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  • March 1994 (Revised September 1995)
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Enron Gas Services

By: Peter Tufano
  • Format:Print
  • | Pages:27
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Abstract

The CEO of Enron Gas Services (EGS), a subsidiary of the largest U.S. integrated natural gas firm, considers the risks and opportunities of selling a variety of natural gas derivatives, both embedded in gas delivery contracts and as free-standing financial contracts. In its three years of existence, EGS had been successful by offering buyers and sellers of natural gas a variety of innovative pricing contracts. In order to mitigate the risks of having mismatch between its commitments to buy and sell gas, EGS established a system to decompose all of its commitments into a handful of different risks of exposures. Its centralized risk-management group not only measures the firm's exposures but also enters into financial contracts to offset the exposure brought about by the firm's business activities.

Keywords

Risk Management; Energy Sources; Financial Services Industry; Energy Industry

Citation

Tufano, Peter, and Sanjay Bhatnagar. "Enron Gas Services." Harvard Business School Case 294-076, March 1994. (Revised September 1995.)
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About The Author

Peter Tufano

General Management
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