Glencore supplies around 3% of the world's oil consumption, with its biggest customers the oil majors as well as national oil firms in India, Nigeria and Mexico, the company said in the prospectus for its initial public offering.
Glencore supplies around 3% of the world's oil consumption, with its
biggest customers the oil majors as well as national oil firms in India,
Nigeria and Mexico, the company said in the prospectus for its initial public
offering.
The company, which estimates it is among the world's largest non-integrated
physical suppliers of crude oil and oil products, supplied a physical volume of
around 2.5 million barrels of oil a day in 2010.
"This is a volume equivalent to some 3% of the world's oil
consumption," the Swiss commodities firm noted. "Glencore's
significant customers are the major integrated oil companies such as Royal
Dutch Shell PLC (RDSB), BP PLC (BP, BP.LN) and ExxonMobil Corp. (XOM), as well
as national oil companies such as Indian Oil Corp Ltd. (530965.BY), Nigerian
National Petroleum Company and Petroleos Mexicanos," it added.
In addition, crude oil and oil products are sold to a diverse customer base,
including utilities and oil refineries. Glencore said that the percentage of
term contracts is "relatively small," but added that this is largely
consistent with the structure of the oil market and that spot contracts are
primarily with "customers with whom relationships have been established
and developed over a long time and are therefore considered similar in nature
to term contracts due to their expected renewal."
Glencore's main competitors are Vitol Group, Trafigura Group, Mercuria Energy
and Gunvor, all of which are largely asset-light--that is, they own little, if
any, upstream production--business models, the Swiss firm said. Glencore also
faces marketing competition from banks such as Morgan Stanley and Goldman
Sachs, it noted, which have some infrastructure and no current oil production,
although the large majority of their business activities involve derivatives
and not the physical sourcing and distribution of oil.
Volumes captured by oil majors such as BP and Shell are also in direct
competition with Glencore's marketing volumes, it said, although their participation
in the market increases overall volume and liquidity.
According to Glencore, it also takes trading positions into account for the
purposes of hedging "as well as to take or increase exposures within group
limits and policies, where a physically backed position exists, it said."
"The availability of liquid electronic trading markets, covering the
majority of the products marketed by the crude oil and oil products operations,
enables marketers to hedge their physical oil activities as well as provide
profit enhancing opportunities in relation to physical marketing
strategies," Glencore noted.
The company is meanwhile also active in supplying natural gas to industrial
consumers, with the gas delivered via pipeline in the
U.S.
, the
U.K.
and
other parts of
Europe
.
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