The global energy industry is grappling with divided market conditions as the world shifts towards a new, multipolar order. These were some of the key themes of APPEC 2023, the prestigious annual gathering in Singapore for the oil & gas sector.
“As a global commodities trader focused on energy, we are well aware of the new dynamics created by partitioned markets and the rise of alternative geopolitical coalitions,” said Yannick Luce, Chief Financial Officer of BGN, who spoke on a panel at the conference. More than 1,000 executives of oil majors, national oil companies, traders, banks and other institutions attended APPEC.
“Successful trading houses have demonstrated resilience and adaptability in today’s markets, in which traditional supply routes have been disrupted,” Yannick said. “They have had to diversify their sourcing, looking for opportunities amid the new trade flows, as well as tightening their grip on operational risk.”
BGN has been a big lifter of products from the Middle East Gulf, U.S. Gulf and Mediterranean regions and has continued to develop a key role in the trade of liquefied petroleum gas (LPG) in recent years. The company has benefited from strong business relationships with industry, banks and other funding partners.
The so-called “partitioning” of commodities markets referred during the APPEC discussion to the divisions created in the international market by Russia’s war in Ukraine and the resulting political fallout that has disrupted trade flows. Cargoes of crude oil and petroleum products have been heading east to places such as China and India, forcing many of Russia’s traditional customers to find other new suppliers to help compensate for the disruption.
Yannick commented that the Ukraine war led to substantial costs for the European oil majors that were heavily invested in Russia, resulting in a costly exit from the country as international sanctions began to bite. In addition, a rise in shipping costs has impacted the whole market, he noted.
Some countries are seeking to cut back the use of the U.S. dollar in global trade. However, the greenback will remain the world’s major reserve currency and the key medium of exchange for cross-border trades, even if an increasing number of transactions are settled in AED (the UAE’s Dirham) and RMB (the currency of China), Yannick said.
Active across 120 countries, with a presence in 23 locations – such as the strategic markets of Dubai, Geneva, Houston, Rotterdam and Singapore – BGN uses at any one time about 100 ships to transport cargoes of energy and is increasingly investing in its own gas-carrying vessels.