu munder contract to its European customers, he said. It is also looking at buying gas on the spot market to meet its obligations.

Naftogaz blamed Gazprom for the disruption, saying that Gazprom stopped transporting supplies to Ukraine on Jan. 7. Over the first 6 days of January, it insisted it had delivered 74 million cu m of gas to Europe from its own reserves despite Gazprom's stoppage.

Gazprom has alleged that Ukraine has stolen Russian gas intended for European consumers after it stopped exports for Ukraine's domestic needs on Jan. 1.

Different European countries have reported significant drops in their Russian imports with the Balkan countries severely impacted. Bulgaria, which relies solely on Russian gas, could run out in days and Slovakia has declared a state of emergency. France, Germany, and Italy are also suffering reductions. The shortage coincides with an Arctic cold snap which will leave millions of eastern Europeans in a humanitarian crisis if the crisis is not resolved quickly.

Both companies have blamed each other throughout the dispute and they have now pledged to the European Commission to have international monitors check the supply of Russian gas through Ukraine for Europe.

Medvedev told OGJ that it previously wanted to use international observers to monitor the metering stations in Russia and Ukraine, but Ukraine has resisted it. "We sent them to the Russia and western Europe and the Ukrainians fought against it."

Gazprom is now demanding from Ukraine $450/1,000 cu m for its exports in 2009, which is the same rate for the eastern European countries bordering Ukraine minus costs of gas transit across Ukraine. Ukraine's last price offer was $235/1,000 cu m and it has announced it will resume negotiations with Gazprom on Jan. 8. But it is demanding an increased transit fee of $2/1,000 cu m.

Medvedev told OGJ that the initial offer of $250/1,000 cu m for gas exports that expired on Dec. 31, 2008, was "very expensive for us in the present financial situation," adding that, "Ukraine said then it wanted to pay $100/1,000 cu m."

Medvedev urged Ukraine to resume talks, but complained that Jan. 8 was unfeasible as Gazprom was holding talks with officials in Europe on this date. "They [Ukraine] want to create the illusion that they want
to negotiate."

"We hope that this situation will be fixed quickly and so we wouldn't want to do a force majeure clause in our contracts," he added.

Gazprom has sought to establish medium term supply contracts rather than renewing yearly agreements at different prices to avoid disruption to exports. Ukraine, Medvedev said, has rejected this proposal.

The company has not shut down any production wells amid the dispute as this could impact "very negatively" on its operations. "We have a very comprehensive upstream and midstream situation and are currently using all our underground reserves."

Contact Uchenna Izundu at uchennai@pennwell.com.