* Conoco eyes entry into new trading markets
* Reorganization of supply arm designed to support growth
* Move mirrors trading of big rivals like BP, Shell
(Updates with detail on ConocoPhillips past trading activity)
By Robert Campbell
HOUSTON, Jan 28 U.S. oil major ConocoPhillips
Co (COP.N) wants to grab a bigger chunk of global oil trading,
including markets where it has not normally been active, three
people familiar with the firm's plans said this week.
The move marks a departure from ConocoPhillips conservative
approach to trading. The company, in its 2008 annual report
filed with U.S. securities regulators, described its trading
business as "limited" and said it was "immaterial" to the
company's earnings or cash flow according to regulatory
By contrast, BP Plc (BP.L), long one of the most aggressive
and ambitious market players, allows its traders to make bets
that could under the worst circumstances cause losses of $100
million in a single day, according to its most recent annual
ConocoPhillips declined to comment on trading activities.
The planned expansion of ConocoPhillip's global trading
business was a major part of the motivation behind the recently
disclosed reshuffling of its trading arm, which saw the bulk of
the company's risk-taking trading centralized in London.
"We're looking at every tender now and we want to play a
role in those where we weren't present before," said a
The overhaul will take the Houston-based company into
markets where it does not have significant oil production or
processing assets, including both crude oil and refined
Although Conoco owns three refineries in Europe and shares
in a fourth plant in Germany and a refinery in Malaysia, its
downstream activity has been largely focused on the United
States where it is one of the biggest oil refiners and
This vision of broadened trading activities would put
Conoco into the same league as the other major oil companies,
which already operate sophisticated worldwide trading arms that
aim to wring profit out of the daily flows of oil between
different parts of the world.
Supermajors BP and Royal Dutch Shell Plc (RDSa.L) have long
fattened profits by taking advantage of dislocations in
regional oil markets to move cheaper oil to places where prices
The current contango structure of the oil futures market,
where prices for oil to be delivered later in the year are
higher than those earlier in the year, has also helped bolster
many companies' bottom lines, including Conoco, by making it
possible to earn a profit by buying crude oil for storage while
selling higher-priced futures to lock in gains.
The brutal environment for oil refiners, which led to
Conoco's downstream unit bleeding $215 million in the last
quarter of 2009, is adding a sense of urgency to the drive to
restructure trading operations at many oil companies in a bid
to find profits and reduce costs.
Other market participants are already noticing Conoco
taking a more aggressive role in the Americas where it has the
bulk of its refining and marketing assets.
"They're making some bigger moves in the U.S. and other
markets. They're more prominent than before," said a U.S. crude
U.S. market sources say Conoco has been among the leaders
of an attempt to kick start over-the-counter trading against
the Argus Sour Crude Index, the new benchmark selected by Saudi
Arabia to price crude oil shipments to American customers.
(Additional reporting by Jonathan Leff in New York; Editing by