![]() They are now building up their presence in renewables. They have expanded their presence in LNG, as supply grows and prices have jumped. But they now seem comfortable stepping into a future without it. Trafigura, Vitol and others have made record profits over the past few years by capturing price volatility and making smart bets on the futures markets. But whether the big Asian state operators are willing to step in, and run the risk of being exposed to sanctions, is a different matter.įor the big western traders, Russian oil was once though an indispensable part of their business. The replacement of Trafigura by a Far East-based company underlines Russia’s growing Asian pivot, and its determination to cut its ties with the West. At the St Petersburg Economic Forum last month, the CEO of Rosneft, Igor Sechin, invited Asian “friends” to join the Vostok project, with executives from India’s ONGC and China National Petroleum Corp. It is one of several obscure newcomers that have popped up as regular offtakers of Rosneft barrels in recent months. According to port data, Nord Axis last month sold several cargoes of vacuum gas oil and fuel oil out of the Kavkaz terminal, all of which came from Rosneft and ended up in Greece. The company does actual business in Russia, shipping products out of the Black Sea. The ultimate owner of Nord Axis remains a mystery, with the Hong Kong registry offering little detail. Nord Axis could not be reached for comment, and Rosneft declined to comment. How was Nord Axis, which was incorporated in February, able to buy the multibillion-dollar stake? Trafigura did not disclose the sales price but said Nord Axis has taken on “non-recourse debts” associated with the shareholding that amount to around €5.8 billion. The Kremlin has also moved to limit the sales price of transactions. Russia has enacted a series of policies aimed at guiding Russian oil and gas assets into the hands of companies registered in Russia. Trafigura’s deal raises as many questions as it answers. ![]() Vitol - which bought a 3.75% stake in Vostok last autumn in a joint venture with Singaporean trader Mercantile and Maritime Energy (MME), with 1.25%, for a combined sum of €3.5 billion - is preparing to sell its equity in the project. The EU and Swiss sanctions that came into force in mid-May banning transactions with Rosneft and other Russian state-backed companies have forced Trafigura and Swiss giant Vitol to slash their Russian oil offtake, with volumes now a fraction of the 500,000 b/d they were at the beginning of the year. State-backed giant Rosneft expects Vostok to produce up to 2.3 million b/d by 2033. The chief attraction of the deal was the guaranteed long-term crude offtake it provided. Trafigura, which is headquartered in Singapore with a trading office in Geneva, had bought its equity in Vostok in late 2020 for €7 billion ($8.5 billion at the time), putting up €1.5 billion of its own capital and funding the rest via a syndicated loan arranged by a private Russian bank, Credit Bank of Moscow. ![]() The sale by Trafigura of its 10% stake in the $85 billion Vostok Oil upstream venture in Russia’s Arctic to a mysterious Hong Kong trader, Nord Axis, is further proof that sanctions are pushing the big western trading firms out of Russia, possibly for good. Since Russia’s invasion of Ukraine, major trading firms have been on the back foot there and now recognize the risks of continuing to do business in the country are too great. ![]()
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