Goldman Sachs has reportedly entered exclusive talks to purchase El Paso Corp.'s electricity trading book, which includes derivative and cash positions, according to DW sister publication Power Finance & Risk. The investment bank is conducting due diligence on the portfolio as part of the exclusive agreement, said an official familiar with the sale process. El Paso wants to sell its electricity trading business as a package with its power generation assets and has recorded the combined book value at approximately USD1.6 billion. Mel Scott, an El Paso spokesman in Houston, declined comment. Officials at Salomon Smith Barney, which is advising El Paso, did not return calls. A Goldman spokeswoman declined comment.
An acquisition of this scale would catapult Goldman's energy trading business into a different league to the handful of financial institutions, such as UBS, Bank of America and Morgan Stanley, which trade the energy markets. None of these players own generation assets.