Oil and gas trading
RAG’s core businesses are oil and gas exploration and production, and gas storage. Our crude is processed at an Austrian refinery. Some of our natural gas output is consumed in Austria and some is marketed abroad. RAG also has international gas trading activities, and supplies both domestic and foreign energy companies. We specialise in providing flexible and secure supplies of oil and gas produced from domestic reserves.
For many years our gas output was almost exclusively sold to RAG’s owners. This was in the days before gas market liberalisation, when contract design and fulfilment were still a simple matter. RAG did not have a separate Gas Marketing & Storage Department until 1994. The pace of change has been rapid since then. The EU’s energy liberalisation efforts, initiated in 1998, have opened up the gas markets in large parts of Western and Central Europe, and traders and suppliers can now buy and sell gas on increasingly liquid exchanges and trading platforms.
RAG first succeeded in selling gas in Germany in 2001, and an Italian supply contract followed during the same year. Although these deals were concluded before Austrian gas market liberalisation in 2002, new logistics approaches made fulfilment possible. As a result, RAG was able to market its gas production outside Austria, and the focus switched away from sales at entry points to the national low pressure grid and towards exports via high- pressure transmission systems. RAG has since made a name for itself as an agile, independent company. In 2002 our natural gas sales topped one billion cubic metres for the first time. We have progressively built up a trading department which operates on markets throughout Europe. RAG is a member of a number of European gas exchanges. EU-wide gas liberalisation and the creation of entry/exit systems have opened up new trading opportunities.
With pricing increasingly decoupled from oil and driven by spot quotations, the influence of European trading points and exchanges is steadily growing. The resultant price volatility is making supply portfolio construction and risk management a more challenging task.