Azeri Socar Eyes Houston as Trading Firm Expands Globally
Azeri state oil company Socar's trading division is looking to expand in North America, having opened an office in Calgary in recent months and eyeing a second one in Houston, its chief executive told Reuters.
The company, which opened an office of some 15 staff in Calgary, is moving away from being just a state-owned marketing arm and is now trading local Canadian crude grades, natural gas and financial derivatives. It also holds some storage at Cushing, Oklahoma.
The move into Calgary, which includes hiring former PetroChina (PCCYF) and BP Plc executive Gary Pon as its head of trading, gives the company a chance to grow market share in a bigger part of the opaque crude market while others scale back.
"It's difficult to expand when everyone is growing. In a situation when there are more opportunities left (as others have scaled back) and with current market volatility ... with higher risk, the trading companies that can manage risk are stepping in," said Arzu Azimov, chief executive of Socar Trading.
"It was not the original intention, but people say we're moving towards becoming a merchant trading house."
Geneva-based Socar Trading was set up in 2007 as the marketing arm of Azerbaijan's national oil company, but has since moved to trading third-party crude and products.
Last year, it hired former Phibro staff in London after Occidental Petroleum (OXY) wound down operations in 2014.
A 60-percent slump in global crude prices forced producers to slash thousands of jobs and millions in capital expenditures. In early 2015, Nexen Energy closed down its crude oil trading division following a round of job cuts.
Socar's Calgary office, which includes four to five traders, adds to the company's global presence, as it already has locations in Singapore, London, Geneva and Dubai.
"With our Houston office, the volumes will grow," he added, citing that he was open to opening an office in other cities.
Last month, Socar's Azerbaijani parent announced that it was closing several foreign offices - including those located in Belgium and Germany - to curb spending amid the oil slump. Azimov said the closures were part of a cost-saving program, but not related to its trading division. He said that instead, market volatility has helped the trading arm.
Azimov said he expects the market to reach around $60 a barrel by year end, though he does not exclude a drop to $40 in the interim.
(Reporting By Catherine Ngai)
