jump to navigation

Timchenko’s Gunvor Thrives As Gas Prices Rise in Europe February 22, 2012

Posted by mytruthaboutoil in Uncategorized.
Tags: ,
add a comment

Energy trader Gennady Timchenko, head of Geneva-based Gunvor Group, has his work cut out for him this year as Europe sees gasoline prices soar to new highs among fears of European economic destabilization.

Bloomberg on February 1, 2012 reported that gasoline was at a four-month high while jet fuel premiums climbed for the first time in a week. The rising price of gasoil may or may not be here to stay, analysts speculate. Just days ago, European gasoline barge prices had weakened and were down by about 1.9 percent (around $994 to $995 a tonne) following outages at various refineries, according to news sources. Hovensa LLC moved to close its refinery in the U.S. Virgin Islands, and Petroplus Holdings saw reduced and stopped runs at five of its refineries. The outages were speculated to account for the boost in refining profits.

America has witnessed heightened tensions in the oil industry in recent weeks. U.S. oil refinery workers have been threatening to strike—which traders fear could close 6 percent of America’s refinery capacity. The current situation in America with possible refinery closures seems to be yet another hurdle the industry has overcome—so far. By agreeing to a new three-year contract, the United Steelworkers union and Royal Dutch Shell Plc avoided a labor strike that would have closed around 70 refineries. 

Gennady Timchenko and Torbjorn Tornqvist, co-founders of Gunvor, have seen—and surpassed—turbulent markets such as these before. After all, it wasn’t so long ago that BP’s well blew out in the Gulf, resulting in an environmental disaster as millions of gallons of oil flowed into the ocean and washed ashore.  

Adroit at navigating fluctuating markets, Gunvor is not Gennady Timchenko’s only successful business venture. The Finnish energy trader also co-heads publicly traded Novatek with Leonid Mikhelson.  Gennady Timchenko and Leonid Mikhelson recently announced tentative plans to try and boost the capacity of liquefied natural gas production in the Arctic Yamal region, in partnership with Total SA, among others.

 

Gennady Timchenko to control construction giant ARKS September 13, 2011

Posted by mytruthaboutoil in Oil (general), Oil giants, Oil trading.
Tags: , , , , , , ,
add a comment

Gennady Timchenko’s energy trading company Gunvor recently acquired a stake in construction giant ARKS and bought an option to take control of the company. A new step forward for the Finnish businessman’s diversification strategy.

A month after gaining control of mining company Kolmar Coal (51%) for approximatively $400 million, Gennady Timchenko’s Gunvor, the third independent energy trading company in the world, goes further with ARKS.

The company acquired last week 21% of one of the leading Russian construction company, ARKS, in order to diversify from oil and gas business. The Moscow-based company is notably specializing in building roads and highways in the Moscow region.

According to Russian newspaper Kommersant, Gennady Timchenko bought 21% of the building company for $200 million. Moreover, the businessman received an option to take control within a few months.

Founded in 2003, the ARKS group was formerly known as UM #4, Russian oldest construction company (since 1926). The group has three main affiliates: Create Story (construction), UM #4 (demolition) and Nataland (engineering services).

Since 2010, Gunvor has launched a wide diversification strategy. According to analysts Gunvor’s recent moves are a bid to curb the company’s reliance on oil and gas, which currently represent most of Gunvor’s turnover.

Gunvor founder and co-owner Gennady Timchenko is a Finnish businessman with Russian origins, specializing for decades on Russian oil and infrastructures.

Gunvor’s Gennady Timchenko’s passion for sailing November 28, 2010

Posted by mytruthaboutoil in Oil (general), Oil giants.
Tags: , , , ,
add a comment

Gennady Timchenko, co-owner of oil trading company Gunvor, has a secret passion: sailing. Timchenko is the owner of “Katusha”, a class RC 44 boat competing in the Austrian Cup. He recently steered the boat during a race in Gmunden.

Last May, Gennady Timchenko achieved a dream. For one day and four races, he steered the boat he owns, Katusha, during an official regatta of the RC 44 Austrian Cup in Gmunden.

The RC 44 is a Ferrari of boats and the fleet is very competitive, so you can imagine what a stressful day it would be for a novice sailor to be steering one of these boats in a 10 boat fleet race”, said a crewmember of Katusha at the end of the race.

Gennady Timchenko actually did pretty well for his first ever regatta, and never finished last in any of the races against professional sailors – a huge accomplishment.

The crew of Katusha, which never had their owner onboard before, also enjoyed the experience and Gennady Timchenko’s humble and positive attitude: “He had a smile on his face despite receiving plenty of suggestions all day long”, a crew member said.

Gennady Timchenko was the most excited of all the crew. “I will remember this first regatta all my life! It is an absolute pleasure to sail on this lake with Paul and the other guys; the place is absolutely beautiful and the sport is very interesting”. His only regret, “I discovered it so late!”

Gennady Timchenko: how Gunvor’s founder changed the face of oil trading October 22, 2010

Posted by mytruthaboutoil in Oil giants, Oil trading.
Tags: , , , ,
add a comment

Logistics and infrastructures. Gennady Timchenko’s motto over the years has been to improve logistics and infrastructures. The only way to do business for a “niche player” who wants to buy and sell competitive oil.

When Timchenko founded the independent oil trading company Gunvor, more than a decade ago, oil trading was a business only Majors could afford to get involved in.

Oil majors were essentially controlling the entire logistics systems in the trade and did not have to fear the rise of competitors. Neither did they have to work on improving logistics to bring cheaper oil to markets.

From Perestroika to Geneva

Gennady Timchenko’s oil trading career started at the dawn of the Soviet era when Mikhail Gorbachev’s Perestroika was in place.

This was a period of liberalization for Russia’s economy, during which Timchenko, who was working for the government at the time, was asked to build the first ever oil export routes from Russia to Western Europe. Railway, pipelines, port facilities,… Timchenko’s team conceived the first infrastructures meant to export Russian oil.

This experience gave Timchenko in-depth know-how and expertise of Russian oil trading infrastructures and bottlenecks.

He created Gunvor in 1997 based on his insight: Russia’s oil was not competitive on an international scale because of the weakness of Soviet-inherited infrastructures.

Better logistics to sell competitive oil to Western markets

Gennady Timchenko, along with his business partner Torbjorn Tornqvist, understood the cause of Russia’s bottlenecks. So they massively invested in infrastructures.

Gunvor notably built its own railway company, several port facilities, and its own oil tanker fleet.

These investments allowed Gunvor to buy oil cheaper than their competitors and to sell it at attractive prices. This meant they became a highly reliable and competitive player in the market.

More than ten years after its creation the company has widely broadened its range of activities with offices and operations across the world. Gunvor is also active in the global energy trading market, including power, gas and renewables

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

Posted by mytruthaboutoil in Oil giants.
Tags: , , ,
1 comment so far

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.

“The Economist” apologizes to Gennady Timchenko and Gunvor August 3, 2009

Posted by mytruthaboutoil in Uncategorized.
Tags: , , , ,
add a comment

economist timchenko okIt seems that finally journalists have to admit that, in the 21st century, the oil business is actually conducted in a nice and transparent way by the leading traders. FYI, please find hereafter a translation of the prominent Geneva newspaper La Tribune de Genève:

“An agreement has been reached between the oil group Gunvor, whose operations are run from Geneva, its co-founder, Russian citizen Gennadi Timtchenko, and the British magazine “The Economist”.

Apologies will be published in the weekly’s next issue.

This agreement ends the conflict dating from 29 November 2008 and renders null and void any and all proceedings filed by Gennadi Timtchenko. On the date in question, the magazine had implied that Gunvor or Gennadi Timtchenko had received favors following payments made to Russian political leaders.”

Gunvor: an unknown trading giant March 16, 2009

Posted by mytruthaboutoil in Oil (general), Oil giants, Oil trading.
Tags: , , ,
add a comment

traderdeskVery few people outside oil circles have ever heard of Gunvor, a Dutch company with trading desks in Geneva and Singapore, even though it is now the third largest oil trader in the world with an annual turnover of around 70 billion dollars and profits in the hundreds of million according to its Chairman Torbjorn Tornqvist. (see the Financial Times article 14/05/08).

The oil trading success story of recent years

The company was created in 1997 as a niche player focusing on exporting Russian oil through Estonia, relying on the expertise of its two founders (Torbjorn Tornqvist and Gennady Timchenko) in the oil business, the Russian market, and transit logistics as well as connections in Estonia. Mr. Tornqvist has traded oil across the world for over twenty years, beginning his career at BP. Gennady Timchenko was one of the first Russians to export oil to Europe. Many in the oil industry consider him to be one of the pioneers of the oil trade between East and West, and he created the first new export routes for Russian oil after the break-up of the Soviet Union.

It is very interesting from a trading point of view to see how Tornqvist and Timchenko used their experience to build a logistics system able to overcome the different bottlenecks which were seriously harming Russias oil export, since the country had (and still has) quite poor infrastructure. This allowed Gunvor to take maximum advantage of overcrowded pipelines and thus transit oil extremely efficiently. A real case study!

logistics-image

Gunvor also invested in oil storage facilities, railway transportation as well as port facilities and terminals, therefore ensuring a comparative advantage over their competitors (this is how John D. Rockefeller got rich, too). Today, Gunvor is associated with a railway oil transportation company (Transoil) and has its own tanker fleet, which allows it to keep costs very low. (On this there is an excellent article, if you read German, in Capital, 12/02/2009)

Gunvor’s business has grown steadily since its founding, but especially so after the Yukos group was dissolved and taken over by Rosneft. This is because Rosneft, contrary to Yukos, did not trade its own oil. Suddenly, Rosneft needed to outsource the sale, transportation and delivery of huge volumes of oil, and Gunvor (as well as Glencore, Vitol, and other traders) dramatically increased their volumes. Gunvor is now in a position to rival these other great oil traders.

In 2007, the company had an annual turnover of about 70 billion dollars and profits of several million dollars. Gunvor has thus become the third largest oil trader in terms of turnover behind Glencore (142 billion dollar turnover) and Vitol (146 billion dollar turnover). I call these the “Big Three”.

Thanks to its knowledge of the Russian market and its logistics, Gunvor also trades one third of Russian oil exports. Perhaps because of this, rumours circulate that Gunvor is somehow linked to the Kremlin (some even say Timchenko and Vladimir Putin are in the same Judo club). I personally dont see how such a strategic company could NOT be closely watched by the political authorities (remember what I said about French Total, or even Aramco?). What is certain (from my point of view) is that Gunvors management is professional and, if we look at its history, its success does not seem surprising or strange: they have continuously offered Russian suppliers the best price. Of course, other traders have complained about this…

The company’s future also seems sound. Indeed, as the company has become larger it has begun focusing on the Asia and West African markets, where they already have a strong presence. It is a pity the company is not publicly traded, or I would buy some of its stock today!

Anyway, this means that Gunvor is a company to keep an eye on, as it promises to become a huge actor in the global oil trade. Ill keep that eye for you.