Koch Supply Trading, a unit of
Koch Industries Inc., will start buying and selling European
electricity and expand its liquefied natural gas business to
take advantage of a globalizing market for the fuel.
The trading unit of the second-largest closely held U.S.
company by revenue is hiring one or two power traders in Geneva
and plans to be ready for trading next year, Stephen Cornish,
director of Koch Supply Trading, said in a telephone interview
from London. The company will expand into Turkey and the Caspian
region in 2015 and open an office in Tokyo for its LNG business
this year, he said by phone.
Koch is expanding in power as companies from Bank of
America Corp. to Cargill Inc. pull out of the market as prices
trade near a nine-year low after the euro region’s longest
recession cut demand. As many as 120 European power and gas
traders lost or changed their jobs last year in the biggest
shakeout of the industry since the collapse of Enron Corp. more
than a decade ago.
“We don’t build our business based on whether the markets
are up or down,” Cornish said. “There are a lot of
counterparts out there that are re-evaluating their business
models and are looking for high quality counterparts to do deals
with. In that scenario we think we can add value.”
German year-ahead power, a European benchmark, fell to the
lowest since 2005 in April and settled at 34.50 euros ($46.89) a
megawatt-hour yesterday, according to data from European Energy
Exchange AG. Thirty-day volatility fell to 4.4 percent on June
12, its lowest in at least 10 years.
Koch is looking to expand into mainland European power
markets from Geneva, its base for gas trading and origination in
Europe, the Middle East and Africa, after a separate London-based business focused on the U.K. exited the market in 2011,
Deanna Altenhoff, a spokeswoman for Koch, said June 23 by e-mail. Koch Energy Europe Ltd. traded natural gas, power and
emission credits, according to a company statement in 2010.
Koch started trading crude oil in 1969 and added global gas
and LNG to its portfolio in 2012, according to the company’s
website. As part of a large industrial conglomerate, which
itself is a gas consumer, Koch benefits from dealing with
industrials, which “want to talk to like-minded companies,”
“When it comes to power, we believe there should be an
opportunity for us there too,” Cornish said by telephone from
London on June 13. “We are getting requests to get involved in
that market to map over the success that we have had in European
Koch Supply Trading plans to enter Turkey and the Caspian
region next year, he said. In addition to Geneva, the company
has an Amsterdam office for its gas sourcing needs and a
presence in Dusseldorf, Germany, for some of its marketing
activity, he said.
The company’s LNG business is based in London with trading
and origination operations in Singapore and Houston and
satellite offices in Rio de Janeiro and Dubai. The company may
expand further in the Far East and in South America, if
opportunities arise, he said.
Renewables, shale gas, the 2008 economic crisis and the
Fukushima nuclear disaster in Japan have all impacted the
market, Cornish said. While the global LNG market will remain
tight through next year, trade will start to increase in 2016 as
Australian projects now under construction start producing the
super-chilled fuel and U.S. exports begin, the International
Energy Agency said in its medium-term natural gas market outlook
on June 10.
Koch has done LNG deals in both the Atlantic and Pacific
regions, according to Cornish.
“We have a natural need to be in the market,” he said.
“If you are a natural market participant with a global reach, a
great balance sheet, and lots of physical activity, you have a
significant role to play.”
To contact the reporter on this story:
Anna Shiryaevskaya in London at
To contact the editors responsible for this story:
Lars Paulsson at
Rob Verdonck, Dan Weeks
Koch to Start EU Power Trading as It Plans LNG Expansion