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Cancel the Ferrari, bonuses down for Asian oil traders

Written by: Staff
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SINGAPORE, Mar 23 (Reuters) Andy Ong drives a Porsche and has a BMW at home for his wife, a former air stewardess.

Like many in the oil trading fraternity, he navigated his way through opaque markets to profit from risky multi-million dollar deals.

The long hours and feverish calculations needed to build speculative positions, backed by analysis but exposed to myriad risks from guerrilla attacks to the weather, pay off once a year with bonuses that may range from SINGAPORE, Mar 23 (Reuters) Andy Ong drives a Porsche and has a BMW at home for his wife, a former air stewardess.

Like many in the oil trading fraternity, he navigated his way through opaque markets to profit from risky multi-million dollar deals.

The long hours and feverish calculations needed to build speculative positions, backed by analysis but exposed to myriad risks from guerrilla attacks to the weather, pay off once a year with bonuses that may range from $2,000 to millions of dollars.

But bonuses for many oil traders in Asia -- many being paid out this month -- look lower than the previous year despite record corporate profits, leaving some disgruntled dealers looking for the door or complaining the stress is not worth it.

''Volatility has increased, causing much more risk in the market,'' said the head of a Singapore-based oil trading house.

''2005 was not as good as 2004, especially the fourth quarter.'' Asian traders say they have the worst of it -- longer hours to monitor more active European and U.S. markets; lower liquidity on local deals, which means bigger risks as it may be more difficult to get out of a position if prices suddenly turn.

Traders point to bonuses of over a million dollars as the top of the range, but say a more likely figure for an Asian-based trader at a trading house such as Trafigura or Cargill is around $100,000-$200,000, depending on performance.

''The nature of speculative business is much bigger and more lucrative in London or the U.S., so the chances of an Asian trader making $20 million is lower,'' said a veteran oil trader.

These kind of bonuses, though seemingly hefty, are thought to be between seven and 12 per cent of the annual profit made by a trader after costs or company targets.

''The most charitable are often the banks if you perform well, but I don't think this condition was fulfilled in 2005. I don't think the year was great either for traders, at least on crude,'' said a crude oil trader at a major.

MERRY-GO-ROUND Global major BP Plc. still made $2.8 billion in energy trading last year, up from $2.0 billion in 2004, using its large nfrastructure to capitalise on price differences between products or regions. But sources say bonuses are capped at about 5-6 per cent of profits. ''It's never enough,'' said one at BP.

Traders point to competition from banks eating into margins and liquidity on forward derivatives markets that has yet to fully recover from the near-collapse of China Aviation Oil (Singapore) (CAO) in 2004 after $550 million losses.

''I think the physical oil traders did better than the derivatives guys,'' said a trader at U.S.-based Koch.

Oil product traders in Asia saw opportunities for shipments to key consumers such as power plants in China and drivers in Indonesia fall back in 2005, as higher prices hit demand, leaving them more reliant on arbitrage plays out of the region.

''There are some big smiles around town -- light distillates did well, but fuel oil guys struggled,'' said a Singapore-based oil headhunter. ''It's the time of year to wait for a bonus and look to move if that signal to stay isn't strong enough.'' Ong, not his real name, has jumped ship on five occasions for not less than a 50 per cent pay hike each time, but he is still waiting for his bonus this month before deciding any new moves.

Fortunes can change overnight, so a trader who lost big may still be hired by another firm and make millions.

''It looks like the merry-go-round is going to be bigger than usual this year,'' said a senior crude trader at a third major.

CHINA UNDERPAID While China has led world oil demand growth and its firms aggressively chase energy assets around the globe, its traders are still seeing lower earnings than their Western peers.

Chinaoil, trading arm of PetroChina, has the highest bonuses at around 200,000-500,000 yuan (up to around $62,000) for a senior trader, while Sinopec's trading arm Unipec brings up the rear with two month's salary.

''A Western trading house may pay higher but it's not worth the stress you will put yourself under,'' said a Chinaoil trader.

This pressure is intense and careers can be short.

''Four traders under 40 died of a heart attack because of severe stress in the last few years,'' said a dealer at U.S.

commodities giant Cargill, who said he had to watch European markets until 2 a.m. local time.

When oil prices jumped by more than $4 a barrel one September night last year, as a new storm Rita threatened to add to damage wreaked by Hurricane Katrina on the U.S. Gulf, some traders at industry parties in Singapore whooped in the street, but others sat in corners fiddling frantically with their Blackberrys.

Many stand to gain handsomely, heading to top restaurants, designer shops and car showrooms in Singapore to celebrate this month. Others lost their jobs in 2005 and the fear of another CAO-type debacle still haunts some.

The former head of jet fuel trader CAO was jailed for over four years and fined over $200,000 this week for his role in the city-state's biggest trading scandal in more than a decade.

''Do they pay traders bonuses? I kept my job in 2006,'' quipped a trader at Swiss-based Vitol. Another Vitol trader said talk of millions was simply hype. ''Otherwise everyone would drive a Ferrari. I'm only driving a BMW.'' And even those who did see big one-off payments -- higher than annual salaries -- still compare these against the multi-million dollar fees commanded by the growing army of energy dealers in Asia at banks and hedge funds, made by margins on the huge volumes of fund money now pouring into commodities markets.

''If you are working for financial institutions like Goldman Sachs you can make a lot more,'' said a Tokyo-based trading manager. ''Of course you can buy a Ferrari or Porsche easily with the bonuses you make with those companies.'' REUTERS SD VC1715 ,000 to millions of dollars.

But bonuses for many oil traders in Asia -- many being paid out this month -- look lower than the previous year despite record corporate profits, leaving some disgruntled dealers looking for the door or complaining the stress is not worth it.

''Volatility has increased, causing much more risk in the market,'' said the head of a Singapore-based oil trading house.

''2005 was not as good as 2004, especially the fourth quarter.'' Asian traders say they have the worst of it -- longer hours to monitor more active European and U.S. markets; lower liquidity on local deals, which means bigger risks as it may be more difficult to get out of a position if prices suddenly turn.

Traders point to bonuses of over a million dollars as the top of the range, but say a more likely figure for an Asian-based trader at a trading house such as Trafigura or Cargill is around 0,000-0,000, depending on performance.

''The nature of speculative business is much bigger and more lucrative in London or the U.S., so the chances of an Asian trader making million is lower,'' said a veteran oil trader.

These kind of bonuses, though seemingly hefty, are thought to be between seven and 12 per cent of the annual profit made by a trader after costs or company targets.

''The most charitable are often the banks if you perform well, but I don't think this condition was fulfilled in 2005. I don't think the year was great either for traders, at least on crude,'' said a crude oil trader at a major.

MERRY-GO-ROUND Global major BP Plc. still made SINGAPORE, Mar 23 (Reuters) Andy Ong drives a Porsche and has a BMW at home for his wife, a former air stewardess.

Like many in the oil trading fraternity, he navigated his way through opaque markets to profit from risky multi-million dollar deals.

The long hours and feverish calculations needed to build speculative positions, backed by analysis but exposed to myriad risks from guerrilla attacks to the weather, pay off once a year with bonuses that may range from $2,000 to millions of dollars.

But bonuses for many oil traders in Asia -- many being paid out this month -- look lower than the previous year despite record corporate profits, leaving some disgruntled dealers looking for the door or complaining the stress is not worth it.

''Volatility has increased, causing much more risk in the market,'' said the head of a Singapore-based oil trading house.

''2005 was not as good as 2004, especially the fourth quarter.'' Asian traders say they have the worst of it -- longer hours to monitor more active European and U.S. markets; lower liquidity on local deals, which means bigger risks as it may be more difficult to get out of a position if prices suddenly turn.

Traders point to bonuses of over a million dollars as the top of the range, but say a more likely figure for an Asian-based trader at a trading house such as Trafigura or Cargill is around $100,000-$200,000, depending on performance.

''The nature of speculative business is much bigger and more lucrative in London or the U.S., so the chances of an Asian trader making $20 million is lower,'' said a veteran oil trader.

These kind of bonuses, though seemingly hefty, are thought to be between seven and 12 per cent of the annual profit made by a trader after costs or company targets.

''The most charitable are often the banks if you perform well, but I don't think this condition was fulfilled in 2005. I don't think the year was great either for traders, at least on crude,'' said a crude oil trader at a major.

MERRY-GO-ROUND Global major BP Plc. still made $2.8 billion in energy trading last year, up from $2.0 billion in 2004, using its large nfrastructure to capitalise on price differences between products or regions. But sources say bonuses are capped at about 5-6 per cent of profits. ''It's never enough,'' said one at BP.

Traders point to competition from banks eating into margins and liquidity on forward derivatives markets that has yet to fully recover from the near-collapse of China Aviation Oil (Singapore) (CAO) in 2004 after $550 million losses.

''I think the physical oil traders did better than the derivatives guys,'' said a trader at U.S.-based Koch.

Oil product traders in Asia saw opportunities for shipments to key consumers such as power plants in China and drivers in Indonesia fall back in 2005, as higher prices hit demand, leaving them more reliant on arbitrage plays out of the region.

''There are some big smiles around town -- light distillates did well, but fuel oil guys struggled,'' said a Singapore-based oil headhunter. ''It's the time of year to wait for a bonus and look to move if that signal to stay isn't strong enough.'' Ong, not his real name, has jumped ship on five occasions for not less than a 50 per cent pay hike each time, but he is still waiting for his bonus this month before deciding any new moves.

Fortunes can change overnight, so a trader who lost big may still be hired by another firm and make millions.

''It looks like the merry-go-round is going to be bigger than usual this year,'' said a senior crude trader at a third major.

CHINA UNDERPAID While China has led world oil demand growth and its firms aggressively chase energy assets around the globe, its traders are still seeing lower earnings than their Western peers.

Chinaoil, trading arm of PetroChina, has the highest bonuses at around 200,000-500,000 yuan (up to around $62,000) for a senior trader, while Sinopec's trading arm Unipec brings up the rear with two month's salary.

''A Western trading house may pay higher but it's not worth the stress you will put yourself under,'' said a Chinaoil trader.

This pressure is intense and careers can be short.

''Four traders under 40 died of a heart attack because of severe stress in the last few years,'' said a dealer at U.S.

commodities giant Cargill, who said he had to watch European markets until 2 a.m. local time.

When oil prices jumped by more than $4 a barrel one September night last year, as a new storm Rita threatened to add to damage wreaked by Hurricane Katrina on the U.S. Gulf, some traders at industry parties in Singapore whooped in the street, but others sat in corners fiddling frantically with their Blackberrys.

Many stand to gain handsomely, heading to top restaurants, designer shops and car showrooms in Singapore to celebrate this month. Others lost their jobs in 2005 and the fear of another CAO-type debacle still haunts some.

The former head of jet fuel trader CAO was jailed for over four years and fined over $200,000 this week for his role in the city-state's biggest trading scandal in more than a decade.

''Do they pay traders bonuses? I kept my job in 2006,'' quipped a trader at Swiss-based Vitol. Another Vitol trader said talk of millions was simply hype. ''Otherwise everyone would drive a Ferrari. I'm only driving a BMW.'' And even those who did see big one-off payments -- higher than annual salaries -- still compare these against the multi-million dollar fees commanded by the growing army of energy dealers in Asia at banks and hedge funds, made by margins on the huge volumes of fund money now pouring into commodities markets.

''If you are working for financial institutions like Goldman Sachs you can make a lot more,'' said a Tokyo-based trading manager. ''Of course you can buy a Ferrari or Porsche easily with the bonuses you make with those companies.'' REUTERS SD VC1715 .8 billion in energy trading last year, up from SINGAPORE, Mar 23 (Reuters) Andy Ong drives a Porsche and has a BMW at home for his wife, a former air stewardess.

Like many in the oil trading fraternity, he navigated his way through opaque markets to profit from risky multi-million dollar deals.

The long hours and feverish calculations needed to build speculative positions, backed by analysis but exposed to myriad risks from guerrilla attacks to the weather, pay off once a year with bonuses that may range from $2,000 to millions of dollars.

But bonuses for many oil traders in Asia -- many being paid out this month -- look lower than the previous year despite record corporate profits, leaving some disgruntled dealers looking for the door or complaining the stress is not worth it.

''Volatility has increased, causing much more risk in the market,'' said the head of a Singapore-based oil trading house.

''2005 was not as good as 2004, especially the fourth quarter.'' Asian traders say they have the worst of it -- longer hours to monitor more active European and U.S. markets; lower liquidity on local deals, which means bigger risks as it may be more difficult to get out of a position if prices suddenly turn.

Traders point to bonuses of over a million dollars as the top of the range, but say a more likely figure for an Asian-based trader at a trading house such as Trafigura or Cargill is around $100,000-$200,000, depending on performance.

''The nature of speculative business is much bigger and more lucrative in London or the U.S., so the chances of an Asian trader making $20 million is lower,'' said a veteran oil trader.

These kind of bonuses, though seemingly hefty, are thought to be between seven and 12 per cent of the annual profit made by a trader after costs or company targets.

''The most charitable are often the banks if you perform well, but I don't think this condition was fulfilled in 2005. I don't think the year was great either for traders, at least on crude,'' said a crude oil trader at a major.

MERRY-GO-ROUND Global major BP Plc. still made $2.8 billion in energy trading last year, up from $2.0 billion in 2004, using its large nfrastructure to capitalise on price differences between products or regions. But sources say bonuses are capped at about 5-6 per cent of profits. ''It's never enough,'' said one at BP.

Traders point to competition from banks eating into margins and liquidity on forward derivatives markets that has yet to fully recover from the near-collapse of China Aviation Oil (Singapore) (CAO) in 2004 after $550 million losses.

''I think the physical oil traders did better than the derivatives guys,'' said a trader at U.S.-based Koch.

Oil product traders in Asia saw opportunities for shipments to key consumers such as power plants in China and drivers in Indonesia fall back in 2005, as higher prices hit demand, leaving them more reliant on arbitrage plays out of the region.

''There are some big smiles around town -- light distillates did well, but fuel oil guys struggled,'' said a Singapore-based oil headhunter. ''It's the time of year to wait for a bonus and look to move if that signal to stay isn't strong enough.'' Ong, not his real name, has jumped ship on five occasions for not less than a 50 per cent pay hike each time, but he is still waiting for his bonus this month before deciding any new moves.

Fortunes can change overnight, so a trader who lost big may still be hired by another firm and make millions.

''It looks like the merry-go-round is going to be bigger than usual this year,'' said a senior crude trader at a third major.

CHINA UNDERPAID While China has led world oil demand growth and its firms aggressively chase energy assets around the globe, its traders are still seeing lower earnings than their Western peers.

Chinaoil, trading arm of PetroChina, has the highest bonuses at around 200,000-500,000 yuan (up to around $62,000) for a senior trader, while Sinopec's trading arm Unipec brings up the rear with two month's salary.

''A Western trading house may pay higher but it's not worth the stress you will put yourself under,'' said a Chinaoil trader.

This pressure is intense and careers can be short.

''Four traders under 40 died of a heart attack because of severe stress in the last few years,'' said a dealer at U.S.

commodities giant Cargill, who said he had to watch European markets until 2 a.m. local time.

When oil prices jumped by more than $4 a barrel one September night last year, as a new storm Rita threatened to add to damage wreaked by Hurricane Katrina on the U.S. Gulf, some traders at industry parties in Singapore whooped in the street, but others sat in corners fiddling frantically with their Blackberrys.

Many stand to gain handsomely, heading to top restaurants, designer shops and car showrooms in Singapore to celebrate this month. Others lost their jobs in 2005 and the fear of another CAO-type debacle still haunts some.

The former head of jet fuel trader CAO was jailed for over four years and fined over $200,000 this week for his role in the city-state's biggest trading scandal in more than a decade.

''Do they pay traders bonuses? I kept my job in 2006,'' quipped a trader at Swiss-based Vitol. Another Vitol trader said talk of millions was simply hype. ''Otherwise everyone would drive a Ferrari. I'm only driving a BMW.'' And even those who did see big one-off payments -- higher than annual salaries -- still compare these against the multi-million dollar fees commanded by the growing army of energy dealers in Asia at banks and hedge funds, made by margins on the huge volumes of fund money now pouring into commodities markets.

''If you are working for financial institutions like Goldman Sachs you can make a lot more,'' said a Tokyo-based trading manager. ''Of course you can buy a Ferrari or Porsche easily with the bonuses you make with those companies.'' REUTERS SD VC1715 .0 billion in 2004, using its large nfrastructure to capitalise on price differences between products or regions. But sources say bonuses are capped at about 5-6 per cent of profits. ''It's never enough,'' said one at BP.

Traders point to competition from banks eating into margins and liquidity on forward derivatives markets that has yet to fully recover from the near-collapse of China Aviation Oil (Singapore) (CAO) in 2004 after 0 million losses.

''I think the physical oil traders did better than the derivatives guys,'' said a trader at U.S.-based Koch.

Oil product traders in Asia saw opportunities for shipments to key consumers such as power plants in China and drivers in Indonesia fall back in 2005, as higher prices hit demand, leaving them more reliant on arbitrage plays out of the region.

''There are some big smiles around town -- light distillates did well, but fuel oil guys struggled,'' said a Singapore-based oil headhunter. ''It's the time of year to wait for a bonus and look to move if that signal to stay isn't strong enough.'' Ong, not his real name, has jumped ship on five occasions for not less than a 50 per cent pay hike each time, but he is still waiting for his bonus this month before deciding any new moves.

Fortunes can change overnight, so a trader who lost big may still be hired by another firm and make millions.

''It looks like the merry-go-round is going to be bigger than usual this year,'' said a senior crude trader at a third major.

CHINA UNDERPAID While China has led world oil demand growth and its firms aggressively chase energy assets around the globe, its traders are still seeing lower earnings than their Western peers.

Chinaoil, trading arm of PetroChina, has the highest bonuses at around 200,000-500,000 yuan (up to around ,000) for a senior trader, while Sinopec's trading arm Unipec brings up the rear with two month's salary.

''A Western trading house may pay higher but it's not worth the stress you will put yourself under,'' said a Chinaoil trader.

This pressure is intense and careers can be short.

''Four traders under 40 died of a heart attack because of severe stress in the last few years,'' said a dealer at U.S.

commodities giant Cargill, who said he had to watch European markets until 2 a.m. local time.

When oil prices jumped by more than a barrel one September night last year, as a new storm Rita threatened to add to damage wreaked by Hurricane Katrina on the U.S. Gulf, some traders at industry parties in Singapore whooped in the street, but others sat in corners fiddling frantically with their Blackberrys.

Many stand to gain handsomely, heading to top restaurants, designer shops and car showrooms in Singapore to celebrate this month. Others lost their jobs in 2005 and the fear of another CAO-type debacle still haunts some.

The former head of jet fuel trader CAO was jailed for over four years and fined over 0,000 this week for his role in the city-state's biggest trading scandal in more than a decade.

''Do they pay traders bonuses? I kept my job in 2006,'' quipped a trader at Swiss-based Vitol. Another Vitol trader said talk of millions was simply hype. ''Otherwise everyone would drive a Ferrari. I'm only driving a BMW.'' And even those who did see big one-off payments -- higher than annual salaries -- still compare these against the multi-million dollar fees commanded by the growing army of energy dealers in Asia at banks and hedge funds, made by margins on the huge volumes of fund money now pouring into commodities markets.

''If you are working for financial institutions like Goldman Sachs you can make a lot more,'' said a Tokyo-based trading manager. ''Of course you can buy a Ferrari or Porsche easily with the bonuses you make with those companies.'' REUTERS SD VC1715

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