Naftogaz Group’s Commerce Division has begun operational testing of an Energy Trading & Risk Management (ETRM) system.
The product accelerates commercial decision-making through building a unified database of counter-parties, contracts, and agreements to exchange real-time data among functions, including front, middle, and back office, security, compliance, risk management, and financial control. This helps enhance efficiency, transparency, and control over gas trading transactions as well as improving commercial risk management and the quality of managerial decisions. For instance, it previously required about 20 signatures and several days to approve a gas sale or purchase contract, while now the process is automated to a maximum and takes 15-20 minutes.
Naftogaz Commerce has been implementing this project with the support of Naftogaz Digital Technologies LLC, Nagtogaz’s subsidiary responsible for the automation of the group’s key business processes.
As reported earlier, four months ago, TRMTraker by Pioneer Solutions LLC was chosen as the most suitable ETRM solution. ETRM solutions can be further implemented for electricity, oil, and petroleum product trading. Naftogaz Commerce can now perform a comprehensive analysis of trading position risks and accelerate the conclusion of deals. At further implementation stages, it will also be possible to analyze settlements with counter-parties and simulate a gas portfolio under changing prices, exchange rates, production, consumption, etc.
“Historically, the Group has used a huge variety of production and business processes. The launch of a unified ETRM system is part of our digital transformation strategy and will help integrate and optimize different elements into a single system. ETRM has already enabled automation cooperation between nine different units, along with the redesign and automation of business processes in the gas trading sphere. We can now manage our gas portfolio in real time, take commercial risks into consideration, and automate control over contract approval and limits,” commented Naftogaz IT Director Maryna Kvashnina.
In future, the ETRM system is to be integrated with both internal systems such as SAP ERP and external systems, including those of the Gas Transmission System Operator of Ukraine, Ukrainian Energy Exchange, and e-signature.
The system ensures transparency of transactions and creates a so-called audit trail indicating which amendments were made to contracts by whom and when, who approved the counter-party, who rejected the agreement, and why.
“The introduction of the ETRM system has enabled us to arrange our gas sale and purchase transactions, enhance control, transparency, efficiency and results, and at the same time improve commercial risk management along with the quality of commercial decisions. The ETRM system has been installed to help understand risks related to the value chain and identify better options to mitigate those risks. Our goal is to make Naftogaz capable of concluding hundreds of transactions with multiple customers and provide the company with a unified control and optimization system for our sales portfolio. This is the first step towards better risk management,” Nafotgaz Commerce Director Willem Coppoolse noted.
Hugo Stappers, Director of Sales & Marketing EMEA at Pioneer Solutions, believes it was a bold step by Naftogaz to start such a complex project during the global pandemic. “The fact that Naftogaz is introducing the ETRM system also demonstrates the company’s confidence in flexible introduction of TRMTraker by Pioneer. Thanks to this modern system, Naftogaz is equipped with a navigation tool to operate in unfavorable conditions, and can rely on the supplier’s continuous maintenance,” Hugo Stappers emphasized.
NJSC Naftogaz of Ukraine