Hi guys,Sorry if my questions sound a bit stupid.1) I would like to know what does the job of energy structuring consist of in practical terms?apart from pricing vanilla options of course :-)2) What are the skills required for such positiongrazie

Well.... it requires a lot of brains for one.Energy options are by far the most difficult to price and trade, they have none of the characteristics of other markets.If anyone tells you that they understand how to completely price swing options, hourly options or other gas and electricity derivatives, they are full of BS. There are many complex features to these products and the participants that I will not go into here.I know only a little bit, and none of it is theoretical!

Thanks segga for your reply, which I found, some how tough; you must come from an engineering background - like myself . If I wasn't already in the derivatives business (non-energy market), I would imagined that an energy structurer was superman.Now let me put it in a simpler way:What sort of work (theoretical & practical) does an oil/gas structurer do, apart from pricing swing contracts?grazie

grazie,only in oil and gas?In my experience, your job would very much depend on where you work - structuring at Goldman (strategist in their language) and structuring at Shell are going to be two slightly different beasts. But there is a core - any contract with any 'optionality' could be devised by, checked by, sold to customers in tandem with the sales/origination force by you. You also might specialise in structuring with other angles - tax, legal, political, but those are slightly rarer beasts.The Shell sort (asset rich) are about devising ways of protecting and enhancing the value of the optionality inherent in the assets. Pipelines, for example, are spread options with respect to locations - what sort of products do you sell or buy to extract the most from the pipeline.The Goldman sort think about parcelling and reparcelling risks that their clients want. So you come up with the product that is du jour. First you are going to have long and serious chats with traders and risk managers where they will ask you all sorts of impertinent questions like " How are you going to hedge that?" and "Do you know how illiquid that instrument is in that market?" and "Can I triple check the methodology and the code you wrote in VBA/C++, etc to implement the pricing enging you are suggesting"There are other exotic types, and if you are really interested, send me a private message - I'll happily share. Otherwise, that covers the forest, with a few trees for colour.

grazie,I asked my colleague who is now working as a quant in energy derivative markets.Our desk(of a Tokyo-based quants' house) is mainly on the financial side, if I use gammashark's word, the Goldman sort of work.He(my colleague) said he totally agrees what gammashard said.So, lesten to, what he says, as one of the cases in Asia:<Asset rich side>On the Shell sort (asset rich) side(also called 'refineries' in Tokyo),main work would be around the modelling of supply and demand to help the supply plannning section. Not only 'refineries', power and gas companies are now awakening and under preparatory mode, by market liberalization. Historically they have hired many PhDs under the name of accomplishment of stable power supply, and now are shifting PhDs to the quantitative(market-oriented) field.Model development to hedge market risks are also just beginning, because the gov't protect them(by law) to exclude foreign competitors.We don't know the cases in European countries in detail,but my colleague feels Japanese markets are still slow to activate and need more time to have a power enough to compete to foreign giants.Many Japanese 'refineries' still buy energy resources usually as a long-period & fixed-price contracts from the overseas(SIMEX, Arab or Southeast-asian countries). No derivative contracts are active. We feel there will be a long way to go, to be able to handle complex derivative contracts.Skills for energy quants are possibly the same as other fields, i.e.,A) Basic and practical knowledge of energy. inport&export procedure, shipping planning, composition of ingredients in one oil(or gas) product, such and such.B) Skills in operations&research('OR') field, and mathematical finance, as well as financial engineering.C) Skills in programming. Hope this helps....It really helps?