Lukoil’s Litasco Bulks Up LNG, Power Trading Desks Amid Clean-Fuels Boom


Litasco SA is adding traders to its gas and power business as it looks to expand into lower-carbon fuels.

The Swiss arm of Lukoil PJSC is bulking up with a series of hires and an eye on possible asset investments, Chief Commercial Officer Matt Holme said. It’s the latest commodities firm to bolster its liquefied natural gas and power desks as part of a long-term energy-market shift toward electricity and renewables.

“The purpose is to diversify our portfolio into a wider array of energy products with a focus on lower carbon intensity, but to also find synergies with our existing businesses,” Holme said in an interview. The executive recently took on a new role himself, having been promoted from head of crude oil.

The Geneva-based firm is building a team of seven, dedicated to its LNG business, according to Holme. Paul O’Sullivan, the former head of physical LNG trading at RWE Supply & Trading, joined in October to lead the team. Litasco has also moved an employee from its oil division, hired externally in Singapore and is in the process of taking on another three staff members. Sumeet Jadhav joined the firm this week to trade LNG from Singapore, Bloomberg reported on Tuesday.

The trading house enters the LNG market at a moment of high volatility, with spot prices in Asia rallying to records earlier this month after a cold winter left buyers jostling for supplies. Still, it recently managed to conclude its first physical deal and has more opportunities available, according to Holme.

“The sort of volatility we have seen in this space in the last month will pressure-test the most sophisticated risk management, and this will be a big focus as the business grows for us,” he said.

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The firm will look at potential LNG asset acquisitions and is likely to develop a shipping business for the super-chilled fuel, according to Holme. Litasco already owns freight unit Eiger Shipping SA, which comprises vessels from small LPG carriers to supertankers, according to its website.

As it seeks to develop its clean-energy portfolio, Litasco is also looking to build out its power team, and recently expanded in emissions trading with a new hire, Holme said.

Litasco will continue to trade oil amid the energy transition, but as fossil-fuel funding and investments dry up, it sees output dropping, pushing up prices. The potential return of Iranian barrels and OPEC’s spare capacity will provide something of a stopgap, but ultimately the impact of natural declines will have to be addressed, according to Holme. Shale is less likely to provide the volumes it did in previous years as the industry looks to focus on better returns and capital management.

“There is no better catalyst for behavioral change than price,” Holme said. “Finding the right balance of carbon-emission tax cost and oil price will create the right incentive to get a global coordinated move toward a greener environment.”

©2021 Bloomberg L.P.

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