MOSCOW (MRC) - Energy trader Gunvor Group is considering selling non-core assets in Russia and finding a strategic partner for its German refinery as it tries to recover from the first-ever annual loss it suffered in 2018, trading and banking sources said, as per Hydrocarbonprocessing.
Four sources familiar with the development said the plan had been discussed in recent meetings between Gunvor’s majority owner Torbjorn Tornqvist and Gunvor’s main lending banks.
The sources asked that neither they nor their banks be identified because they were not allowed to speak to the media. The plan and losses had not previously been reported.
Gunvor, formed at the start of the century by Tornqvist and his former Russian partner Gennady Timchenko, first specialized in Russian crude and product sales. It became at one point the biggest seller of Russian oil thanks to what it described as excellent Russian connections.
Its role in Russian oil shrank earlier this decade and the trading house diversified into other areas and products. Last year was widely considered to have been difficult for merchants as traders lost money on sharp, unexpected price swings in oil benchmarks such as Dated Brent and U.S. West Texas Intermediate.
Sources said Gunvor’s underlying trading business remained profitable and strong in 2018. However, the trader suffered losses due to one-off factors that will not be repeated this year, the sources said.
Those included a write-down of several tens of millions of dollars because of an abandoned upgrade of its Rotterdam refinery, a write-down relating to the Lagansky Caspian Sea oil block in which it no longer holds an interest, and provisions for legal cases that remain open.
Gunvor told its bankers that 2018 losses would be non-recurring, the sources said. Final 2018 results will not be published before April. Preliminary nine-month results for 2018 showed a loss in excess of USD100 million due to the one-offs, two of the four sources said.
Gunvor declined to discuss the plan and financial performance. “Gunvor has proactively addressed challenges it faced in 2018 by making decisive, strategic adjustments, including restructuring, trimming costs, and investing in its trading platform,” a company spokesman said.
MRC