January 21, 2010 at 11:58 am #2792
<Looks like a “Me-Too” move following Chevron move for cut back (or talking point for Mulva’s speech at CERA)? CRandall comment>
UPDATE 2-ConocoPhillips reshapes trading, supply operations
Wed Jan 20, 2010 3:50pm EST
ConocoPhillips globalizes trading, supply management
* Part of an effort to cut costs, boost profitability
* Move reflects worldwide energy market shifts -analysts
By Bruce Nichols and Anna Driver
HOUSTON, Jan 20, 2010 (Reuters) – ConocoPhillips (COP.N), the third largest U.S. oil major, is reshaping trading and supply operations into a global organization it believes will be more efficient and profitable, the company announced on Wednesday.
The new global trading operation will be headquartered in London. The new global supply organization will be based in Houston. A few jobs will be relocated but many traders will stay where they are. No layoffs were announced.
“This change to the organization will better position these two groups to focus on the strategic initiatives of supply excellence and trading excellence,” the company said in a memo to employees.
One goal for global trading is stronger participation in physical markets. A goal for global supply is better strategic coordination of crude and clean products supply.
Recent reorganization announcements by ConocoPhillips and others reflect a shifting world oil market, particularly on the refined products side, said Antoine Halff, first vice president and deputy head of research for NewEdge Group.
Royal Dutch Shell (RDSa.L), Chevron Corp (CVX.N) and Total (TOTF.PA) in recent months have announced plans for organizational change.
“There are tectonic shifts in consumer behavior and energy demand in industrialized economies. At the same time, there’s rapid demand growth in emerging or newly industrialized economies,” Halff said.
“This has cast a spotlight on the need for international majors to reassess their refining arms, their trading arms, and to think more globally about the market and the industry,” Halff said.
Some traders speculated ConocoPhillips wants to reduce entanglement in coming tighter regulation of markets by the Commodities Futures Trading Commission, but others disagreed.
“I highly doubt that,” said Tim Evans, energy analyst for Citi Futures Perspective. “ConocoPhillips is a firm that uses the market to hedge and would be eligible for position limit exceptions, even under the new proposed framework.”
Other industry watchers said it could be as simple as ConocoPhillips said in its memo, an effort to improve efficiency and profitability.
ConocoPhillips, dogged by weak fuel demand, is in the midst of a push to cut costs and improve its finances. As part of its effort, the company said it plans to cut its 2010 budget 12 percent and plans to sell $10 billion in assets.
Some inside ConocoPhillips expected further developments.
“We are still here, for now,” a trader in Houston told Reuters. “They just moved senior managers around and reorganized the trading and supply books. No one is laid off.”
Effective Jan. 1, as announced in the memo, Chris Conway, current president of supply and trading, Americas, became president of global trading and relocate to London.
John Wright, current president of gas and power, became president of global supply and remain in Houston.
ConocoPhillips also is globalizing gas and power in Houston and LNG business management in Singapore, the memo said. (Additional reporting by Janet McGurty in Toronto and Joshua Schneyer in New York; Editing by David Gregorio)
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