Not just a quick fix

Real options are an accepted risk management technique in the energy sector. Kevin Foster takes a look at how are they being used and what factors are affecting their development and implementation

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The use of real options is a common feature in the energy markets, but there is still industry debate over how best to apply them. And that debate is intensifying following the demise of Houston-based energy and trading major Enron Corp in December.

Peter Antoniades, energy sales executive at Toronto-based risk management software company Algorithmics, says: “Companies are broadly agreed on the conceptual idea, but there is no widely shared model.” Instead, energy companies are mainly using

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