Thana Balan P Jaganathan, Executive Chairman, Global Oil 57, Singapore
Thana Balan P Jaganathan describes his role in the emerging success of Global Oil 57. As the name suggests, he has international ambitions for this company and describes his companys unique take on interacting between interested parties across the world for the purpose of trading hydrocarbon fuels. As chairman of the company, the interview also contains comment on the businesses’ diversification into ownership of producing assets and his expectations of a potential future flotation for the business.
What was your vision and the opportunity you saw which prompted you to found Global Oil 57?
I founded Global Oil 57 in Singapore before expanding into other countries such as Korea, Indonesia, and the U.S.A. The business focused on oil and gas trading. This built on connections I had developed in a previous business venture, as a producer. The Middle East has been a particular focus for Global Oil 57 since then- Qatar featuring significantly in our portfolio. Ms. Helia Parker, is Iranian with excellent links to NIOC and all the other major oil suppliers in the region. She is the CFO of the entire group.
Strong partners, such as the Korean Development Bank greatly augment Global Oil 57’s ability to trade effectively. In the USA, our partners have interests in the gas pipeline supply business- I mention this to reflect the diversity of our business interests across the oil and gas commodity sector. In any trading business, finance is key. This is because adequate financial resources are essential to close any deal – one has to be able to beat the market price and gain stock in sufficient quantity and quality for resale.
Global Oil 57’s competitive advantage stems from our simple, yet accessible payment systems. For example, everyone seeks to engage in business with China- as they are a major consumer of commodities. Orders from China can be enormous, but one must be able to supply the whole order- and fit with the Chinese payment system. They are the best paymasters in the world, but require a cargo prior to issuing payment. Conventionally in the international market, shipping rests on a principle of ‘you give me the money; I give you the honey’. The converse is true in China.
One must therefore, be able to ship sufficient product to China and stump up the cost of doing so before one can engage in this market.
Global Oil 57 simplified this process and represents a ‘bridge’ between the seller and buyer- one of the means by which we can guarantee successful procurement and delivery of this cargo.
What does Singapore mean for Global Oil 57; why did your company locate itself here?
Singapore is a great location from where one can access the gatekeepers between East and West. These gatekeepers are essential for one to be able to penetrate into any market. One has to be able to recognise these key figures, and connecting with them is vital to achieve success in international trading and access to the resources one needs.
A secondary advantage of connecting with a gatekeeper is that they can deal with local laws and regulations- this simplifies the process of accessing commodities in any given market. Global Oil 57 therefore, connects gatekeepers in, for example, China and Saudi Arabia. Business must be undertaken in a manner suitable to the client- which is why our business seeks to work alongside our partners in a manner suitable to them whilst staying independent of local affairs.
This enterprise started as a very small company, but can now sign multi-billion dollar contracts because the company has built rapport with its partners. Performance is performance, regardless of whether it is on a small scale, or a large one. Our partners can see we can consistently deliver, on a scalable level and thus they trust us.
When one has the confidence of the buyer, one can secure the confidence of the seller.
The confidence that partners have in your business saw Global Oil 57 receive a LNG and refinery crude supply contract worth 25 billion Singaporean dollars. What does this mean for your company?
The partner in this deal is putting their entire fuel order- 70 million barrels- through Global Oil 57’s processes. This is the entire capex of OCE.
This is a secure order, and meant I had to procure this whole order at once. OCE is a key example of one of our key business relationships- in China it remains our primary connection.
Winning the competitive race to acquire and supply commodities is all about capex. After that, our businesses ability to securely deliver product means that our businesses working alongside us are likely to be fairly flexible in their delivery terms – safe in the knowledge that Global Oil 57 can and will deliver.
One challenge to shipping in particular is the shortage of LNG vessels and in order to guarantee a secure means of transit, the business is speaking to NYKY in the hope of purchasing vessels at an appropriate price. This will be a long term contract, but eliminates the expense of leasing vessels. I am very flexible however, and would be prepared to partner with vessel owners as another route to securing this reliable means of transport.
The company is also looking to other deal makers to ensure sufficient access to supply when required- in effect, to guarantee supplies are available to companies buying from us promptly and on time.
All these endeavours are to ensure the business is able to take on any contract that should come forward- over extension of ones abilities is a danger which the business must avoid.
In Indonesia, Global Oil 57 has also acquired a number of oil fields in Palang Bang.This was undertaken in part through means of a share swap with excellent contacts in the country. The investment to purchase the oil field was reduced in this manner. Our business ‘purchases’ the oil at a good rate, meaning the price at which we can sell oil is highly competitive.
Our technical teams in Indonesia have been very successful in speeding up production by improving the aged existing infrastructure on site. The business is looking to further acquisition of producing assets.
What makes Global Oil 57 such an attractive partner?
I am a member of ESI traders, the largest trading platform. This gives clients confidence that I can tackle any trading challenge. That, and Global Oil 57’s ability to offer flexible and appropriate financial instruments is important.
When I go to a meeting, I do not focus on my own interest, but clearly understanding and addressing what the client needs. Listening to the client is important; to take two hours to clearly understand what they want.
There are many banking instruments which can be harnessed to forward our trading needs. Buying oil does not just pertain to upstream or downstream industries- the financial sector has a great deal to offer as well. To bolster this aspect of our business, Global Oil 57 sells futures for example.
Drilling on our resources might happen in two years, but by quantifying our resources, confirming we have them insured (thus de-risking our asset), this means we have a secure investment that will deliver value now, despite only being realised in the future.
Finance and production is intertwined.
Are you seeing many opportunities arising from the SGX, – is your business finding more competitors or allies as finance stimulates more companies in this area?
I feel I do not have any competitors. A good analogy would be that of a fishing boat, in an immense sea. There are sufficient resources to go around, if one has the ability to pull the fish out of the water. Bigger fish are worth more, however, so rather than seeing other oil and gas companies as rivals, I see them as entities which can help me better haul in my nets- and catch bigger fish.
Viewing other players in the market as competitors is myopic and unconstructive. Making deals, working cooperatively; this is constructive and as long as another player has this same attitude, I can do business with them.
How would you like Global Oil 57 to be perceived by the international business community?
This depends on the market. Everyone has their own missions and visions. The industry however, commonly believes oil and gas to be the sole preserve of the large players- big money and big deals. This is not true, and Global Oil 57 is an iconoclastic company breaking this paradigm.
Anyone can participate in this market if they have a busienss plan, and know what they are doing , in the right way, at the rigth time and do it everytime . I started as a scrap metal trader. This gave me the ability to move forward into the oil and gas business. Now, Global Oil 57 is clearly a proven oil trading company- and its performance indicates that we are accepted internationally as that.