Five minutes with: Jawad Nizar, director, Ennero Group
O&GME delves beneath the corporate strategy to learn what makes the industry’s leaders tick. This month, a director of the Ennero Group is in the hot seat.
What is Ennero’s core business activity?
Ennero is an oil trading firm, based out of Dubai and London. The group operates under three revenue streams: petroleum products trading, marine fuels and lubricants and downstream distribution, supplying end users such as mining, utilities and heavy industries. The principal revenue streams are supported by our advisory group which delivers price risk management services, while our renewable energy division seeks to provide alternative energy solutions to our term clients.
Does the strength of the oil price have a direct effect on your core business activity?
Demand has remained strong throughout the rise in oil prices and we have seen growth and opportunities as the markets adjust to higher prices. The shipping market has shown signs of improvement across several sectors as well and the increased fuel costs have mostly been offset by higher freight rates, allowing activity to pick up with it. If the brighter economic outlook stays on track, the market could tighten and this would support higher prices. I believe in better days ahead, currently the data supports the bulls not the bears.
Gulf producers are cutting oil production - is this impacting your business?
Although we are seeing less crude production in the region, this hasn’t translated to a lack of demand in the marine fuel sector for Ennero, since our portfolio is spread across the various sectors within shipping. In many cases we are finding we can add further value to our clients, guiding them through the changing dynamics. In the past, oil typically was produced in the Middle East and flowed to the markets in Europe and the US. Increasingly what we will see is oil flowing from west to east, to the expanding markets of China and India.
What future plans or projects do you have within the region’s energy sector?
The nature of the energy industry over the next 20 years will change dramatically. Renewables are predicted to be the fastest-growing energy source, with the sector boosted by falling costs. Ennero is keen to gain exposure to this sector, especially in regions like the Arabian Gulf. Our plans involve leveraging those developments particularly in the secondary markets.
What is your view of traders increasingly using commodity for loan deals?
In my opinion commodity for loans structured deals are definitely here to stay. It’s a pretty creative tool to bridge the gap that effectively exists between buyers and sellers that goes beyond just a simple price offering. Of course, it’s restricted to those with the most capable balance sheets, but I do feel it’s a tool that allows traders to enter, and subsequently exit, or even grow their market share in a number of regions that otherwise would not be accessible to them. In my view, the industry only stands to witness further financial creativity across sectors such as oil, agriculture, mining and metals to name a few.