(Updates with more executives' comments)
LAUSANNE, March 29 Top executives from the
world's largest commodity trading houses discuss trends in
trading at the FT Commodities Global Summit in Lausanne,
Switzerland, this week.
For highlights from the first day:
The following are the latest highlights:
DANIEL JAEGGI, PRESIDENT, MERCURIA
Echoing remarks by Mercuria's CEO on Tuesday, Jaeggi sees a
coming crunch as short-term investments are prioritised over
"There is imbalance right now which is getting bigger ...
when you look at 2018, 2019, 2020 what you're seeing is short
cycle investment that is hedging on the back-end of the (oil
price) curve ... pushing it down."
"In the medium term, 3-4 years, there's a potential to
create the next big imbalance. You're going to miss at some
stage the big, long-term investments. It's sowing the seeds for
potential instability and volatility in the future."
BEN LUCKOCK, CO-HEAD MARKET RISK, TRAFIGURA
"What's interesting for someone like Trafigura is that U.S.
flows are changing and it gives you something to look at every
single day. The greater Gulf coast - it's the new release valve
for the global oil market," Luckock said, adding that initially
U.S. flows went to Europe first then to Asia.
Luckock also sees a crunch coming due to short cycle
"The best ones (producing assets) are being used up now, low
hanging fruit ... It's coming home to roost sooner than people
Trafigura is a major lifter of crude from Iraqi Kurdistan,
which Luckock says is becoming less controversial.
"The buying group has certainly increased, a lot of these
barrels go to Asia. Some refiners still refuse because of their
relationships with Baghdad. But it's a significant flow. It
impacts the balance around the world."
ALISTAIR CROSS, GLOBAL HEAD OF OPERATIONS, MERCURIA
Cross said it typically takes 30 days to process contracts
prior to payment and can take longer depending on the product.
"In our test case, within four days we got all electronic
documents in and certainty of settlement ... It's a significant
Cross also sees blockchain technology as a way to reduce
high-level fraud and cut back office costs.
"Our industry is very paper based and we have the technology
now that can solve the complete settlement cycle ... Back office
costs are a focus for all the companies and an area where we can
make significant savings."
"A lot of instances of fraud - it's high tech. The
information on the document looks real and recognizable by
counterparts. With blockchain, you can have a verifiable,
authenticated (document) and only a person with a secure login
can send that document."
ALAN HAYWOOD, CEO OF SUPPLY AND TRADING BP
"The context for our strategy is laid out in fundamentals
until 2035. We see energy demand increasing by about 30 percent,
half from nuclear, hydro power and renewables ... half will be
going to the power sector."
"But we see 75 percent of energy demand still coming from
oil, gas and coal. Gas demand will grow at approximately twice
the rate of oil ... on the renewable side we will focus on our
commitment to wind and Brazilian biofuels."
MARCO ALVERA, CEO, SNAM
Alvera sees emerging markets moving towards gas away from
coal due to the cleaner advantage of gas.
"A one percent switch from coal to gas, gives same benefit
on carbon dioxide, as a 10 percent shift to renewables."
"In Europe, demand for gas has stabilised but production is
declining. Faced with stable demand, imports need to grow ... we
can only look east or southeast like the southern corridor.
"Europe has huge opportunities for LNG storage due to huge
depleted reserves. LNG will become hugely seasonal ... and very
distressed in the summer. Italy is a unique position because has
largest gas storage reserves so can be a hub for imports and
"In the United States, coal will be back, which potentially
in the short term will benefit gas in Europe, and the price of
coal will go up."
"There's a huge potential for biomethane in transport ...
the beauty is that you can use existing infrastructure."
MARK CRANDALL, CHAIRMAN, POSTSCRIPTUM
"The switch from coal to gas is a bigger thing than any
switch to renewables."
"Batteries are about to happen. The first large scale
delivery will start in July ... Whether they will live up to the
hype is another thing. They still are not cheap enough."
"You can see the grim reaper for fossil fuels in the rear
view mirror. In Chile and Argentina ... in non-subsidised
tenders, renewables win. That's extraordinary compared to five
years ago. Eventually it will catch up in the northern
SAMUEL LEUPOLD, EXECUTIVE VP, DONG ENERGY
"Coal needs to go, lignite needs to go but it needs to be
politically led ... Batteries in my view are completely
"The influence of Washington D.C. is limited ... in terms of
subsidies, it's more about the state than D.C.," Leupold said,
when asked about U.S. President Donald Trump's executive order
undoing Obama-era climate change regulation.
(Reporting by Julia Payne and Gus Trompiz, editing by Louise
Heavens and Susan Fenton)