Mercuria CEO mulls energy-asset deals with private-equity firms

[GENEVA] Mercuria Energy Group is looking to tie up with private-equity firms to buy oil and gas production amid weak crude prices, said Chief Executive Officer Marco Dunand.

Mercuria could spend as much as US$1 billion on majority or minority stakes and will study projects in places including the US, Argentina and Nigeria, he said in an interview.

"Now that we are in the lower part of the cycle, it will be interesting," MR Dunand, also the company's co-founder, said at the FT Commodities Global Summit in Lausanne, Switzerland.

Acquiring assets would guarantee long-term supplies for the fourth-largest independent oil trader, seeking to benefit from lower prices squeezing producers. Still, it has struggled to find US sellers as shale oil output has remained resilient.

"The people who can produce at this level don't want to sell," said Dunand, who founded Mercuria a decade ago with former Goldman Sachs Group executive Daniel Jaeggi.

Mercuria, Cyprus-based with major trading operations in Geneva, could operate an asset or be a minority partner, he said. Argentine shale gas is "interesting" while the change of government in Nigeria may offer opportunities for the company, which also trades metals, coal, iron ore, power and gas, the CEO said.

Mercuria has resumed plans to sell as much as a 20 per cent stake, Dunand said. It froze negotiations with possible partners including a China sovereign wealth fund after being shortlisted to buy JPMorgan Chase & Co.'s physical commodities unit.

The company won that auction, paying US$800 million for the bulk of the physical trading assets. The integration of the unit, significantly increasing Mercuria's gas and power assets in North America, is 80 per cent complete, MR Dunand said.

North America now makes up about a third of its revenue.

As part of the JPMorgan deal, Mercuria acquired the Henry Bath warehousing business. Dunand said Mercuria is considering expanding Henry Bath's operations in China.

BLOOMBERG