Risk management
Trying to model reality
Quantitative credit risk models are a must-have in today’s energy industry. But human judgement is still needed, as Maria Kielmas discovers
Enron will not centralise risk management
Failed energy trader Enron plans to package together the majority of its internationalassets into a company known as InternationalCo, the shares of which will be distributedto its creditors.
ABN Amro makes global OTC oil and gas drive...
Dutch bank ABN Amro last month started to offer its clients oil and gas hedgingservices, as part of its financial markets business which incorporates debt capitalmarkets, structured lending and risk management activities.
Energy firms turn to overlay
Energy companies face a tough future over pension provisions – a problem that could well exacerbate credit deterioration. Paul Lyon finds that innovative use of currency overlay could provide some form of refuge
Energy firms find succour
US energy company debt has reached critical levels, with nervous investors and banks working hard to keep these companies afloat. But Paul Lyon finds the secretive hedge fund industry could also lend a helping hand
Kiodex adds more energy forward curves
Kiodex, an energy risk management technology company based in New York, willadd five new forward curves to its global market data offering, it told delegatesat EPRM’s May congress in Houston.
Ferc calls for risk manager vigilance
The director of the office of market oversight and investigations (OMOI) at theUS Federal Energy Regulatory Commission (Ferc), has urged energy risk managersto alert his office to any suspicious market practices.
CROs seen as vital for restoring confidence
Chief risk officers (CROs) have a vital role in helping shape the future of thetroubled energy sector and should report directly to their company’s boardif investor confidence is to be rebuilt in the industry. Vincent Kaminski, seniorvice-president of…
Buying your way out of trouble
UK high-street retailer Littlewoods has saved £1.5 million through an energy risk management and procurement programme. Utilyx’s Nigel Cornwall looks at how other companies can reduce energy costs through purchase programmes
Cross-border conundrums
Analysts at rating agency Standard & Poor’s Lee Munden and Paul Lund look at the future of cross-border trading in Europe, given the credit crises of 2002
People swaps
Chappel replaces McCarthy as Williams CFO US energy major Williams has hired Donald Chappel (pictured) as senior vice-presidentand chief financial officer (CFO). He succeeds Jack McCarthy, who retired atthe end of 2002 after 10 years as CFO. Before this…
Speculate away
A new report argues that speculative trading in the crude oil markets contributes far less to volatility than its critics suggest. Kevin Foster looks at the arguments
How to spot a VaR cheat
Traders can use weaknesses in VaR measurement to make it appear that they are not taking any risks. Brett Humphreys exposes how easily this can be done
Petrochemicals firms take a stand against oil price volatility
Many petrochemicals firms are seeking to reduce price volatility through hedging, given that the cost of crude oil is strongly influencing the price of petrochemical products. GlobalView Software looks at the figures behind the trend
Trading with a small ‘t’
What made headlines before is now becoming everyday news: energy companies are scaling back or leaving energy trading. Some industry observers are emphasising the shift to ‘trading around assets’. Anne Ku investigates just what this means
Optimise this
One of the reactions to recent energy trading difficulties has been a shift away from speculative activities towards portfolio optimisation, but what does the term really mean, ask Tim Essaye and Brett Humphreys
Project risk: improving Monte Carlo value-at-risk
Cashflows from projects and other structured deals can be as complicated as we are willing to allow, but the complexities of Monte Carlo project modelling need not complicate value-at-risk calculation. Here, Andrew Klinger imports least-squares valuation…
Models of good behaviour
The development of new models that describe the real dynamics of energy prices have to take into account the behavioural aspects of market players. The problem is how to quantify these aspects. Maria Kielmas reports
Greening the markets
Environmental risks are increasingly being recognised as important financial issues, but the markets are still some way from rewarding companies for good environmental performance, as Kevin Foster discovers
Online clearing: the shape of energy markets to come
The energy trading market is moving towards a structure in which participants achieve market presence through a dedicated market network, rather than having to use local or regional exchanges, says strategic consultant Chris Cook
Asian basket spreads and other exotic averaging options
Giuseppe Castellacci and Michael Siclari of OpenLink introduce a class of exotic options that simultaneously generalises both Asian and basket options. They develop approximate analytic models for real-time pricing of complex instruments that average…