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Global oil & gas refiner

Situation

The company was overly reliant on hydrocarbon feedstocks that had illiquid prices, resulting in significant margin erosion when price volatility spiked, as well as escalating friction between front office traders and operations as to plant changeover decisions.

Solution

We developed a source-fuel modeling and decision-support capability, including parameters for constructing forward curves of illiquid price indices to better inform changeover decisions based on a longer forward view of the spread risk between feedstocks and refined products relative to changeover costs.  In addition, recommended changes in trade authorizations to increase visibility of potential cash flow timing and hedge accounting impacts.

Services:

Market and Counterparty Credit Risk

Market:

Conventional and Renewable Energy Developers

Client:

Global oil & gas refiner

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