DME in talks with firms from Russia, Australia and Asia

Dubai Mercantile Exchange will launch four DME Oman-related contracts in 2010. (EB FILE)

The Dubai Mercantile Exchange (DME) is talking to oil producers in Russia, Australia and Asia to accept the DME benchmark, the Exchange's CEO Thomas Leaver told Emirates Business.

These discussions are going ahead along with engaging the national oil companies (NOCs) in the GCC for benchmarking their products on the basis of the DME Oman crude oil futures contract, said Leaver.

"We are talking to producers outside the GCC. This is a major strategy," he said.

Leaver expressed optimism about the NOCs shifting to the DME benchmark.

"We are transparent and the DME Oman Futures Contract is the largest physically traded contract in the world. If the NOCs are waiting for the volumes to rise further, they very well understand that their association with the exchange could help us grow in terms of volume."

The share of two major Indian oil importers Reliance and Essar in the volumes traded at the exchange increased from zero to 11 per cent in 2009, said Leaver.

The total number of companies trading at the exchange increased from 30 to 50 the last year, he said.

"The increase in share of the Indian companies was particularly high in the last quarter of 2009. Demand from India constantly rose as new refineries came online there," said Leaver.

Asian firms account for almost all the trade at the exchange, said Leaver.

Data sent by DME showed that 33 percent of the exchange's physically traded contracts currently head to China, 17 per cent to Japan, 13 per cent to Thailand and 11 per cent to India.

The exchange looks forward to adding new products in its portfolio, said Leaver. Without outlining a time frame, Leaver said the contracts could offer trade in commodities such as? LNG, refined crude products like jet fuel or petrochemicals.

"The key thing is to keep the Oman contract up to a critical mass and have it accepted by all major oil players. Once that happens, we can look forward to launching other products," said Leaver. "Anything is possible. But we have to allocate our resources to places where it will work. LNG could be fantastic for the Gulf but it could take long for the contract to become viable. Then we could consider gasoline, jet fuel and gas oil."

The exchange recently announced that it will launch four DME Oman-related contracts in 2010.

DME does not intend to release further equity stake in the exchange, Leaver said adding that there has been a constant demand from the market for such stakes.

"There were a number of companies who wanted an equity stake in the exchange, but then we released it to only those companies that could help us in some way. We still have demand from the market but we do not intend to release any more equity stake," Leaver said.

The Exchange recently reported a 69 percent year-on-year increase in volumes in 2009.

 

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