ESP Consulting provided services to a global energy company.

Further information on our projects is available below.

LNG pre-deal risk analysis

One of ESP Consulting's partners, Andrew Chattrabhuti helped the company quantify the risk that would be borne under the terms of a major potential LNG offtake contract (approximately 10 bcma).

As part of the assignment, Andrew worked with the company’s LNG analyst to identify key potential market, credit and operational risks that the trading organisation faced and to develop assumptions about the probability and severity of these incidents. Andrew then used Monte-Carlo techniques to simulate the risk distribution resulting from this stand-alone deal over the twenty five year deal life and to estimate the company’s expected losses, the amount of economic capital required to be reserved against unexpected losses and a cost of risk to be built into the purchase price formula.

Asian Middle Office Set-up

One of our Directors, Andrew Chattrabhuti, assisted the company set up the Middle Office of its Asian subsidiary. Andrew helped implement the capability to report the daily P&L and daily VaR on its Asian oil and FX books, ran the Middle office for a two month period and helped induct and train the newly recruited Singapore Middle Office manager.

Physical oil reporting tool

ESP Consulting developed a tactical spreadsheet / VBA solution to help the company report P&L and price exposure on its physical oil books. The reporting tool integrated physical trades captured in a bespoke physical oil system with financial (paper) hedges captured in Endur to provide integrated P&L and position reports.

Other Assignments

ESP Consulting supported the Risk Management and Strategy Departments of the trading arm of the company on a wide range of other activities, including:

  • Credit risk reporting: Reviewing the process, scope and methodology for credit risk quantification;
  • Risk capital allocation: Assisting in the design and implementation of methodology and process for allocation of risk capital to books, and for forecasting future risk capital; requirements;
  • Ad hoc risk and industry subject matter expertise: Providing ad hoc risk subject matter expertise and power and gas industry subject matter expertise to the Global Director of Risk, as and when required; and
  • Strategy development: Providing secondees to support of the Strategy Department in the conduct of their annual strategic review process in each year over a four year period.
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