Publications
Publications
- March 1994 (Revised September 1995)
- HBS Case Collection
Enron Gas Services
By: Peter Tufano
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
Citation
Tufano, Peter, and Sanjay Bhatnagar. "Enron Gas Services." Harvard Business School Case 294-076, March 1994. (Revised September 1995.)
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