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gunvor: “we inject over 50 million francs a year into the Genovese economy” December 20, 2009

Posted by mytruthaboutoil in Oil giants.
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When the Finnish, and originally Russian, Businessman Gennady Timchenko settled in Geneva, he also established Gunvor. The company he founded became a giant oil trader achieving a turnover of 65 billion dollars in 2008. By Stéphane-Benoit Godet.

Gennady Timchenko is a discrete businessman. Readers of the Bilan review of 300 richest will have found him last year with a fortune estimated at 2.5 billion francs (3 billion this year). The Russian businessman has been based in Geneva since 2001 and is associated with the Swede Torbjorn Tornqvist in the Gunvor business which achieved a turnover of 65 billion dollars in 2008. The giant oil trader, with industrial and logistical arms has taken an enviable position as number three oil trader in the world.

A lot has been written about Gennady Timchenko in the international press, but according to him too much false information goes around. This year in the spring, he took the prestigious magazine The Economist to court in the U.K. Gennady Timchenko ended up reaching an agreement with the economic magazine, who withdrew from its Internet archives the article in question and published a correction in its July 31 edition. The businessman has given only one interview so far, to the Wall Street Journal, and now he’s giving Bilan his point of view.

Bilan What kind of life do you have here?

Gennadi Timchenko A simple life with friends, amongst others stemming from our industry. I also meet a lot of people through tennis. Talking about this, we sponsor a professional tennis tournament in Geneva with ATP challengers. We also organize cultural events which are an opportunity to meet local personalities from here.

B Why Geneva?

GT When we arrived in 2001, it was to benefit from an excellent environment and quality of life. Moreover, it is a perfect place when you are actively trading. In terms of education we could go to London for my son, but schools are excellent here as well. Moreover, the very central geographical location in Europe facilitates my frequent trips

B And, in terms of business?

GT The government is pragmatic and very business oriented. Whether it is left or right they all make a lot of effort to create an ideal environment for trading companies. There are 9000 people who work in trading in Geneva. All these people are very well paid, pay taxes, spend a lot and numerous visitors come to meet them. It is an excellent activity for the government.

B What is the economic impact of Gunvor in Geneva?

GT We pay more than 20 million in taxes here and if you count salaries and other things, we inject over 50 million francs into the economy every year. Furthermore, we have 5 billion in loans and credits with various banks in Geneva like BNP-Paribas, Credit Suisse, Crédit Agricole and even the Banque Cantonale de Genève. You will see more and more commodity trading companies settling down here, coming from London and elsewhere.

B Would you consider living elsewhere?

GT No, for the time being my family and I are very happy with our life in Geneva. Of course, if the business environment were to change in regards to our activities, we might consider reviewing our plans. But I see no indication of this.

B Why are you so discreet?

GT I try to remain who I am and to lead a normal life.

B What car do you drive?

GT A Smart.

B Who do you socialize with in Russia?

GT I have known the whole business community, especially in the field of energy, for a very long time. I have been socializing with all the managers of Russia’s largest oil and gas companies for years. In this business, people trust you in the long term only if they know you and if you are a real professional.

B What is the information that you consider false about yourself?

GT There is so much of it, I don’t know where to start. As a result, I have to open myself to the international media to explain who I am. But we gave two interviews with my partner, this one is the third, and the image begins to be more precise.

B Do you have protection in Russia?

GT Like many businessmen in Russia I have to take security measures because unfortunately it is not as safe as in Geneva, even if security has improved a great deal in the last ten years.

B Do you travel by jet?

GT Yes. I travel about 500 hours a year, mainly for work purposes. I move all the time. My daughter does not like it much that I fly by jet and she draws my attention to CO2 emissions and the risks for the environment. But we use private planes for business and to make sure that time is money.

B Have you got investments in the West?

GT Yes, I have a bit of real estate in Geneva. Other than that, I own two Relais & Chateaux hotels in France, an aviation company in Finland and more recently a small insurance company in Germany.

B Do you sponsor a sailing team?

GT Yes, I have a team in the RC44 Championship Tour, the race course created by Russell Couts. It is a mini America Class with boats with eight-people crews on board. Paul Cayard manages the team. The last time, my boat, the Katusha, came second in a boat-race in Slovenia.

B How did you make your fortune?

GT With the changes in the USSR, so dramatic from a political but also economic point of view, there were many opportunities to make a fortune during the transition from socialism to capitalism. We were lucky to be in the right place at the right time. In slightly more than twenty years we have transformed a small trading company into one of the most important independent oil trader in the world.

B What about you, personally?

GT I have more than 20 years experience in oil and petrochemicals. In 1991, I went to Finland and I spent ten years there and now I have Finnish citizenship. It allowed me to learn about business culture in Europe, a great asset compared to my colleagues who spent their entire career in Russia. I learned what a reputation was worth and how to behave in a transparent way in business.

B But not only…

GT We are not afraid of investing in the real economy, even in Russia. If someone wants to make money it is probably the best place in the world for it. Since the beginning with my partner, we had the vision to create a business which had a dimension bigger than only the financing of oil. In oil logistics, amongst others. We are the biggest private carrier of oil and derivative products in Russia where we started from scratch. Our company now has 25 000 wagonloads and 36 locomotives.

B Why this vertical integration?

GT The ambition was to become very competitive and to have good relations with terminals. Previously, we used to deal with a single outlet situated in Estonia. Now, we are going to build a new oil terminal, the biggest in the world, which will allow the transit of goods from train to boat. It is a 800 million dollar investment financed by our capital and debt.

B While Gunvor has quickly taken a lead (in the market), how do you manage to embark on such vast projects?

GT I began in this sector in 1987: 22 years is not a short period of time. Our infrastructures in Russia allowed us to handle more volume and to become more competitive than any other Russian company. Which does not prevent us from having very good relations with all the Russian oil companies, state-owned or private. But we have reach a higher stage now.

B And that is?

50 % of our oil is now extracted outside Russia. It comes from Indonesia, Algeria, Thailand, Ecuador, etc. We are not only focused on Russia and we are henceforth a global player. In Geneva, amongst the 110 people who work for Gunvor, 25 % are Swiss, 6 % Russian and the rest is very international. On the whole, we employ 300 people and we diversify our activities. We have just set up a new division active in trading of natural gas, electricity, coal and CO2 emissions. This division will employ fifty people in Geneva by the end of 2010.

B How do you perceive the crisis in Russia?

GT It will not be like the 1998 bankruptcy but still the crisis is serious. It shows how much work the government still has to do to restructure the economy and establish healthier and more diversified bases for it. I feel encouraged by the number of investment projects in the infrastructure and industrial areas. These initiatives are strategic to guarantee the country’s prosperity. One should note that during this crisis, I was impressed by the excellent team work and cohesion between President Medvedev and Prime Minister Putin.

B And politically, how you do see the country evolving?

GT Russia is in a phase of consolidation, Prime Minister Medvedev is very impressive. He is doing a good job for the country while also highlighting what is not going well. Whether it is corruption or other issues. I find Medvedev’s modernization project, which involves diversifying the economy through promoting investments in technology among other things, fascinating. Overall, things are going in the right direction. Maybe one day Russia will be a member of Europe.

B Do you currently have any other projects in Russia?

GT We will open a mineral water factory in Nizhniy Novgorod (Russia’s fifth largest city) at the beginning of 2010. This investment is important, so we can have quality water, and it also allows us to create jobs. We have just taken a minority stake in a geological studies and oil exploration company. We are looking at sectors like insurance or real estate. But our core business remains trading and logistics and more recently a significant investment in Russia’s largest private gas producer, Novatek, which is listed on the London and Moscow stock exchanges.

B Would you have any interest in creating a bank in Switzerland?

GT Everything has been done in this field. I have often talked with private bankers in Geneva, who have been in the business for seven or eight generations and are very competent. They have this huge experience of highs and lows in the world of finance over a very long time. I have no expertise and I will not be able to add much. I would rather stay within my field of expertise.

B And in the industrial field?

GT I am not looking into any project at this stage. On the other hand, in Geneva I have created a foundation to promote cultural, scientific and educational exchanges between Russia and Switzerland, particularly in Geneva. We recently sponsored an exhibit on Russian literature at the Bodmer Foundation, which attracted 5000 people.

“We inject over 50 million francs

a year into the Genovese economy”

When the Finnish, and originally Russian, Businessman Gennady Timchenko settled in Geneva, he also established Gunvor. The company he founded became a giant oil trader achieving a turnover of 65 billion dollars in 2008. By Stéphane-Benoit Godet.

Gennady Timchenko is a discrete businessman. Readers of the Bilan review of 300 richest will have found him last year with a fortune estimated at 2.5 billion francs (3 billion this year). The Russian businessman has been based in Geneva since 2001 and is associated with the Swede Torbjorn Tornqvist in the Gunvor business which achieved a turnover of 65 billion dollars in 2008. The giant oil trader, with industrial and logistical arms has taken an enviable position as number three oil trader in the world.

A lot has been written about Gennady Timchenko in the international press, but according to him too much false information goes around. This year in the spring, he took the prestigious magazine The Economist to court in the U.K. Gennady Timchenko ended up reaching an agreement with the economic magazine, who withdrew from its Internet archives the article in question and published a correction in its July 31 edition. The businessman has given only one interview so far, to the Wall Street Journal, and now he’s giving Bilan his point of view.

Bilan What kind of life do you have here?

Gennadi Timchenko A simple life with friends, amongst others stemming from our industry. I also meet a lot of people through tennis. Talking about this, we sponsor a professional tennis tournament in Geneva with ATP challengers. We also organize cultural events which are an opportunity to meet local personalities from here.

B Why Geneva?

GT When we arrived in 2001, it was to benefit from an excellent environment and quality of life. Moreover, it is a perfect place when you are actively trading. In terms of education we could go to London for my son, but schools are excellent here as well. Moreover, the very central geographical location in Europe facilitates my frequent trips

B And, in terms of business?

GT The government is pragmatic and very business oriented. Whether it is left or right they all make a lot of effort to create an ideal environment for trading companies. There are 9000 people who work in trading in Geneva. All these people are very well paid, pay taxes, spend a lot and numerous visitors come to meet them. It is an excellent activity for the government.

B What is the economic impact of Gunvor in Geneva?

GT We pay more than 20 million in taxes here and if you count salaries and other things, we inject over 50 million francs into the economy every year. Furthermore, we have 5 billion in loans and credits with various banks in Geneva like BNP-Paribas, Credit Suisse, Crédit Agricole and even the Banque Cantonale de Genève. You will see more and more commodity trading companies settling down here, coming from London and elsewhere.

B Would you consider living elsewhere?

GT No, for the time being my family and I are very happy with our life in Geneva. Of course, if the business environment were to change in regards to our activities, we might consider reviewing our plans. But I see no indication of this.

B Why are you so discreet?

GT I try to remain who I am and to lead a normal life.

B What car do you drive?

GT A Smart.

B Who do you socialize with in Russia?

GT I have known the whole business community, especially in the field of energy, for a very long time. I have been socializing with all the managers of Russia’s largest oil and gas companies for years. In this business, people trust you in the long term only if they know you and if you are a real professional.

B What is the information that you consider false about yourself?

GT There is so much of it, I don’t know where to start. As a result, I have to open myself to the international media to explain who I am. But we gave two interviews with my partner, this one is the third, and the image begins to be more precise.

B Do you have protection in Russia?

GT Like many businessmen in Russia I have to take security measures because unfortunately it is not as safe as in Geneva, even if security has improved a great deal in the last ten years.

B Do you travel by jet?

GT Yes. I travel about 500 hours a year, mainly for work purposes. I move all the time. My daughter does not like it much that I fly by jet and she draws my attention to CO2 emissions and the risks for the environment. But we use private planes for business and to make sure that time is money.

B Have you got investments in the West?

GT Yes, I have a bit of real estate in Geneva. Other than that, I own two Relais & Chateaux hotels in France, an aviation company in Finland and more recently a small insurance company in Germany.

B Do you sponsor a sailing team?

GT Yes, I have a team in the RC44 Championship Tour, the race course created by Russell Couts. It is a mini America Class with boats with eight-people crews on board. Paul Cayard manages the team. The last time, my boat, the Katusha, came second in a boat-race in Slovenia.

B How did you make your fortune?

GT With the changes in the USSR, so dramatic from a political but also economic point of view, there were many opportunities to make a fortune during the transition from socialism to capitalism. We were lucky to be in the right place at the right time. In slightly more than twenty years we have transformed a small trading company into one of the most important independent oil trader in the world.

B What about you, personally?

GT I have more than 20 years experience in oil and petrochemicals. In 1991, I went to Finland and I spent ten years there and now I have Finnish citizenship. It allowed me to learn about business culture in Europe, a great asset compared to my colleagues who spent their entire career in Russia. I learned what a reputation was worth and how to behave in a transparent way in business.

B But not only…

GT We are not afraid of investing in the real economy, even in Russia. If someone wants to make money it is probably the best place in the world for it. Since the beginning with my partner, we had the vision to create a business which had a dimension bigger than only the financing of oil. In oil logistics, amongst others. We are the biggest private carrier of oil and derivative products in Russia where we started from scratch. Our company now has 25 000 wagonloads and 36 locomotives.

B Why this vertical integration?

GT The ambition was to become very competitive and to have good relations with terminals. Previously, we used to deal with a single outlet situated in Estonia. Now, we are going to build a new oil terminal, the biggest in the world, which will allow the transit of goods from train to boat. It is a 800 million dollar investment financed by our capital and debt.

B While Gunvor has quickly taken a lead (in the market), how do you manage to embark on such vast projects?

GT I began in this sector in 1987: 22 years is not a short period of time. Our infrastructures in Russia allowed us to handle more volume and to become more competitive than any other Russian company. Which does not prevent us from having very good relations with all the Russian oil companies, state-owned or private. But we have reach a higher stage now.

B And that is?

50 % of our oil is now extracted outside Russia. It comes from Indonesia, Algeria, Thailand, Ecuador, etc. We are not only focused on Russia and we are henceforth a global player. In Geneva, amongst the 110 people who work for Gunvor, 25 % are Swiss, 6 % Russian and the rest is very international. On the whole, we employ 300 people and we diversify our activities. We have just set up a new division active in trading of natural gas, electricity, coal and CO2 emissions. This division will employ fifty people in Geneva by the end of 2010.

B How do you perceive the crisis in Russia?

GT It will not be like the 1998 bankruptcy but still the crisis is serious. It shows how much work the government still has to do to restructure the economy and establish healthier and more diversified bases for it. I feel encouraged by the number of investment projects in the infrastructure and industrial areas. These initiatives are strategic to guarantee the country’s prosperity. One should note that during this crisis, I was impressed by the excellent team work and cohesion between President Medvedev and Prime Minister Putin.

B And politically, how you do see the country evolving?

GT Russia is in a phase of consolidation, Prime Minister Medvedev is very impressive. He is doing a good job for the country while also highlighting what is not going well. Whether it is corruption or other issues. I find Medvedev’s modernization project, which involves diversifying the economy through promoting investments in technology among other things, fascinating. Overall, things are going in the right direction. Maybe one day Russia will be a member of Europe.

B Do you currently have any other projects in Russia?

GT We will open a mineral water factory in Nizhniy Novgorod (Russia’s fifth largest city) at the beginning of 2010. This investment is important, so we can have quality water, and it also allows us to create jobs. We have just taken a minority stake in a geological studies and oil exploration company. We are looking at sectors like insurance or real estate. But our core business remains trading and logistics and more recently a significant investment in Russia’s largest private gas producer, Novatek, which is listed on the London and Moscow stock exchanges.

B Would you have any interest in creating a bank in Switzerland?

GT Everything has been done in this field. I have often talked with private bankers in Geneva, who have been in the business for seven or eight generations and are very competent. They have this huge experience of highs and lows in the world of finance over a very long time. I have no expertise and I will not be able to add much. I would rather stay within my field of expertise.

B And in the industrial field?

GT I am not looking into any project at this stage. On the other hand, in Geneva I have created a foundation to promote cultural, scientific and educational exchanges between Russia and Switzerland, particularly in Geneva. We recently sponsored an exhibit on Russian literature at the Bodmer Foundation, which attracted 5000 people.

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Comments»

1. Scopefinance - December 7, 2010

All I could say is: congratulations to GT. I have lived this incredible period stretching from 1982 till today, I’m myself an Electromechanic and Petroleum engineer and an oil trader with more than 25 years experience and can assure you that a smart engineer and trader who is fluent in both Russian and English or German can make miracles during this period. GT made it. This period offerred opportunities that can happen once every one thousand years. No matter what others think or say: if they did not live this exciting period close to Russia and the petroleum markets they would never understand how someone can build a fortune from scratch.


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