LONDON: Oil companies are reviewing their dealings with Russian energy trader Gunvor but have not yet altered their business links, industry sources said yesterday, after the United States imposed sanctions on its billionaire co-founder.
The United States added Gennady Timchenko to its sanctions list on Thursday, forcing him to sell his near 50 percent Gunvor stake to Chief Executive Officer Torbjorn Tornqvist this week to keep it running.
Following the sanctions and stake sale, one major oil company had an internal debate as to whether it could still trade with Swiss-based Gunvor, which trades crude, refined oil products and other commodities including natural gas and coal.
“We reviewed everything earlier today. We needed to be convinced of the flow of money and check into the new shareholding to see the implications,” said a senior executive at the company.
After reviewing the matter, the company decided it could still trade with Gunvor with no restrictions, because Gunvor is technically not under Timchenko, the executive and a separate trading source said. Gunvor was active in the oil market yesterday, buying a cargo of gasoline from France’s Total in Asia.
A senior trader with another European oil company said the firm was assessing the situation, although he did not see an impact in the near future. “The fact Timchenko sold out makes things easier,” the trader said.
Timchenko, 61, was listed by Forbes as the 61st richest person in the world this month, with an estimated fortune of $15.3bn. Gunvor is not a well-known name outside of oil and commodities trading circles.
Gunvor grew spectacularly over the last decade with a turnover of $93bn in 2012 compared with $5bn in 2004. It traded large volumes of oil of Russian state companies such as Rosneft at the end of last decade but since then ceded its leading positions and now focuses on trading in Europe and Asia.
Gunvor handles around three percent of the world’s oil. Its counterparties and banks include Goldman Sachs and Vitol SA. It trades commodities on US exchanges, and enters into derivatives and swaps transactions with the biggest players in energy and banking.
US oil companies are likely to be more wary of trading with Gunvor, industry sources said. “US companies are normally cautious, so it will be difficult for them,” the source said.
The US Treasury cautioned Americans on Thursday against conducting transactions with a Russian firm.
“US persons are advised to act with caution when considering a transaction with a non-blocked entity in which a blocked person has a significant ownership interest that is less than 50 percent or which a blocked person may control by means other than a majority ownership interest,” a Treasury spokesperson said.
Reuters
