FSU and Europe Commodity Traders - Risk Management, International Congress and Round Table 25 September 2009, Moscow, Russia

FSU and Europe Commodity Traders 2009 – Risk management,
The International Congress and Round Table
Moscow, 25th September 2009

This event, presenting the experience of various companies, will be of utmost practical value to those who only consider price risk management and to those who already have some expertise.
The round table will focus on hedging tools specifically for:

oil and gas sector

aviation and bunker companies

shipping companies

agricultural producers

metal industry and mining companies.

Look around you. See what is happening in this crazy world. There never been a better time to discuss how to survive in this turmoil. Last year of unexpected turbulent times just proved the point that nobody is immune to changes in market conditions. The boundaries have been tested. Even those who thought were invincible and cruised through the markets ups and downs now realize how much they put their businesses at jeopardy and the importance of protecting themselves from the never seen before market volatility. When the times are great it is a human nature to think it will last forever and only when the storm hits hard appreciate all the protection and insurances that you have and more importantly you don’t have.

This year we are focusing on true networking and sharing experience with each other. In order to make the most of your time, in addition to a set of general informative presentations, we will be running a series of round table-discussions on the various topics on trading, financial and risk management issues. Round table will be running by professional experts and experienced industry specialists.

Do not miss this opportunity and share your experience with your colleagues, experts and professionals!
At the end of the day, there will be a cocktail-reception taking place between 19:00-22:00- the best opportunity to establish new contacts and develop partnership relationship (separate participation fee applies).

Forum Agenda:

9:15–10:30 Session 1: What is price risk management? Do we need risk management in order to control this turbulent market?
Fasilitator: Konstantin Babourine – Managing Partner, Mindstone and Founder of TradeCruiser.com

The commodity markets situation and how it affects the need to manage price risk and risk management concepts for producers, consumers and traders

Status and development trends of the financial risk management in the CIS and globally

Practical case studies of different commodity companies

Panel Discussion Participants:
Alessandro Mauro – Risk Management Department Head, LITASCO
Hayal Ahmadzada – Senior Trader, Socar Trading SA
Arseniy Ulchinkov – Deputy Head of Corporate Finance Department, Russneft
Alexey Nemkov – Business Development Manager FSU, Shell Trading Russia B.V.
Marina Dunaeva – Associate, MS Commodities, Morgan Stanley
Georgy Gorshkov – Director, Runitek GmbH
Alexey Shvedov – Trader, Reval-Oil Ou

10:30 – 11:15 Coffee-break

11:15–13:00 Session 2: Practical aspects of risk-management organization
Fasilitator: Sergei Timokhovitch – Global Head of Commodities, VTB Capital

Do we need to optimise current corporate risk management strategies? Why and how?

Financial planning. At what price should we hedge? How can companies survive in high volatility with a fixed budget?

Identifying and assessing all potential risks of a trading company

Risk management process organisation for ‘dummies’. Where to start?

Corporate risk management – concept, implementation and control. Experience of other companies

Panel Discussion Participants:
Alexey Tsikulaev – Financial and Risk Management Department Head, Rosneft
Andrey Proskurnikov – Risk Manager, Telf B&T UK Ltd
Semen Morozov – Risk Manager, PNT-GSM
Anton Mitin – Business development Manager, Telf AG Moscow Representation
Roman Frolov - Manager, Smann SA
Hayal Ahmadzada – Senior Trader, Socar Trading SA
Alexander Prosetsky – Commercial Director, Dukkar S.A.

13:00 –14:15 Lunch

14:15–15:30 Session 3: Status and development trends of the financial risk management in the CIS and globally. Practical experiences of different commodity companies
Fasilitator: TBC

Exchange Traded Commodities. Commodity futures priced in rubles?

Price transparency in the domestic market

Latest developments in the use of derivatives by traders to manage their price risks. Government initiatives

Panel Discussion Participants:
Roman Gorunov* – President, RTS Exchange
Ilia Moroz – Client Relations Department Head, SPIMEX
Anna Mihailova – General Director, AeroportFuelService
Dmitry Gusev – Commercial Director, Novotek-Trading
Arseniy Ulchinkov – Deputy Head of Corporate Finance Department, Russneft
Alexander Shenderuk-Zhidkov – Leading Economist, Sodruzhestvo

15:30 – 16:00 Coffee-break

16:00–18:00 Session 4: Current commodity financing. Currency risk management and accounting reporting
Fasilitator: TBC

Latent inflation risks and currency hedging

Financing trading transactions in the times of crisis

Difficulties of financial reporting and accounting of derivatives in Russia. European experience

Panel Discussion Participants:
Natalia Kolesnik – Deputy Director, Treasury Department, Gazprom Neft
Alexander Shenderuk-Zhidkov – Leading Economist, Sodruzhestvo
Bruno Gremez – Global Head and Managing Director of ECT, Fortis Nederland
Daniel Seregin – Manager of ECT, Fortis Nederland

18:00–21:00 Cocktail-reception and Gala Dinner. The best time for Networking!

PARTICIPATION FEES:
Delegate’s pass – £495 (For Commodity Traders)
Delegate’s pass – £1450(For Banks, Stock Exchanges, Brokers and Consulting Companies)
Cocktail-reception – £120

Glossary

Risk management is a way to modify and control the risk profile of a firm’s cash flows.This allows Management to adjust their exposure to specific risks, depending on their appetite for those risks.

Oil trading – a trade of oil and oil products.

Hedge - the reduction of risk by covering anticipated commitments at a fixed price in the future through a futures or options contract. Buyers and sellers can hedge.

Derivatives – financial instruments that reflect value of an underlying commodity in the future.

Speculator- is frequent in & out of the Market looking for potential gain opportunities; Want price volatility to increase; Will enter into deals and set limits when to exit…

Hedger - is in & out of the Market only when there is a (strategic) business; Reduce/eliminate the risk faced from potential future price movements; Reduce/eliminate exposure to volatility of the business; Want certainty at the cost of sacrificing away potential upside;

Arbitrageur - takes offsetting positions in two or more instruments/markets to lock in profit; Exploit inefficiency in different markets/locations; Take advantage of mis-pricing of certain financial instruments; “Riskless” profit (from a price perspective)

Position: LONG – is to net own a commodity in a Market. A Long position is taken in the expectation that prices will rise. Think of something you own e.g. Your house. You are Long one house and would prefer its value to increase.

Position: SHORT – is to net owe a commodity in a Market. You have an obligation to supply a commodity not currently owned to someone else. A Short position is taken in the expectation that prices will fall.

Spot Price – is the spot price is the price for immediate payment and delivery

Forward Price – is the forward price is established by a contract in which you set the price now, but delivery and payment occur at a future date

Forward Curve – is a graph of forward prices over different forward time periods

Bid Price - is the price at which you can sell

Offer Price – is the price at which you can buy

Bid-Offer Spread – is the difference between the selling price and the purchase price

Liquidity – is the ease with which something can be bought or sold (converted to cash) in the marketplace; A large number of buyers and sellers and a high volume of trading activity are important components of liquidity; Depth, or the ability of the market to absorb either a large buy or a large sell order without a significant price change in a security, is also crucial to the liquidity of the market

Bullish Market Direction- is having the belief that prices will rise. A ‘Bull’ is someone who thinks market prices are going up.
A ‘Bull Market’ is when the price is rising.

Bearish Market Direction – is having the belief that prices will fall. A ‘Bear’ is someone who thinks market prices are going down.
A ‘Bear Market’ is when the price is falling.

CONTANGO – is the prompt price is less than the sustainable long term price of oil in the future

BACKWARDATION – is the prompt price is greater than the sustainable long term price of oil in the future

Spread – “…is trading the same commodity in two markets…”

Crack – “…is trading across the CDU, i.e. buying crude or a refined product and selling another refined product”

Flat Price Trading – “…is trading the outright commodity, as opposed to trading spreads or cracks…”

Arbitrage - “...is taking advantage of differing commodity prices for the same commodity in different markets...”