Shell Trading unveiled its mega-energy electronic tradingplatform in London this week, offering the first heavy dutycompetition for Enron Corp.’s industry-leading EnronOnline.
Shell Trading, due to start Jan. 1, effectively consolidates thereorganization of Royal Dutch/Shell Group’s trading activities. Itincludes the company’s current trading platforms for crude and oilproducts worldwide; chemical feedstocks in Europe and the UnitedStates; and natural gas and power in North America through CoralEnergy, based in Houston, and in Europe through Shell Energy. Theworldwide crude and oil products shipping operations and themarketing business of Coral Energy also will be included.
Trading companies will be situated throughout the world, withkey trading and marketing operations in North America, Asia, theMiddle East and Europe. The reorganization puts Shell into thederegulation game for natural gas and electric power marketsworldwide. It already leads the list as the world’s largest oiltrading operation.
Shell expects the new business to enhance the value of tradingin each of its group’s core businesses, and thus create a vehicleto develop trading opportunities. The global portfolio will includecrude oil, refined products, natural gas, electric power andchemicals.
“Over the past several years, Shell companies have establishedleading positions in several trading businesses, which includecrude oil, oil products and natural gas,” said Paul Skinner, groupmanaging director. “We now see a significant opportunity toconsolidate the current trading platforms in an integratedapproach, enabling us to compete strongly in the evolving energytrading market.”
Mike Warwick, now president of Shell International Trading &Shipping Co., will lead up the operation. Warwick led the formationof the Shell trading network in 1998, which globalized thecompany’s crude oil and products trading.
“Shell Trading will possess the skill base and internationalscope to capitalize on the extensive trading opportunities inherentin Shell’s asset and market positions around the world,” Warwicksaid.
In July, Coral Energy officials had predicted that Shell andconstruction giant Bechtel would fold InterGen, InterGen North Americaand certain assets of Coral Energy into one business (see Daily GPI,July 10).
Under an agreement signed in August, InterGen received the majorityof Coral Energy’s natural gas pipeline, storage and power generationassets in the United States in a joint venture by Shell and BechtelEnterprise Holdings Inc. (see Daily GPI, Aug. 4). InterGen will develop and operatelarge-scale independent power projects and co-generation facilities inNorth America in the venture.
InterGen, which was created by Shell and Bechtel in 1995, nowoperates or is building power generation facilities totaling morethan 15,000 MW in nine countries. Coral Energy also was created in1995 as a natural gas marketing venture between Shell and TejasEnergy.
Shell’s move to enter the market full steam is not unlike othermultinational oil and gas corporations — BP Amoco and ExxonMobilalso have plans to do so. However, Shell is considered to be wellplaced to meet Enron in a battle for energy trading opportunitiesbecause its energy division already sells retail gas in four U.S.states: Georgia, New York, New Jersey and Pennsylvania.
Enron, based in Houston, has been trading natural gas since the1980s, and is now considered the leading energy trading siteworldwide. It sold 14.6 Bcf/d during the fourth quarter 1999,compared with 10.7 Bcf/d for second-place Duke Energy. Enron hasbeen expanding its wholesale activities in Europe and Asia, and hasalso expanded its trading opportunities into more commoditymarkets.
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