InterOil, LNG, Gunvor ink deal on gas scheme

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The National, Tuesday 29th November 2011

THE Gunvor Group’s Singapore office last Friday signed a “non-binding” agreement with InterOil and Liquid Niugini Gas Ltd to work toward lifting LNG produced from the Gulf province’s Elk and Antelope gas fields.
Gunvor is a major oil and gas trader on the global scene.
The following is some background on the company, extracted from Wikipedia:
Gunvor Group Ltd is an energy trading company registered in Nicosia, Cyprus, with major trading operations in Geneva and Singapore. The company operates in the trade, transport and storage of petroleum and other energy products, as well as having investments in oil terminal and port facilities. Its operations consist of securing crude oil upstream and delivering it to market via pipelines and tankers.
The company, which was founded in 1997, is the fourth largest crude oil trader in the world after Glencore, Vitol, and Trafigura, and is controlled by two men; Gennady Timchenko and Torbjörn Törnqvist.
Gunvor’s main supplier of crude oil is Russia, though the company also trades African, Asian and South-American crude and is active on all continents.
Early years

The company was created in 1997, by Gennady Timchenko and Torbjörn Törnqvist. In 2003, the company started operations in Geneva.
According to the Financial Times, until 2007 the company was a “niche player”focused on exporting Russian oil through Estonia, relying on the expertise of its two founders in the oil business, Russian market and transit logistics. Torbjörn Törnqvist is a Swedish citizen born in 1953.
He has traded oil across the world for over twenty years, beginning his career at BP. Gennady Timchenko is a Finnish citizen born in the Soviet Union in 1952.
He has more than 20 years experience in the oil industry, beginning with the Kirishi refinery during perestroika, and was one of the first Russians to export oil to Europe after the Soviet Union collapsed.
In 2007, Gunvor’s turnover was US$43 billion, with exports of 83 million tons of oil and petroleum products (60 million tons in 2006) and according to Tornqvist in an interview with Swedish business magazine Affärsvärlden the company expected to increase its volume to 110-115 million tons in 2009. In 2008, turnover was approximately $70 billion.
Logistics and
infrastructures
Gunvor had invested in oil storage facilities, railway transportation as well as port facilities and terminals, therefore ensuring a “comparative advantage over their competitors”, according to Törnqvist interviewed by the Financial Times.
According to the company website, Gunvor was associated with a railway oil transportation company (Transoil) and owned its own shipping company, Clearlake Shipping Ltd, which shipped 30% of the Baltic crude oil (20.5 million tonnes) in 2006.
According to Nefte Compass, from February 2002 to February 2008, Russian oil exports through Gunvor increased sixteen times.
The company controls 60% of the volume transiting through Estonia, and 41% of that transit via the port of Primorsk, Leningrad Oblast.
In 2009, Gunvor made major investments into physical assets such as oil terminals and facilities, the largest being into its oil export terminal in the port of Ust-Luga on the Baltic Sea, outside of St Petersburg. In September 2009, the terminal was sold to Transneft.
In September 2009, Gunvor made its first direct investment in oil exploration when it purchased a 30% interest in Lagansky block in the Caspian sea from Lundin Petroleum. The field has proven reserves of over 230 million barrels of oil.
Expansion
Gunvor had expanded beyond its Russian roots, and trades globally, including in the Middle East, Asia, Africa and the Americas with its main trading hubs located in Geneva for Europe, New York for America and Singapore for Asia.
The group had also opened offices in Amsterdam, Moscow, Houston, Beijing and Nigeria. Gunvor has stated that it intends to develop its new energy trading division so that it will become a more significant part of a more diversified business.
In 2009, Gunvor established its Global Energy division, focused on trading a broad range of energy commodities including global coal and freight, emissions and renewables, natural gas and LNG and power.
The company continueed to expand and diversify last year, both geographically and across the energy value chain.
Marking a new phase in its expansion into the European energy markets, Gunvor entered its first trades in the natural gas, power and carbon markets in January last year, and extending its trading capability across North West and Central Europe for physical natural gas and coal across the globe.
In April last year, the company hired traders who take responsibility for Gunvor’s physical-gas positions across continental Europe, D. Smith for as a coal trader in 2010, and Fredrik Bodecke who will be responsible for the Nordic and Baltic electricity markets.
Ownership
The ownership of Gunvor cannot be ascertained, as it was a privately-owned company.
It is said that its two founders hold an equal number of shares, with the balance being held in an employee benefit trust for senior management.
Following the major WikiLeaks release of US State Department cables in November last year, it was reported by the London Daily Telegraph that the wealth of Russian Prime Minister Vladimir Putin was linked to a “secretive Swiss-based oil trading firm” called Gunvor.
It said that John Beyrle, the United States Ambassador to the Russian Federation, stated that close connections exist between Gunvor and the Russian government and that he reported: “its secretive ownership is rumoured to include prime minister Putin.”
The newspaper went on to report that Gunvor had, however, totally refuted the existence of any links between it and Putin.
Gunvor stated in response to the Wikileak disclosure that Timchenko and Tornqvist owned “a large majority of Gunvor” and that a “minority stake was owned by an employee benefit trust”.
It went on to say that “the company had taken out credit facilities which require full disclosure of company ownership”.
The Economist
lawsuit
On November 27, 2008, as part of a lengthy special report on Russia, The Economist mentioned Timchenko in an article headlined Grease My Palm, that repeated, briefly, previously published statements about Timchenko and Gunvor.
Both parties sued for libel. The Economist withdrew the contested material from its website.
The lawsuit was settled in July 2009.
The Economist published a retraction.

 

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