Sales

There are many ways sales of the Commodities are organized:

Long term supply contracts between energy producers and large purchases: these are often of a national strategic nature and are therefore quite often subject to government oversight or approval. Examples can be supply contracts between Gazprom and ENI, Italy or Gaz de France, France. Alchemie Energy is involved in assisting a number of governments and producers in securing strategic supplies and structuring the supply and investment packages.

Spot market trading involves the sale of the commodity in the situation where there is an extra quantity available on the market for sale due to the cancellations of the planned purchases or sudden demand for a commodity due to shortage from an established supply base. Through www.Alchemie-Energy.com a number of known spot market Buyers are directly emailed details of these Spot opportunities as well as details being made publicly available on the site.

It is estimated that U$8/barrel is attributable to the fact that Institutional & private investors buy allocation or physical commodity. Alchemie Energy is in contact with a network of investors that have sufficient capitalization and liquidity to take advantage of spot deals as well as advantageous supply terms on longer term contracts. Alchemie Energy is involved in syndication of investment enabling investors to combine resources to be able to support a trade where a number of individual power generators would like to acquire fuel oils in bulk but lack the financial resources individually to do so.

On-line market trading, accounts for approximately 1% of the physical supply as most of the trading is done on paper with individual consignments being traded many times over.

In the Soviet era the sales of petrochemicals were done through state owned organisations and ministries and outside Russia through “foreign trade houses” which were supported by the Russian Embassies to promote and sell petrochemicals for economic or political gain. After 1991 with the collapse of the Soviet Union and partial deregulation and privatization of the petrochemical industry in Russia sales are done either by the production companies themselves, or in many cases, selling is done through private or state trading companies established abroad, similar to old trading houses, except that they are owned, primarily, by the producers or affiliated parties. For example Gazprom alone publicly acknowledges it has over 50 such partially owned JVs companies and fully owned trade houses abroad.

These trading companies are set up by the producers (oil and gas and/or refineries) or parties affiliated with the supplier and their main business is in long term supply contracts (10 or 15 years) based on Commodity allocations provided by the producer. In many cases the main supply contact is still signed directly between the Seller and the Buyer and the trading company participates as an intermediary from the Sellers side.

 

Sales and Communication Channels

Sales process typically will include the following parties:

• Supplier or Owner of Commodity (holding Proof of Commodity or POP), in some cases the supplier will act as the Seller in the main supply contract;
• Seller or Company with the authority to sell the Commodity;
• Alchemie Energy;
• Alchemie Technology Associate;
• Intermediary parties, through which the Associate/AT can reach the Buyers,
• The Buyer.

 

Types of Buyer:

• Distributor, the company buying the Commodity (diesel or gas) and then distributing it to the smaller companies who are in turn selling it to end users;
• Traders, who have financial ability to pay for the Commodity to resell it later to the other types of Buyers listed here. Refineries selling diesel with an established supply base which cannot satisfy the demand for diesel can possibly be considered as traders for the Commodity;
• Big government agencies and corporate bodies, like aircraft companies, cities/ municipalities/ states, etc (for diesel and gas for consumption purposes or for oil for strategic energy reserve stores or bonds);
• Refineries or toll processors (for oil)

Alchemie Energy is in the process of developing its international network of creditable professionals that will ensure the integrity of the commercial transaction between our suppliers and the buyers.

Trade or Deal Time

Long term supply contracts involve extensive negotiation on detailed legal documentation and documentary credit procedures.

Speed is of the essence in taking advantage of short term supply and demand opportunities (SPOT trades).