tgo slides 2 shellconference.tgo.or.th/.../seminar/.../trading_shell.pdf · trading and marketing...

Shell TradingShell TradingShell TradingShell Trading

BangkokBangkokBangkokBangkok31313131stststst Jan Jan Jan Jan 2011201120112011

Ming-Yee Lim

Environmental Products Origination Manager

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AgendaAgendaAgendaAgenda

1. Introduction to the Environmental Products Team at Shell Trading

2. Lessons learnt in the past from a Compliance Buyer’s perspective and what we can do to protect our risks

a) Regulatory uncertainties on project types, volumes and pricing

b) Factors that Compliance Buyers will consider when buying projects

Emissions Markets – Global Developments

Western Climate Initiative

EU Emissions Trading Scheme

Clean Development Mechanism

Japanese Emissions Trading Scheme

Joint Implementation

Initiative

Regional Greenhouse Gas Initiative (“RGGI”)

Australian CPRS

New Zealand Emissions Trading Scheme

Scheme

LondonLondonLondonLondon

Trading

CDM Origination

Marketing

Deal Structuring

BeijingBeijingBeijingBeijing

CDM Origination

CDM Project Management

JapanJapanJapanJapan

Business Development

Shell Global COShell Global COShell Global COShell Global CO2 2 2 2 Trading TeamTrading TeamTrading TeamTrading Team

HoustonHoustonHoustonHouston

Trading

Business Development

SingaporeSingaporeSingaporeSingapore

Trading and MarketingCDM Origination

DubaiDubaiDubaiDubaiCDM Origination

Group position managementGroup position managementGroup position managementGroup position management

� Manage EUR400m Group position in EU

� EUA-CER spread optimization

JV/Customer businessJV/Customer businessJV/Customer businessJV/Customer business

� Trading with over 150 counterparties

� 250m EUA customer portfolio

Global Emissions MarketGlobal Emissions MarketGlobal Emissions MarketGlobal Emissions Market ExpertiseExpertiseExpertiseExpertise

CDM originationCDM originationCDM originationCDM origination

� First counterparty to receive CER delivery

� Portfolio of over 45 projects

Proprietary tradingProprietary tradingProprietary tradingProprietary trading

� First ever EUA, exchange based RGGI

� Over 500k EUA/CER average daily trading

Lessons learnt in the past from a Compliance Buyer’s perspective Lessons learnt in the past from a Compliance Buyer’s perspective Lessons learnt in the past from a Compliance Buyer’s perspective Lessons learnt in the past from a Compliance Buyer’s perspective

● Examples of issues faced by a Compliance Buyer are:

a) CERs eligibility

b) Price risk

c) Delivery risk

Secondary CER Price volatilities result in price riskSecondary CER Price volatilities result in price riskSecondary CER Price volatilities result in price riskSecondary CER Price volatilities result in price risk

15.00

17.00

19.00

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23.00

25.00

Secondary CER Price

Secondary CER Price

Secondary CER Price

Secondary CER Price

1111

2222

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6666 7777 88881) CERs rise in line with bull-trend across

6) Small decline broadly explained by relative weakness in gas prices.

8) The CDM EB's decision to request investigation of HFC credits resulted in the expected massive supply cuts to be priced in here.

9) Droppedin power prices and EUA UK auctions started the downturn initially, followed by release of news from the Eurpoean Commission first announcing ban of HFC and N2O credits from

5) The utilities return to the buy side as forward-hedging of power sales resumes.

Series1, 10.99

5.00

7.00

9.00

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Secondary CER Price

Secondary CER Price

Secondary CER Price

Secondary CER Price

3) Banking crisis sees prices crash across all markets. CERs followed equity indices, which are viewed as a proxy to economic strength and therefore expected emissions.

4444

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with bull-trend across the energy complex, which saw oil prices peak at $147.

2) CERs continue to move in line with energy complex as they retrace some of the gains.

7) Copenhagen provides some volatility, with initial optimism pushing prices upwards followed by a reduction as that faded.

credits from 1 Jan 2013

Delays to registration result in delivery risksDelays to registration result in delivery risksDelays to registration result in delivery risksDelays to registration result in delivery risks

Factors that a Compliance Buyer will take note ofFactors that a Compliance Buyer will take note ofFactors that a Compliance Buyer will take note ofFactors that a Compliance Buyer will take note of

1. CERs eligibility: China, India, Thailand and others?

2. Price structures: fixed price, floating price or both

3. Factors affecting price levels

Ms MingMs MingMs MingMs Ming----Yee LimYee LimYee LimYee Lim

Environmental Products Origination ManagerEnvironmental Products Origination ManagerEnvironmental Products Origination ManagerEnvironmental Products Origination Manager

Shell International Eastern Trading Company Shell International Eastern Trading Company Shell International Eastern Trading Company Shell International Eastern Trading Company

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Email: Email: Email: Email: mingmingmingming----yee.lim@shell.comyee.lim@shell.comyee.lim@shell.comyee.lim@shell.comEmail: Email: Email: Email: mingmingmingming----yee.lim@shell.comyee.lim@shell.comyee.lim@shell.comyee.lim@shell.com

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