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Petroleum Trading: A broad range of customer needs
calls for innovative and creative solutions.
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Domestic
Crude: Sempra Energy Trading ® is a major market
maker in the US mid-continent physical crude market with pricing
alternatives either fixed or indexed to posted prices or NYMEX
averages.
Refined
Petroleum Products: Sempra Energy Trading ®
is active in all petroleum products supply and trading throughout
Europe, Asia and the US. We partner with major refineries
and utilities to satisfy their risk management requirements
by the use of swaps, options and futures. We actively trade
a complete range of products: condensates, naphtha, gasoline,
jet fuel, heating oil and residual fuel oil.
North
Sea Physical Trading: Sempra Energy Trading ®
participates in the actively traded North Sea crude oil markets,
in particular, Brent BFO and its derivatives. To minimize
exposure to market fluctuations, the Brent traders supply
their customers with physical crude oil and a host of associated
risk management products.
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Derivatives:
Our Oil Derivatives Group develops strategies to aid customers in
limiting their exposure to fluctuating oil prices. Our products
cover everything from basic swaps to complex derivatives, and include:
- outright swaps, options and collars
- crack swaps and options
- calendar spread options
- dual currency swaps and options
- compound options
- digital/binary options
- barrier options
The Oil Derivatives Group offers timely and reliable pricing for routine
hedging transactions as well as more sophisticated solutions needed for
more complex situations. Terms range from one month to over 10 years.
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Sempra Energy Trading®:
Customer challenges and tailored solutions for
the oil industry
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Following are examples of SET's ability to create customized
and innovative solutions for a variety of challenges.
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Producers
go to Risk Management Capability Presentation.
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The Customer Challenge "At Market": A heavy crude oil producer wants to fix the price of its forward production.
The SET Solution: The producer sells Sempra
a swap contract at an agreed price, either outright or as a spread vs. WTI.
Sempra pays the producer an agreed fixed price, while the producer pays the
average posted price of the crude. If the crude declines, either absolutely
or relative to the WTI, the losses on the customer's physical production are
offset by gains on the swap contract.
The Customer Challenge "Above Market": A producer wishes to fix the price of its forward production at a price higher than the
market.
The SET Solution: Customer gives Sempra a one-time
option, exercisable at the end of the initial period, to extend for a second,
equal period, at the same terms. Sempra gives the customer the high price.
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End Users
go to Risk Management Capability Presentation.
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The Customer Challenge: A shipping company
with fixed revenues is worried about escalating bunker costs. Their bunker lifting
pattern is evenly split between Rotterdam, Singapore and Houston.
The SET Solution: The company buys a basket swap
contract from Sempra, paying an agreed fixed price, to protect its profit margins.
Sempra pays a weighted average of Platt's Bunkerwire 380 cst for the three ports
of Rotterdam, Singapore and Houston.
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Refiners
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The Customer Challenge: A large refinery
wants to lock in its margins.
The SET Solution: Customer sells Sempra spread
contracts (cracks) on gasoline, distillate and fuel oil in proportion to
the average refinery yield. Customer pays the floating or market price for the
products, plus or minus the agreed spreads, while Sempra pays the average near
month of WTI crude oil on the NYMEX. Any decline in actual refinery margins is
offset by gains on the spread contracts.
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