Oil
Wall Street’s energy rivals – Big Oil, a French utility, the Koch brothers
NEW YORK – As a historic oil and gas boom transforms the U.S. energy sector, Wall Street is losing the battle to remain the partner of choice for energy producers and major consumers seeking to protect themselves against volatile prices.
In the thriving Texas Permian oil patch and beyond, banks are being edged out by a handful of the world’s biggest corporations including BP Plc, Cargill and Koch Industries.
With Wall Street hamstrung by growing regulatory restrictions, a recently finalized ban on proprietary trading and increased capital requirements, these corporate behemoths are leveraging their robust balance sheets and savvy global trading desks to capture as much as a quarter of the global multibillion-dollar market for hedging commodity prices.
New risks have arisen this year that could tilt the scales further, as the Federal Reserve considers limiting banks’ ability to trade in real physical markets, the kind of deals that are increasingly important for many of the smaller and mid-sized companies at the fore of the U.S. energy renaissance.
Just ask Alan Barksdale, president and chief executive of Red Mountain Resources, a conventional driller in the Permian Basin. Early this year his company was shopping for a counterparty to execute derivative trades that would protect some of its near 900 barrels of daily production from a possible price drop. Barksdale, a former investment banker, was looking to lock in “costless collars”, a type of specialized options trade.
After reviewing a number of offers, including some from Wall Street firms, he chose BP Energy Corp, a unit of the oil and gas major’s trading division. In part that was because BP was already working with the firm’s lenders. But Barksdale was also interested in a partner who could one day take physical delivery of his crude, potentially netting Red Mountain an extra dollar or more per barrel.
“As you grow as a company, you’d like some flexibility to get some physical delivery,” Barksdale said. “When you’re dealing with somebody who is long a commodity, you get better service.”
Ten years ago, only a handful of banks would have likely handled such a trade. Over the past decade, however, more than a dozen rushed into the commodity trading business, acting as lenders, counterparties and risk managers.
Now some of the biggest are beating a hasty retreat. Deutsche Bank became the largest victim last week, announcing plans to exit most trading under mounting regulatory pressure and diminished profitability.
Others are like JPMorgan Chase & Co and Morgan Stanley are poised to carve out their large physical trading operations – things like oil storage tanks, gasoline cargoes and power plants – but will still compete fiercely on derivatives deals, trades they can combine with financing or other activities. Goldman Sachs has been resolute that the bank will continue trade both cash and paper commodities.
While most banks have blamed regulations and lower market volatility for the sharp slump in commodity earnings, at least a portion of the decline appears to stem from the corporate giants quietly stealing banks’ core business: serving clients.
Commodity revenues at the world’s top 10 investment banks has fallen from a peak of more than $14 billion in 2008 to just $5.5 billion last year, according to consultants Coalition. One senior executive at a top 10 commodity bank said corporations had taken as much as a quarter of the global hedge book away from banks, including deals with airlines and utilities.
“When you look at the market overall, the commercial firms are making in-roads into the hedging business,” says Andy Awad of Greenwich Associates, which conducts an annual survey of hundreds of companies that hedge commodity prices. “I would imagine the pace of change is going to increase.”
While the big non-bank companies have not yet cracked the top tier, four of them made it into the top 20 U.S. energy hedgers this year, he said.
RETURN OF THE CORPORATES
As banks withdraw, the conventional wisdom has been that foreign, privately owned commodity merchants like Vitol and Trafigura – which typically trade only for themselves – would fill the market void, particularly in the costly, complex realm of physical trading.
While they may help bolster liquidity, most of those firms are loathe to take on the onerous regulatory burden now required to become a major derivatives trader.
Yet this year, units of BP, Royal Dutch Shell and Cargill all formally entered the big leagues of derivative dealing, registering as “swap dealers” alongside dozens of the world’s biggest banks. As the most heavily regulated type of derivatives trader under the Dodd-Frank law’s financial reforms, they face onerous record-keeping and trade reporting rules, but also have the latitude to hedge with far more clients, and to trade in excess of $8 billion in swaps a year.
To be sure, banks retain many advantages in the business. As the leading lenders to the world’s industries, they can offer bundled services and leverage existing lines of credit; the derivatives operations of the biggest players, even those selling some parts such as JPMorgan, remain competitive on pricing.
Yet they are suffering set-backs across multiple fronts.
Some of their most valuable traders are now being hired away by private merchants who can offer higher salaries and bigger bonuses. Tougher capital requirements under the Basel III international accord are raising banks’ funding costs and narrowing profit margins.
“We have a strong balance sheet and an ability to manage these price risks,” said Cody Moore, head of North American Gas and Power at EDF Trading, a unit of France’s government-backed utility, EDF.
The group was formed in 1998 and expanded its international reach ten years later with the purchase of Lehman Brothers’ physical trading unit Eagle Energy during the financial crisis. Its revenue has surged 60 percent since 2008; pre-tax profits at the firm, one of the few to separate its financial performance from that of the parent group, reached nearly 500 million euros in 2012.
With some 350 people in its Houston office alone, EDF Trading is now the leading energy management provider for power generators in the United States. Last year it hired a small team to expand into oil market logistics.
Corporations have another advantage – unlike banks, they are not banned from trading with their own money.
Under the Volcker Rule, which was formally approved by regulators this month, banks can no longer engage in proprietary derivatives trading – giving them less incentive to chase customers simply for the benefit of valuable insight into a particular trend they may be able to trade themselves.
“In the past, the information was worth something to a bank if you had a proprietary desk,” says Eric Melvin, a former trader at an investment bank who now runs boutique Houston-based risk-advisory firm Mobius Risk Group.
He estimates that investment banks now account for only about half of the U.S. oil and gas-hedging business, with corporate merchants accounting for some 40 percent, up from almost nothing just a few years ago.
PHYSICAL STRENGTH
For most of these companies, one of their biggest selling points is the ability to manage the risk of some of the most esoteric or niche energy markets in the world – typically because they already trade those commodities for themselves.
“We’re willing to stand in as a provider of risk-management where many or most others won’t,” says Steve Provenzano, BP Energy’s Chief Commercial Officer for client hedging in the Americas. “Obviously our involvement in the physical business gives us credibility.”
Long the largest U.S. natural gas trader and a major global oil operator, BP also has 20 people who help arrange customer derivatives trades in North American alone, and more than 3,000 wholesale customer worldwide, he said.
While Wall Street awaits the completion of a Federal Reserve review of commodities trading – the results of which are expected early next year – corporations that hedge energy prices are placing a greater importance on the ability of a counterparty to trade in physical markets, according to Greenwich Associates’ latest survey.
“I think what we’re seeing is that people recognize you can’t divorce the financial and physical, they’re linked,” says Awad.
Meanwhile competitors are stealing a march.
Minneapolis-based Cargill, better known for its prowess in agricultural markets, has recently moved its Houston trading group to a larger office with room for over 100 traders, online industry publication SparkSpread.com reported this month. Cargill employs more than 1,000 people in its Geneva-based Energy, Transportation and Metals business, and executives have said they are looking to expand as others divest.
A spokesman for Cargill declined to comment on the business.
Koch Supply & Trading, a unit of the $115 billion a year conglomerate owned by Charles and David Koch, is famed for having traded the first oil swap over 25 years ago, and says it now has nearly 500 traders, marketers and energy and metal markets professionals worldwide. It expanded its European natural gas team last year, and minces no words in promoting itself as a more constant alternative to Wall Street.
“While some financial institutions’ market coverage varies with global market cycles, KS&T companies take a longer term view,” it says in a recent online brochure. Koch offers market liquidity “at times when others pull back.”
– REUTERS
Modupe ASUDO
The Nigerian Content Development and Monitoring Board has reiterated its commitment to advancing gender inclusion and sustainable capacity development in Nigeria’s oil and gas industry, spotlighting a $20m Women in Oil and Gas Intervention Fund.
The Board made this known at the 3rd edition of the Diversity Sector Working Group’s Women in Oil and Gas Conference and Mentorship Programme, held on March 3, 2026, at Eko Hotels and Suites, Lagos.
The conference, organised in collaboration with the Nigerian Content Consultative Forum, was themed ‘Breaking Barriers, Shaping the Future’, with a strong focus on building bridges and empowering women for a sustainable energy future.
Delivering his goodwill message, the Executive Secretary of NCDMB, Engr Felix Omatsola Ogbe, described women’s empowerment as a strategic lever for strengthening Nigeria’s energy ecosystem, particularly at a time the global industry was undergoing profound structural change.
He explained that the sector’s navigation of energy transition, rapid technological innovation and rising sustainability expectations increasingly requires broader perspectives, adaptive leadership and inclusive participation to remain competitive and resilient.
Represented by the General Manager Midstream PCAD, Ms. Lekoma Phimia, the Executive Secretary framed inclusion not as social advocacy but as sound economics, stressing that diversity consistently delivers measurable performance outcomes across industries.
“Inclusive organisations are more innovative, more resilient and more profitable. When women thrive, industries thrive. When women lead, economies grow. When women are empowered, communities prosper,” he stated.
To illustrate this point, the Executive Secretary referenced the leadership impact of Ms. Oritsemeyiwa Eyesan, Executive Chairman of the Nigerian Upstream Petroleum Regulatory Commission, describing her tenure as clear evidence of women’s capacity to drive sector-wide transformation at the highest levels.
According to him, such leadership exemplifies how competence and inclusion are helping to steer the industry through a period of accelerated change.
While acknowledging the progress recorded, Ogbe observed that systemic barriers had continued to limit the full participation of women across segments of the oil and gas value chain, stressing that addressing the constraints requires deliberate, structured and sustained interventions.
At the centre of NCDMB’s empowerment showcase, the Executive Secretary highlighted the Women in Oil and Gas Intervention Fund, a landmark $20m initiative established in partnership with the Nigerian Export-Import Bank to provide affordable financing exclusively to women-owned businesses operating within Nigeria’s oil and gas sector.
He explained that the fund offers single-digit interest rate loans with repayment tenors of up to three years, targeted at eligible companies with approved industry contracts. According to him, the initiative is designed to accelerate local capacity and enable women entrepreneurs to transition from peripheral participation to ownership and leadership across the oil and gas value chain.
Ogbe further disclosed that a complementary intervention, implemented in partnership with the Bank of Industry, extends structured business training and additional access to capital to women-owned enterprises. He noted that many beneficiaries have expanded from small service providers into competitive vendors now supporting major oil and gas operators nationwide, particularly in logistics and marine services, safety equipment supply and environmental management — segments where female entrepreneurs have historically faced limited access to financing.
Beyond financing, the Executive Secretary highlighted NCDMB-supported skills development programmes executed in collaboration with institutions such as the Petroleum Training Institute and accredited industrial training centres in Rivers and Bayelsa states. He cited the training of women in welding and fabrication, noting that many graduates are employed in fabrication yards and contribute directly to major oil and gas projects.
“These women are earning dignified livelihoods, breaking stereotypes and inspiring a new generation,” Ogbe said, emphasising that collaboration remains critical to scaling impact, citing partnerships with financial institutions, development partners, training institutions and industry stakeholders.
He commended the NCCF Diversity Sector Working Group for sustaining advocacy and dialogue on inclusion. “We must move beyond inclusion towards leadership — more women in technical leadership roles, executive positions and industry boards,” he added.
In her remarks, the Chairman of NCCF Diversity Sector Working Group, Dr Alero Onosode, described the conference as a celebration of progress, leadership and possibility, noting that NCDMB’s sponsorship reflects its strong institutional commitment to inclusion and shared prosperity. She observed that convening the conference in March — International Women’s Day month — was symbolic, coming at a time of renewed activity and reform across Nigeria’s oil and gas industry.
“Alongside this momentum, we are seeing the rise of women into visible and influential leadership roles — regulators, CEOs, directors, engineers and policymakers shaping strategy and transforming spaces that were once dominated by a single voice,” Onosode said.
She explained that the conference theme challenged stakeholders to move from representation to impact, urging deliberate collaboration across sectors, generations and perspectives.
“Building bridges means women and men working together, turning diversity into strength and collaboration into results,” she stated, calling on industry leaders to prioritise mentorship, sponsorship and intentional partnerships.
The conference concluded with a renewed call for inclusive capacity development, with NCDMB reaffirming its commitment to empowering women, strengthening Nigerian content and ensuring that Nigeria’s energy future is sustainable, inclusive and economically transformative.
Modupe ASUDO
The Nigerian Content Development and Monitoring Board (NCDMB) has said that its 10-year strategic roadmap was designed to strengthen Nigeria’s industrial base by retaining 70 per cent of oil and gas industry spending within the country by 2027, while creating employment opportunities for about 300,000 Nigerians across the oil and gas value chain and its linkage sectors.
This position was made known during a high-level panel session at the maiden West Africa Industrialisation, Manufacturing and Trade Summit and Exhibition, held in Lagos under the theme “Accelerating West Africa’s Sustainable Industrial Revolution for Economic Prosperity”.
The session focused on maximising human capital as a catalyst for competitive and resilient industries in the region.
Speaking on behalf of the Executive Secretary of the NCDMB, Engr. Felix Omatsola Ogbe, the General Manager, Human Capacity Development, Mr. Esueme Kikile, congratulated the organisers for convening the summit, noting that “the theme strongly aligns with the Board’s long-standing mandate in the oil and gas sector.”
He explained that NCDMB’s core responsibility is to build the capacity of Nigerians and Nigerian companies to participate actively in the oil and gas industry, stressing that industrialisation, manufacturing and trade were critical drivers of sustainable economic growth.
To achieve this, Kikile said the Board launched a 10-year strategic roadmap in 2017 aimed at developing in-country fabrication and integration capacity, while strengthening local manufacturing capabilities.
According to him, the oil and gas industry alone is capital-intensive and limited in direct employment, but its linkage sectors provide vast opportunities to absorb Nigeria’s growing youth population.
“Our plan is to ensure that at least 70 per cent of Nigerian oil and gas spend is domiciled in-country by 2027. That is why fabrication, manufacturing and industrialisation are so critical. Through this approach, we project employment opportunities for about 300,000 Nigerians, not just in oil and gas, but across its supporting industries,” he said.
Moderating the panel, the Head of Operations at Jobberman Nigeria, Ms Samantha Ifezulike, set the tone by raising concerns about whether West Africa has sufficient human capital to sustain rapid industrial scale-up, both at entry and senior levels. She challenged the panelists to examine barriers to talent deployment and the role of collaboration between industry and government.
In response, Kikile described West Africa’s population of over 450 million people, nearly 60 per cent of whom are young, “as a significant demographic advantage that remains largely untapped due to structural constraints.”
He identified policy fragmentation across borders as a major barrier, and noted that limited mobility of skills within the sub-region restricted optimal use of available talent.
He also pointed to the disconnect between academia and industry, observing that many education systems still prepared graduates for civil service roles rather than practical, industry-driven careers.
He called for deeper collaboration between universities and industry to align curricula with real-world needs, including technology-driven and hands-on training.
On technical and vocational education, Kikile stressed the need to revive and modernise training institutions to meet the demands of the Fourth Industrial Revolution, recalling how vocational pipelines once fed directly into industrial and oil and gas hubs.
He further advocated policies that enabled innovation and entrepreneurship, allowing students to translate viable ideas into businesses, supported by streamlined regulatory frameworks.
Highlighting the NCDMB’s role in talent development, Kikile said human capacity development was central to the Board’s mandate, especially in correcting decades of overreliance on expatriate labour in the oil and gas industry. He noted that the steady growth of indigenous companies over the years reflected the impact of Nigeria’s local content policy.
He said the NCDMB was implementing an Oil and Gas Field Readiness Programme designed to train 10,000 young Nigerians in critical skill areas identified through industry studies, addressing significant skill gaps in the sector. The programme combines classroom learning with compulsory six-month on-the-job training to ensure participants are truly industry-ready.
“We rolled out this programme recently and are already working with operating companies. The goal is not just certification, but field-ready talent. Properly trained Nigerians should be able to compete locally and globally as industry leaders,” he said.
Kikile concluded by emphasising three priorities: strengthening regional capacity and absorptive ability, ensuring industry actively co-creates curricula with government, and enforcing compliance with well-designed policies and regulations.
Wrapping up the session, Ifezulike underscored the need for stronger alliances, effective policy development and practical implementation, calling for broader stakeholder participation to translate discussions into measurable outcomes.
The industry leadership panel reinforced the growing recognition that unlocking West Africa’s human capital is essential to achieving sustainable industrialisation, trade expansion and long-term socio-economic transformation across the region.
Modupe ASUDO
A world-class Gravimetric Flow Metering Calibration Laboratory, the first in Africa, was on Tuesday commissioned at the operational base of Engineering Automation Technology Limited (EATL) at Eket, Akwa Ibom State, with all oil and gas industry regulatory agencies and leading operators in attendance.
The facility, which is engineered to accommodate diverse flow regimes and fluid properties, guarantees accurate and reliable measurement of product transmission through industry pipelines. It incorporates what industry experts describe as “temperature and pressure conditioning, traceable reference standards, and automated data capture,” and would solve problems of flow meter factorisation and recertification.
In a keynote address at the commissioning ceremony, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Felix Omatsola Ogbe, described the facility as a strategic breakthrough in Nigeria’s oil and gas industry, noting that “For decades, critical calibration and metering services were largely executed outside our shores, resulting in capital flight, increased project timelines, and limited knowledge transfer.”
He said the Gravimetric Multifaceted Flow Metering Laboratory is firmly aligned with the objectives of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, 2010, on local asset ownership, capacity building, and value retention. Itsstrategic importance, he noted, extends to revenue assurance and regulatory compliance, cost optimisation for industry operators, technology transfer and skills development, and industrialisation of the Niger Delta.
According to Engr. Ogbe, accurate calibration ensures transparency in hydrocarbon accounting and thus strengthens confidence across operators and regulators. Operators, too, would benefit from in-country calibration and metering servicesin terms of reduced logistics costs and turnaround time, while Nigerian engineers, technicians, and metering specialists now have a world-class training ground.
The Executive Secretary said Engineering Automation Technology Limited is among carefully selected corporate entities under NCDMB’s Project 100 Companies Initiative – a strategic programme designed to nurture high-potential indigenous companies into globally competitive champions. The strategy of the Board, he explained, has evolved beyond monitoring to enabling, which involves provision of access to finance, capacity development, infrastructure, co-investments and research and innovation support.
Represented by the Acting Director, Monitoring and Evaluation, Mr. Silas Ajimijaye, the NCDMB boss acknowledged the leadership role of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in ensuring that regulatory frameworks continue to support technological advancement while maintaining global standards.
He charged EATL to maintain international quality standards, pursue accreditation and global certifications, invest continuously in research and human capital, and explore regional and continental markets. “Let this facility become a West African hub for flow calibration excellence,” he exhorted.
In her own address, the Commission Chief Executive (CCE) of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mrs. Oritsemeyiwa Eyesan, expressed profound joy at the completion and commissioning of the Calibration and Metering Laboratory, which she declared would be Nigeria’s “national standard.”
“Flow labs in the country’s oil industry will bring their Master Meters here for calibration,” she assured, noting that the NUPRC gave its “very best to support EATL” and would continue to do so.
Represented by the Commission’s Deputy Director, Development, Engr. Manuel Ibifuroko, the CCE said the NUPRC is a business enabler, adding, “We want to be very stringent, but we also have to enable business.” She pointed out that the Commission was determined “to co-create solutions and to ensure costs in the industry are reduced.”
In a welcome address, the Managing Director and Chief Executive Officer of Engineering Automation Technology Limited, Dr. Emmanuel Okon, thanked all the organisations – regulators, industry operators and others who facilitated the transition from “aspiration to operational capability.”
He said EATL was “a vision conceived in 2020 shortly after the inauguration of the second batch of NCDMB’s Project 100 by the then Executive Secretary, a support we are still enjoying from the current Executive Secretary of the NCDMB.”
He pointed out that “NUPRC, NCDMB and NUIMS [National Upstream Investment Management Services, an arm of the NNPCL] form the foundational pillars of this facility,” while inviting the regulatory agencies and all industry stakeholders to engage with the laboratory, “scrutinize its data, and adopt it as a shared benchmark.”
He also acknowledged the exceptional support and invaluable partnership of Renaissance Africa Energy Company Limited throughout the commissioning process, particularly “for providing the Meter Under Test, without which the milestone would not have been achieved.”
The Chief Upstream Investment Officer of the Nigerian National Petroleum Company Limited, represented by the Deputy Manager, Production Sharing Contracts (PSC), Engr. Paul Duke, commended Engineering Automation Technology Limited for its “vision, dedication and technical excellence demonstrated in conceptualizing and delivering a world-class system.”
He noted that with the facility now in place, Nigeria strengthens its capacity for accurate measurement, improved hydrocarbon accounting, and enhanced regulatory compliance, which he described as “critical pillars for transparency and value optimization across the upstream and midstream value chains.”
Engr. Duke expressed appreciation for the collaboration among stakeholders, notably, regulators, operators, service providers, and technical teams, whose collective efforts have brought the initiative to fruition. He said the facility “aligns fully with NNPC Ltd.’s mandate to drive accountability, efficiency, and sustainability in Nigeria’s hydrocarbon operations.”
In related comments, Project Director in the Group Chief Executive Officer’s Office, NNPCL, Mr. Adokiye Charles, said the gathering was not just to activate the facility. According to him, “We are gathered here today to commission accountability; we are gathered here today to commission integrity… and to commission trust.” He expressed great delight at the landmark development.
For his part, the immediate past Executive Commissioner, Development and Production, NUPRC, Engr. Amadasu Enorense, said the commissioning marked a defining milestone in Nigeria’s industrial journey. According to him, “To have the first Flow Metering Calibration Laboratory in Africa is indeed a major milestone.”
In a detailed explanation of the benefits the facility would bring to Nigeria, he pointed out that, “By establishing this in-country calibration laboratory, we are declaring that precision will no longer be outsourced; competence will no longer be imported, and value will no longer be exported unnecessarily.”
He revealed that hitherto, calibration services of such technical complexity required sending equipment – and capital – overseas, resulting in “foreign exchange outflows, project delays, and lost opportunities for our engineers and technicians to develop world-class expertise.” “Today,” he remarked, “We reverse that trend.”
He urged industry operators to support the facility, utilize it, and partner the company to strengthen it. To Nigeria’s young engineers, his message was, “This Laboratory represents opportunity; master the science, uphold integrity and innovate endlessly.” According to him, “The future of our industry will be defined not just by [oil and gas] reserves in the ground but also by knowledge.”
From a major partner in the project, Emerson Automation, were words of assurance of continued support and collaboration. According to the company’s Area Director, West Africa and Angola, Engr. Chukwuma Ossaiga, “If we create value we can impact the next generation.” He urged oil and gas industry players to patronise the facility.
From a representative of Renaissance Africa Energy Company Limited, Mr. Enobong Ekanem, was a firm assurance of full patronage of the facility. The NNPCL and other operators all affirmed their confidence in the facility and assured the Management of their preparedness to continue to do business with the company
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