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Trading Places, Herbie Skeete: Tedann Olsen, welcome to your first interview in Trading Places as European MD of Genscape. Could you tell us about the company’s product offering to the market and what is so special about them in a European market context?
Tedann Olsen: Thanks Herbie, I appreciate the opportunity to talk about Genscape and our products. Genscape captures or measures market fundamentals. We do this in power, natural gas, oil, shipping, NGLs & Petchems as well as agriculture. In our effort to solve market puzzles and increase transparency we’ve deployed a variety of patented monitors worldwide. In Europe we offer power production and transmission data for 12 countries on the continent. We also cover the Forties oil network flows, ARA oil storage levels, as well as oil refinery status monitoring. As oil is a global commodity, our North American supply and inventory data also appeals to European market participants. Genscape data is unique because it is objectively measured and empirical. So while there may be some similar data in some areas, nothing compares at a granular and real-time level. Our data is used by our clients to enable them to understand the real fundamentals that drive price, and with that understanding they are able to trade with greater confidence.
HS: How are the markets developing in terms of relevance to your product portfolio and how are you adapting to any external changes you are experiencing?
TO: In power, the ever-changing supply-stack and evolving regulatory rules inside individual countries and within the wider EU Community are changing liquidity patterns. Liquidity has been growing in the spot markets and the unique real-time aspect of Genscape’s supply-data provides our clients with the most up-to-the minute information about generation and power movement. As regulation pushes for additional transparency from market participants, Genscape has been working to pull public and our monitored data together to provide a more complete data set of supply and transmission. Supply and outage information and messages from various sources have been incorporated into our product and are constantly adding functionality that allows customers to filter and view this data on a country, fuel type or plant-by-plant basis. We continue to provide more transparency around supply through a combination of monitoring and/or modelling to estimate more renewable generation. For the past year, we’ve been working on a combination of monitoring and modelling that allows us to estimate on a TSO level and by technology/fuel type, the CHP generation in Germany. This month we will be offering a 14 day rolling forecast along with our hourly estimates. Transparency on actual production by the German CHP fleet has been monthly generation figures offered to the market on a 3 month delay. With the monitor/model approach, Genscape data is delivered hourly and backed up with even more granular real-time monitored generation, providing customers with more insight into how this portion of the supply-stack operates against the ever growing renewable fleet. At our core we are puzzle solvers for our customers, providing them with transparency that empowers them to make better buy/sell decisions.
Market changes and customer requests drive our expansion plans in terms of countries and monitoring. As markets couple and transmission plays a bigger role in cross-border allocation, Genscape’s monitoring will reflect those changes through additional transmission monitoring and country expansions.
In Oil and other commodities, Genscape’s research and product development continues to target the European supply-chain puzzles identified by clients. Since we launched our ARA storage product, our customers have been able to leverage the detailed tank-by-tank storage data to better inform their negotiations and to time their trading decisions in the Gasoil markets.
Since oil, coal, LNG and other commodities move extensively by ship, we entered the AIS space by acquiring VesselTracker last year. This is one of our fastest growing businesses as more and more traders realize the potential benefits of leveraging this sort of data to track supplies and see tactical opportunities.
In Natural Gas, Genscape has partnered with a maritime technology research firm called Commodity Vectors to develop an artificial intelligence service that serves the global Liquefied Natural Gas (LNG) cargos. With the recent changes in global gas supply, this product will help anyone who needs to optimize LNG trading and logistics decision making by providing real-time tracking and predictions of LNG cargo. This product will also leverage VesselTracker data.
HS: In terms of Genscape’s customer base, who specifically are you targeting with your product range and propositions?
TO: Genscape’s customer base is diverse across different types of commodity and energy market participants as well as many governmental and regulatory agencies and large industrial companies. Our products are available in different formats so that this wide variety of clients can choose what will work best for their operation or trading practices. Data is available through web portals that allow for easy interrogation of the data through aggregation and one click to an individual plant, pipeline or ship. The data can also be purchased separately and is available in various formats and at aggregated or granular levels and in different time series depending on a customer’s ability to consume. Analytic driven hedge funds or prop trading houses accustomed to dealing with large amounts of fundamental data can choose to get data through a real-time data feed that allows them ultimate control over internal consumption. Smaller local generation owners may choose to subscribe to their local market or perhaps a neighbouring market and use the web portal exclusively to understand real-time supply and power movement. Regulatory agents may choose a historic data set to help them understand a specific market event. Standard reports that provide data and insight timed to a traded product also illustrate the wide range of offerings Genscape clients can choose to use.
This approach is somewhat universal across commodities. As mentioned above, in 2013, Genscape acquired a Hamburg based company called VesselTracker. VesselTracker tracks over 100,000 vessels in near real-time every day delivering the best open-ocean and close-to-port data on the market today. Through a web portal and/or data service customers as diverse as; port authorities, tug boat operators and hedge funds can do everything from plan operations to take positions based on the amount of a commodity on the water.
HS: How does the European market situation compare to that of the US? In fact would you say the US is ahead of us in terms of maturity or scale?
TO: The European power market situation is much more complicated and fractured in comparison to the US markets. This makes sense given the number of countries and agencies involved in trying to set policy and determine best practices. The markets have evolved in different ways. In terms of scale, the US power markets have an easier time working together because of an over-arching governmental agency but like Europe, there are some smaller markets and larger markets that must work together as they connect. US markets, in much the same way as European markets, struggle with similar physical constraints like loop flows and transmission capacity and it is interesting to see the differences in how these are handled. I would say that the regulatory side of the European equation is far more complicated when compared to the U.S. but in terms of market participants, they are the same and share similar concerns.
On the oil side, the US markets are more developed largely because they were already accustomed to trading on fundamental events like the weekly EIA reports. By offering more accurate data sooner we have a clear proposition to customers. Our European coverage is growing even without that foundation because no one else offers anything remotely similar. It has taken some time but we’re beginning to see our data change market behavior and perhaps one day European oil markets will trade on our data the way the US market does.
HS: How are the new regulations in Europe affecting the way you are evolving the product offering to the market?
TO: We are committed to customer driven development and problem solving. In a high percentage of cases this is closely aligned with regulatory changes because our customers have to comply with those regulations.
HS: And, what future expansion plans we can expect from Genscape in 2014?
TO: In power, we are planning to launch a product covering the UK that will combine public and proprietary components and are engaged with clients about an extension into Slovenia, which is part of the market coupling initiative. As a follow-up to our CHP efforts, we will be working to provide granular solar estimates, first for Germany, then expanding to other countries.
Our Oil and shipping teams recently worked together to launch a product covering West African Crude flows which has been very well received. They have plans to cover a continental oil pipeline this year and add new storage facilities as well as adding a number of additional refineries to the coverage we now provide. They are also likely to produce more waterborne flow reports for specific sectors.
Our collaboration with Commodity Vectors has just borne fruit with the launch of a unique LNG flow tracking and forecasting tool.
Furthermore, our shipping team is rapidly expanding its software functionality, adding new data about the vessels themselves as well as increasing the granularity of its data by adding to its already vast network of receivers.
HS: If there were any compelling messages from you directed specifically at our readership, what would they be?
TO: The most direct message would be that if they are looking for unique trading advantages or ways to make better buy/sell decisions, then leveraging fundamental data like what we produce is a sound decision both strategically and tactically. Fundamental data can give you real insight into trends, and it’s also very powerful when it comes to short term tactical matters or negotiating with counterparties.
Secondly, whether you are a client of ours or not, if you have a transparency problem or some fundamental information you’d like to access, then talk to us about it. We love to solve those difficult problems that no one else can!
