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High price tag on oil and gas trading inefficiencies

Published by
Hydrocarbon Engineering,


US refiners with outdated trading, transaction and risk management systems can overlook millions in potential annual revenue, according to a study commissioned by OpenLink, the global leader in trading and risk management solutions for the energy, commodities, corporate and financial services industries.

Hobson & Company, a research firm focused on return on investment (ROI) and total cost of ownership (TCO) studies, conducted a sample survey of eight of OpenLink’s existing energy clients, finding that a refinery operation with an implemented ETRM system could potentially save up to US$5.6 million each year in improved operational efficiencies, amounting to nearly US$30 million in savings and revenue growth over a five year period. The annual benefits add up as follows:

  • Up to US$1.5 million in efficiency savings when replacing legacy IT, disparate systems and spreadsheets for contract management, logistics, inventory management, ordering, regulatory tax reporting and settlement.
  • Up to an additional US$1.1 million through better compliance management and risk mitigation.
  • Up to US$3 million in business growth and new revenue streams.

The study, ‘Driving ROI: The Business Case for a Comprehensive ETRM Liquid & Bulk Commodities Solution’, captured the collective benefits participants attributed to their ETRM solutions. Clients saw a range of improvements, including:

  • Up to 70% reduction in time spent on reconciliations across departments and operations.
  • Up to 80% reduction in time spent managing rack pricing.
  • 50% reduction in time spent monitoring trades and managing risk.
  • Up to 50% reduction in time spent on settlements/invoicing.
  • A 30% drop in the amount of time spent on deal capture and processing.
  • One less tax infraction/penalty due to reduced risk of errors in tax calculations.
  • One less default per year as a result of credit extended to counterparties.
  • The ability to house data in a single source for analysis and reporting, as well as running risk scenarios.

"This study is a remarkable illustration of the rewards that come with investments in comprehensive ETRM solutions,” said James Potts, Director, Americas Energy & Commodities for OpenLink. “The research presents a fuller understanding of the ROI, and the business growth that can be sustained despite the demands of complex regulations and market volatility. A company that makes a five year investment in ETRM solutions can generate positive returns within 14 months and can capture an astounding 432% ROI.”


Adapted from press release by Rosalie Starling

Read the article online at: https://www.hydrocarbonengineering.com/refining/03082016/high-price-tag-on-oil-and-gas-trading-inefficiencies-3841/


 

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