Reuters Summit-Energy firms eye Asian expansion, but risks loom

(For other news from the Reuters Global Energy Summit, click
on http://www.reuters.com/summit/GlobalEnergy10?pid=500)

* Asia is focus of C&E growth as Europe reels

* Firms, banks seek new and diverse courses of expansions

* Risk aversion, volatile markets pose concerns

By Jennifer Tan

SINGAPORE, May 27 (BestGrowthStock) – Companies and banks are
upbeat about expanding in Asia’s recovering commodities and
energy sectors, but global oil oversupply, euro zone debt woes
and volatile markets pose risks to growth, industry executives
say.

Asia offers refuge to firms seeking to emerge from the
worst of the 2008 financial meltdown and the current turbulence
in Europe, but the region is not immuned to shaky demand growth
and the spectre of risk aversion, they told the Reuters Global
Energy Summit.

Expanding overseas, venturing into alternative energy and
new products are also crucial to boosting growth, executives
say.

Thailand’s PTT Exploration and Production (PTTE.BK: ) is
looking to buy one or two oil and gas assets worldwide this
year, after losing a bid with its partners for a stake in
Norwegian oil firm Statoil’s (STL.OL: ) offshore oilfield in
Brazil.

“We remain focused on high-quality assets, and no matter
whether we win or lose, our growth objective is more geared to
foreign than domestic markets,” Executive Vice-President
Asdakorn Limpiti said.
Likewise, Japan’s Showa Shell Sekiyu (5002.T: ) is eyeing
overseas solar cell markets and new energy businesses as it
diversifies in a bid to counter declining domestic oil demand.

“The next frontier for us is the creation of new core
businesses, like our solar enterprise, and to move Showa Shell
from a being a domestically centred business into a global
one,” President Jun Arai said.

Gas giant Gazprom (GAZP.MM: ) is pushing into Asia, even as
the Russian government urges firms to re-route exports from
low-growth Europe to other faster-expanding markets. The
company plans to set up a shipping unit in Singapore and is
looking to expand the trade of other energy products in the
region.

Opportunities in India also beckon. Hong Kong-based Noble
Group (NOBG.SI: ) will operate a new iron ore terminal in India
and has already leased storage space in Western India to boost
its presence in the fuel sector.

Persuaded by the strong demand Asia offers, French bank
Societe Generale and Australia and New Zealand Banking Group,
as well as broker Ginga Petroleum are focusing on new product
markets.

SocGen (SOGN.PA: ) opened an office in China this month,
aiming to expand its trade financing volume in Asian
commodities by 20-25 percent this financial year.

ANZ (ANZ.AX: ) (ANZ.NZ: ) launches physical trading of gold on
June 1, and may consider moving into commodities such as grain,
coal or oil in future.

To capture the growth and to create Asian commodity
benchmarks that serve the region’s specific trading and hedging
needs, the Singapore Mercantile Exchange will start trading in
August, launching one energy contract out of six initial
securities.

Ginga is poised to start a gasoline desk this year, and is
considering to revive its distillates business in Asia next
year, while brokerage BGC Radix Energy has diversified into
less traditional areas such as tanker broking.

RISK AVERSION, SATURATION, HIGH COSTS

Yet, even as Asia’s oil broking market recovers from the
crisis, growth could be hampered by a saturated sector, BGC
Radix Managing Director Richard Tan said, adding that further
consolidation of the oil swaps market was possible.

And the growth in commodities demand across Asia, led by
China, also poses a long-term force that will drive up prices
and impact the overall economy, said Peter Aitken, Vitol head
of coal risk.

The world’s third-largest independent oil trader Trafigura
cautioned that Europe’s sovereign debt crisis has sparked an
outflow of funds from most assets, including commodities and
energy, as risk aversion gripped investors.

Unstable markets have also accompanied shrinking risk
appetites, prompting Green Dragon Gas (GDG.L: ) to delay its
listing on the mainboards of London and Hong Kong.

“I don’t think this is particularly the right time for
companies to be proceeding forward with IPO plans or main
market moves considering the turbulence,” its chief Randeep
Grewal said.

While the recent fall in crude brought prices more in line
with demand-supply fundamentals, it would take longer than
expected for physical fuel demand to recover, said Trafigura’s
Chief Financial Officer Pierre Lorinet.

“People are realising you can’t have one of the worst
crises in the last hundred years, come out of it suddenly, and
everything is fine,” he said.

“It should not be a surprise that a pick-up in consumption
will take longer than what most people expect.”

Weak oil demand is aggravated by overcapacity in Europe and
heavy supplies from higher refining runs in the United States
ahead of the summer driving season.

Higher U.S. refining runs could also stop the drawdown in
oil products held in floating storage and weigh on diesel
margins, said Total’s (TOT.PA: ) head of strategy Jean-Jacques
Mosconi.

Neste Oil (NES1V.HE: ), the world’s top biodiesel producer,
also warned that European refining margins may come under
pressure again later this year due to overcapacity.

“It’s a tough market still in refining,” Chief Executive
Matti Lievonen said.

Growth Stocks

(For more Reuters Energy Summit stories, click
[ID:nSGE64N1I1] (Editing by Ramthan Hussain)

Reuters Summit-Energy firms eye Asian expansion, but risks loom