MOSCOW (MRC) -- Global energy trader Gunvor Group is keen to expand its oil dealings in Russia, Chief Executive Torbjorn Tornqvist told Reuters, and sees oil prices staying rangebound over the next few months as the coronavirus pandemic weighs on demand.
“We want to do more in Russia. We are getting more oil there,” Tornqvist said in an interview on Tuesday, without detailing plans.
According to traders, Gunvor will be the largest buyer of Russian Urals from state-firm Rosneft out of the country’s two Baltic ports in April.
Rosneft has been trying to woo traders to invest in its massive Vostok Oil Project in the Arctic. Rival trading firm Trafigura bought a 10% stake in the project last year.
Geneva-based Gunvor’s beginnings were Russia-focused until 2014 when its co-founder Russian businessman Gennady Timchenko was put under sanctions by the US. Treasury that considered him a close ally to President Vladimir Putin. At that point, Gunvor pivoted away from Russia, sold most of its assets and grew into a global business, including expansion into the United States. Russian trading accounted for 5% of its traded volumes in 2020.
Tornqvist said that 2020 was one of the best years for the firm from the trading perspective following a strong performance in 2019 after a difficult 2018 and a company reorganisation. He added that the company had a strong start in 2021 between the extreme cold spells in Asia and in the southern United States that saw prices for liquefied natural gas (LNG), power and natural gas skyrocket.
European refiners still need to contend with low margins and weak demand due to strict COVID-19 lockdowns aimed at curbing a third wave of contagions.
Tornqvist sees oil prices holding rangebound over the next months. Brent oil futures are trading in the low USD60s a barrel . “Stock draws are not going as fast as anticipated and demand is not fully back. Europe is going into another uncertain situation,” he said.
Gunvor mothballed its refinery at Antwerp, Belgium, but still runs two others, at Ingolstadt in Germany and in the Netherlands’ Rotterdam oil hub. The German refinery will undergo a turnaround in 2023 to boost efficiency and cut emissions.
As MRC informed earlier, COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.
We remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
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