Freepoint growing Asia footprint in LSFO, US crude; eyes new energy

Freepoint Commodities is pushing ahead with its strategic expansion plan for Asia that would see the global commodities trader build on its core markets, such as low sulfur fuel oil and US crude, while eying opportunities in the clean fuels space to cater to the changing energy landscape, its CEO for Asia told S&P Global Platts in an interview.

The company is looking to seal more term deals for LSFO and expand its footprint in LNG, and also keeping a close eye on the growing appetite for US crude in markets such as India, said Ouyang Xiuzhang, an investment banker-turned commodities trader who has been heading Freepoint’s Asia business since 2016.

“While markets like LSFO and US crude will offer us ample opportunities, we are also preparing for a future where there will be increasing needs for cleaner forms of energy,” Ouyang told Platts.

“We are also looking for opportunities to expand in the LNG space as we step up efforts to make ourselves ready to embrace the energy transition process,” he added.

Freepoint has recently entered into bunker fuel supply contracts with three companies — Chimbusco International Petroleum (Singapore) Pte Ltd., China Merchants Energy Trading (Singapore) Pte Ltd., and COFCO International Freight SA.

The new LSFO supply deals come after the Connecticut-based merchant supplied the maiden LSFO cargo to Pertamina’s Pulau Sambu Fuel Terminal in Indonesia in December 2020, following an agreement for the cooperation and utilization of the terminal.

It was the first time Pertamina collaborated with an international trading company to transform one of its terminals in Indonesia into an international trading hub.

Core focus area

“LSFO will remain a core market for us and we will be on the lookout for deals in that segment,” Ouyang said.

In addition, as Asian refiners get increasingly comfortable with US crude, Freepoint expects the region’s rising appetite will provide opportunities to grow its trading volumes.

With companies on both sides of the Pacific increasingly investing in logistics to smoothen energy trade flows between the US and Asia, Freepoint is stepping up efforts to build relationships with Asian oil companies and making selective investments to help grow its market share.

“We see the growing interest in US crude in India. As a US-based firm, we will be keeping a close eye on developments in India and see where we can add value for those customers. India’s crude sourcing diversification spree should open up opportunities,” Ouyang added.

India imported 12.69 million mt of US crude in 2020, up nearly 29% from a year earlier, as the country moved from the sixth-largest crude supplier the year before to the fifth-largest last year, data from GAC Shipping (India) Pvt. Ltd. showed.

In February, crude flows from the US totaled 2.11 million mt, about 31% higher than the 1.61 million mt from Saudi Arabia, putting the US as the No. 2 importer to India during the month, trailing only top importer Iraq that shipped 2.89 million mt of crude.

Metals to carbon

Freepoint was launched in 2011 with capital from its management team and backing from Stone Point Capital, a private equity firm and manager of the Trident Funds, with aggregate committed capital of more than $25 billion.

In an effort to expand in Asia, Freepoint brought onboard Ouyang, who previously headed oil and metals businesses for JP Morgan, Goldman Sachs and Noble Group.

Ouyang said as banks reduce their exposure to commodities amid pressure from regulators, Freepoint is aiming to increasingly provide customized solutions to customers — from cargoes to risk management services and financing — given its expertise in both the physical and financial markets.

Freepoint set up a metals unit under the name Freepoint Metals & Concentrates LLC after purchasing the base metal concentrates and copper cathodes business from JP Morgan in 2012. It is a wholly-owned subsidiary of Freepoint.

With China representing roughly 50% of the world’s metals demand, Freepoint has put in place a team in Shanghai to expand its footprint in that segment. “In addition to oil, metals markets in China is an area of interest for us — we will be keeping an eye on supplying cargoes — from iron ore to base metals,” Ouyang said.

He added that as energy needs of the world change, Freepoint is firming up plans on making inroads into new energy initiatives, such as carbon trading and waste-to-energy projects.

“We can see a lot happening in Asia in the energy transition process. And as we go along the way, opportunities will open up. The key is to remain prepared — so when those opportunities knock on the door, we should be quick to grab them,” Ouyang added.
Source: Platts