In Feb 2019, Equinor completed the €400 million acquisition of Danske Commodities as part of its transition from oil and gas into a broader energy company. Two months later, Helle Østergaard Kristiansen was appointed as Danske Commodities’ new CEO, succeeding the company’s high-profile founder and becoming the world’s first female CEO in the energy trading sector. A year on, after a planned trip to Aarhas was postponed due to Coronavirus, she talks via videoconference to Damian Stewart, Managing Partner at Human Capital.
It is a year since Danske Commodities’ long-time chief financial officer Helle Østergaard Kristiansen took over as CEO, replacing the company’s founder Henrik Lind shortly after the sale of the business to Norway’s Equinor. Lind established DC in 2004 in Aarhus, Denmark and over the next 15 years grew it to become one of Europe’s largest short-term electricity and gas traders, making it highly attractive to Equinor as it repositions away from being a pure play oil and gas producer into a broader energy major.
Ranked number 31 in Fortune’s 2019 list of the Most Powerful Women in Business outside the US, Kristiansen has three strands to her vision for DC as it seeks to establish its ambitions post-acquisition. She says: “First, there’s no doubt that our vision now is to have global activities, and to go from being one of the biggest European energy trading companies to one operating on five continents. That was something we started before we were acquired by Equinor and it has been enhanced by the acquisition. We did our first trades in Australia in 2018 and in 2019 we entered the US. Now we are looking to enter more areas in the US, and to move into Brazil.”
Another priority is digitalisation, where DC has always been something of a pioneer. Aarhus is Denmark’s second city and sits off the beaten track, 100 miles northwest of Copenhagen, but is home to Scandinavia’s largest university and a renowned science park. DC’s access to some of the region’s brightest graduates has allowed it to long lead the industry as a tech pioneer; today the majority of its 5,780 daily trades are handled by robotics, automated solutions and machine learning.
Then there is the brief from Equinor to transition towards a focus on renewables, as part of the parent company’s plan to invest 15% to 20% of total capital expenditure annually in new energy solutions by 2030. Kristiansen says: “In a world without subsidies making these investments possible, we need to look across the entire value chain where DC plays an important role optimising and trading around these assets. So, there is a key role for us in this strategy of Equinor’s.”
Part of Equinor
Lind created DC as a dynamic, agile energy trading house that initially focussed on cross-border power trading with Germany. The company grew to become a leading independent European energy trader and service provider, trading financial and physical power and gas products in the intraday, day-ahead and forward markets both on exchanges and OTC. The company also developed an energy market services offering comprising balancing, optimisation and hedging services to asset owners. At the time of the acquisition, DC had built a highly scalable trading platform, with access to 39 European power and 23 gas markets. Integrating DC into one of the world’s largest corporates who’s primary European trading office is in London was not without its challenges, but Kristiansen says Equinor was acutely aware of that challenge: “When they bought DC, Equinor bought this agile, commercial mindset and this ability to adapt through the market very quickly. They have on the one hand said they want to explore the synergies, but also on the other said they want to keep us at arm’s length. They have really found that balance through the operating model they have established.”
Danske Commodities now functions as an independent company with its own board, which includes directors from Equinor but also external members, as it had before. The majority of the management has been with DC for many years. “We also made a clear demarcation that means that all power trading in Equinor has been transferred into DC,” says Kristiansen. “Both companies were also trading gas, and now we also have a demarcation model there so that all upstream gas is handled by Equinor and all downstream gas by DC. I have to give huge respect to Equinor for making those decisions, which can’t have been easy.”
The demarcation model on the gas side also means that all gas storage optimisation that was done by Equinor has been transferred, with only two storage facilities now left to transition. “Everyone in Equinor knows what the business model is, and we are clear about our responsibilities,” she says. “That makes things a lot easier. Of course, it is not without its challenges, but the benefits are certainly bigger than the challenges we see.”
Despite the arm’s length arrangement, there are nevertheless significant advantages and synergies to be gained from being part of Equinor, which DC is now keen to capitalise on. The business has more risk capital, for a start, after Equinor made two capital injections during 2019. Kristiansen says: “Being more capitalised means having better opportunities to negotiate bank guarantees with our banks and having the option to issue parent company guarantees. Also, when we decide to set ourselves up in new countries, Equinor already has an office and competencies there, so that just allows us to accelerate everything faster on our side.”
With roots so firmly established in Aarhus, where DC has been able to benefit from a rich pool of local talent, it’s less certain how the DC brand will fare as the company embarks on international expansion. Kristiansen tells me that the Equinor tie-up has actually given DC’s recruitment something of a fillip. “We have seen that we can attract people that we couldn’t attract before, because they can see the perspectives are big enough,” says Kristiansen. “It is also true to say that whilst DC is a known name in energy trading in Europe, when we started in the US that was definitely not the case, nor in Brazil. There, we benefit from being part of Equinor and of course we use that in our branding. Equinor can open doors for us that we would not have been able to open ourselves.”
We meet via videoconference at a time when most of the world is in lockdown, and the irony of a conversation about globalisation and growth cannot be overlooked. I’m interested to know how Covid-19 is impacting Danske Commodities, and what the outlook is for the balance of the year as market disruption continues into the summer and potentially beyond.
“First of all, I’m really grateful for our efficient IT setup,” says Kristiansen. “We started to prepare for a situation like this in February, setting up trader stations at people’s homes. We were still surprised how fast this went and how big it became, so it’s not like we had foreseen that, but we were prepared. Today, 80% are working from home and 20% are in the office – that means the people in the office can be on different floors and, with additional cleaning, that’s safe.”
Clearly, the uncertainty will create challenges for the business. “One of the impacts for a data and model-based business like ours is that it is obviously difficult to predict the consumption side,” she says. “Even though we lower the predictions, it sometimes gets even lower; we have seen that in many countries, starting in Italy. We can also see there is less liquidity in the market.”
She adds: “We are present, as we have always been, 24/7, and there is some short-term volatility to explore. It is interesting times, but we have an obligation to be in the market because we are part of the security of supply and keeping liquidity levels up. So, for now we are very much open at DC, managing our wind parks and trading operations, especially in the short-term market with all the volatility.”
As one of very few female CEOs in the energy industry, and one of the only female chiefs of an energy trading business, I’m keen to hear Kristiansen’s unique perspective on the issues that companies still face in a sector still seeking to address a significant imbalance in terms of gender diversity, particularly at the senior end.
When I sat down recently with Martin Fraenkel, President of S&P Global Platts, he shared a report his firm had published showing that if growth in women’s representation in energy C-suites continues at the current rate, it will take until the 2090s to reach gender parity.
Kristiansen agrees that the industry needs to take the issue more seriously; “First of all, the energy sector, which is one of the biggest industries in the world, is also where there is the lowest share of females. It’s a challenge for the sector, simply from the point of view that there’s a huge talent pool that the sector misses out on. How can we succeed as a sector without access to 50% of the talent pool?”
She adds: “It’s also a challenge because I believe the energy sector is one of the most interesting sectors that we have in the world right now. There is so much going on and it’s so important in the context of all the green ambition and the energy transition – why are there so few females tapping into these opportunities from a career perspective?”
DC is not immune from the issues; only a third of the workforce is female, though there are women at all levels of management and it is improving, Kristiansen says, adding: “There’s a lot we can do and a lot that has to be done.”
Of course, she has her own experience of the difficulties: “Unconscious bias is definitely there – I have felt it myself, all with good intentions. Before I became CEO of this company, I was the CFO and I built up the risk management unit, treasury, legal, IT, finance. Still, when I entered meetings with our CEO, I think 50% of people I met assumed I was either his executive assistant or the head of HR.”
Kristiansen has recently undertaken a review of DC’s recruitment advertising and identified a tendency to use masculine words when describing the skills required of a trader, for example. “Previously, there was something macho about being a trader, gambling, taking risks and so on. Now it’s much more analytical,” she explains. “You have to change your mindset a little bit and be aware that it is maybe not the competencies you needed previously that you need going forward.”
She also believes in investing in her people for the long term – Danske Commodities now offers four months paid parental leave to all employees, which is not inconsiderable in a company that is two-thirds male with an average age of 33. She recently promoted two women into management roles knowing they were about to go on maternity leave. “It was the right thing to do,” says Kristiansen, “because they were the right people for their positions.”
Listing off the company’s greatest assets, Kristiansen mentions the balance sheet, the distribution network, and the IT systems, where she is clearly very proud of the operational excellence that sits at the heart of Danske Commodities. But people are also a critical component: “The energy market changes all the time and DC has to change with the energy market. That requires a lot of attention – having skilled and highly educated people is clearly of the essence,” she says.
Change has certainly been the driver in Kristiansen’s first 12 months at the helm of DC. Don’t expect her to start standing still any time soon, even if she does have to stay home, for now.
In Conversation with…
The ICW series looks at key trends in the energy and commodities markets with senior industry leaders. Whether discussing diversity in the workforce or the impact of new technologies, the aim is to shine a light on some unique market perspectives, showcasing both the personalities at the pinnacle of the market and their views on the issues of the day.