October 13, 2016 / 7:11 AM / a year ago

Mercuria to grow natural gas team to play U.S. price volatility

LONDON (Reuters) - Swiss-based commodities trader Mercuria wants to expand its U.S. natural gas and LNG trading teams as it sees big opportunities in an increasingly volatile U.S. gas market following the go-ahead for exports and rising domestic demand, its CEO said.

Mercuria has acquired a large north American natural gas portfolio through its purchase of JP Morgan Chase & Co’s (JPM.N) physical trading arm in 2014, an advantage the trading house wants to build on.

“That’s the place where we want to increase volumes because we feel that volatility will come back to north American gas,” Mercuria Chief Executive and co-founder Marco Dunand told the Reuters Commodities Summit.

The U.S. government’s approval for gas exports via liquefied natural gas (LNG) tankers has opened up the United States to the global market and also exposed it to price swings in other regions.

“The more connection you will see, the more adjustment between markets will be needed and the more volatility you will see in the U.S. gas market,” Dunand said.

All major energy trading houses have earmarked the LNG market as one to expand in, expecting the world’s growing hunger for gas as a less carbon intensive fuel to dominate future energy demand.

The trading house, which has around 200 staff in Houston involved in trading gas, power and oil, will build an LNG team of at least 5 to 10 people, Dunand said.

“To be relevant in that sector we would need to have a minimum coverage in Asia and Europe. Then you need some presence on shipping and you also need a contractual middle office,” he told the summit.


    Dunand said Mercuria spent the past year integrating JPM’s business and working closely with ChemChina, which earlier this year bought a 12 percent stake in the trading house.

    As Mercuria’s global footprint grows, it is moving to decentralize decision-making, Dunand said.

    In the United States, it has hired Peter Sherk, the former Commodity Co-Head at Morgan Stanley (MS.N), to run its North American operations.

    Han Jin, Mercuria’s Asian head and one of its co-founders, is moving to Singapore to work closely with new shareholder ChemChina, said Dunand. He is also in the process of hiring a new head for the London office.

    Editing by Ruth Pitchford

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