Global commodity trader Koch Supply & Trading has cut dozens of workers across at least four offices worldwide, several sources said on Tuesday, as the firm restructures its business.
The cuts at the unit of Wichita, Kansas-based Koch Industries Inc, the industrial conglomerate owned by billionaires Charles and David Koch, affected traders and support staff in its United States, Switzerland, United Kingdom and Singapore offices.
A string of notable hedge funds in the commodity space have closed over the last year, while restructuring efforts were launched at firms like Goldman Sachs after losses in 2017.
Some commodity trading firms and banks posted major losses due to muted client activity and wild fluctuations across energy markets. Bonuses across the industry were also low, and some hedge funds have chosen to exit energy trading.
Source: Global commodity trader Koch cuts staff in restructuring
Some publicly-traded U.S. energy pipeline and oil-storage partnerships are restructuring into simpler business models to help attract new investors and spur growth.
Rising oil and gas production has spawned billions of dollars of new transport, gathering and storage projects. But the companies most responsible for these projects can allocate up to 50 percent of their income to the general partner, leaving less for other holders or to invest in new projects.
Historically, these firms have passed most of their income along to holders and sold equity or debt to finance new projects or acquisitions. But in the last year, what they have had to offer investors has jumped. MPLX Energy Logistics LP, for instance, paid a 9.7 percent annualized distribution last quarter to its holders, up from 7.9 percent a year earlier, according to figures from investment firm East Daley Capital Advisors.
“The higher cash yield makes the economics of these projects a little tougher,” said Kendrick Rhea, an analyst at East Daley Capital. He estimates the cost of equity has risen nearly a third for some companies in the last year.
Source: NuStar, other energy partnerships simplify business models to spur growth
Mexico’s oil and natural gas fields are so near but yet so far from the United States, where the hydraulic fracturing (fracking) and horizontal drilling revolution have turned it into a global behemoth. Now Mexico stands poised as an unconventional threat as well.
The Eagle Ford Shale in South Texas, in the cradle of the unconventional fields, extends into the Mexican state of Tamaulipas. But while the small companies that were the guerrilla fighters of the revolution continue to buzz the formation in Texas with drilling activity, the Tamaulipas side is eerily silent.Mexico’s state oil company Petroleos Mexicanos (Pemex) drilled about 20 wells a few years ago, but without apparently being unable to master the fracking/horizontal drilling technology.
This time round, with the instruments of the 2013-14 energy reform under their belt, the Mexican energy authorities have announced the nation’s first upstream auction of unconventional resources in the wake of a government-sponsored forum in the border city of Reynosa, Tamaulipas.
Source: In the Shadow of the U.S., Mexico Strives to Generate a Homespun Fracking Revolution | 2018-02-21 | Natural Gas Intelligence
Avant Energy is planning to build a logistics system that will supply refined products to Mexico’s Bajio region via rail from the Port of Altamira in the northeastern state of Tamaulipas, the company said Wednesday.
The network will be known as Supera and it will be built along with strategic partners Savage Services and Kansas City Southern (KCS), Avant said in a statement.
Avant was not immediately available for comment. The company already has all the port facilities and regulatory permits required for construction.
The system will be anchored by a 1.2-million-barrel marine import terminal at the port of Altamira, which will be able to unload Panamax vessels.
Source: Avant plans logistics system to import refined products into Mexico – Oil | Platts News Article & Story
Mexico’s 2013 energy reforms are based on bringing in more competition for the two state-owned monopolies that had become too stagnant, Pemex (oil and gas) and CFE (electricity). One of the key areas with huge upside for foreign firms is the very expensive process of natural gas storage, which is critical for Mexico as it moves to replace overused fuel oil and reduce GHG emissions to meet climate change goals.
Despite rapidly declining production, Mexico is one of the most natural gas dependent nations on Earth. Gas now supplies 45 percent of all energy and 60 percent of electricity. Mexico has been forced to increasingly depend on cheaper piped imports from the U.S., which at 4.5 Bcf/d now account for about 55 percent of Mexico’s total gas usage. Much more gas will be required. Per capita, Mexico’s 130 million citizens consume just a third of the electricity that other OECD nations do. Additionally, there is a manufacturing boom in Mexico, namely in the automotive industry that will use increasing amounts of natural gas.
Source: Mexico’s Natural Gas Dilemma | OilPrice.com
India’s government has announced that it plans to build 11 LNG import terminals over the next seven years as part of the nation’s plans to have natural gas contribute 15 percent of its energy mix by 2020.
India already has four LNG import terminals (Petronet’s Dahej and Kochi LNG terminals, Shell’s Hazira plant and the Dabhol terminal operated by Ratnagiri Gas and Power) and imports around 20 million tons of LNG a year, about 6.5 percent of its energy needs.
A Reuters news report states that Narendra Taneja, spokesman for the ruling Bharatiya Janata Party, said the plans would increase India’s LNG import capacity to more than 70 million tons per year. India would eventually require even more than 15 terminals to meet its demand, Taneja said, speaking at an industry conference in Bali, Indonesia.
India plans to electrify millions of households that currently use wood for fuel. It also plans to reduce reliance on coal and use the LNG to provide power for electric vehicles. India anticipates that all new cars sold will be electric by 2030. Taneja said the nation is looking to provide LNG for bunkering, including setting up a facility at Kochi port.
Source: India Wants Eleven More LNG Import Terminals
A coalition of six energy company CEOs — including four from Houston — issued a public letter asking President Donald Trump for federal funds for a project to deepen and widen the ship channel at Port Corpus Christi.The South Texas waterway received congressional approval to deepen its ship channel from 45 feet deep and 400 feet wide to 54 feet deep and 520 feet wide, but no federal funding for the $326 million project.In a Jan. 29 letter, Port Corpus Christi CEO Sean Strawbridge asked Trump to include funding for the Port of Corpus Christi Ship Channel Improvement Project in his fiscal year 2019 budget.”Once completed, this economically and strategically vital infrastructure project will undoubtedly position the United States as the most energy dominant player in the world,” Strawbridge wrote.Six energy company CEOs with facilities at Port Corpus Christi joined Strawbridge by sending a letter of their own, specifically asking Trump to include $60 million in his fiscal year 2019 presidential budget for the project.
Source: Energy CEOs ask President Trump to fund Port of Corpus Christi Ship Channel Improvement Project – Houston Business Journal
DCT Industrial had a busy 2017, despite the oil downturn.The real estate investment trust broke ground on three new Houston-area facilities totalling 474,000 square feet, and it acquired 48 acres in the Port of Houston.
The Denver-based company is one of the largest industrial owners and developers in the Bayou City, managing 5 million square feet of industrial real estate locally.Justin Bennett, the senior vice president overseeing DCT’s Houston operations, recently visited with the Chronicle about his outlook for 2018.
Q: How’s business? A: Business is doing very well. A big boon to the industry has been the expansion of plastics.
Source: Q&A: Plastics boom keeps Houston humming – Houston Chronicle
Commodities fund Jamison Capital to shut – source
NEW YORK/LONDON (Reuters) – Jamison Capital Partners LP, a New York-based macro commodity hedge fund run by former Morgan Stanley (NYSE:) trader Stephen Jamison, will be shutting its nearly $1.5 billion fund and convert to a family office, a source familiar with the matter said on Thursday.
The closure of Jamison, one of the largest commodity-focused hedge funds, comes after several other big names have closed shop in recent months. They include hedge fund manager Andy Hall, who closed his Astenbeck Capital Management last summer, and Texas tycoon T. Boone Pickens, who said this month that he was closing his fund, in part due to declining health.
Source: Exclusive: Commodities fund Jamison Capital to shut – source By Reuters