MOSCOW (MRC) -- A rebound in profit this year has allowed Gunvor Group to cancel plans to sell its Ingolstadt refinery in Germany and stall the sale of a stake in a Russian products terminal, Chief Executive Torbjorn Tornqvist told Reuters.
The company has posted gross profit of USD800 million for the first three quarters of 2019 thanks to favorable market conditions and the overhaul of the firm that began last year.
"We actually covered all our losses from last year. We spent a lot of time overhauling the business ... We had a generational shift, lots of changes in corporate governance and risk policy. It’s the most fundamental change in the company since I started it," Tornqvist said.
"So we are seeing the fruits of that. I don’t deny that market conditions are better this year but the consistency in our performance is good. We did well in all our key offices in Geneva, London, the U.S. and Singapore, the best profits in years. The U.S. (office) is really ramping up. This year it’s performing up to our expectations and beyond."
Its liquefied natural gas (LNG) business continues to grow with shipments already surpassing the 2018 level of 176. Gunvor is the largest LNG trader and its traded oil and LNG volumes were 3.3 million barrels per day last year.
After suffering a loss of USD330 million in 2018, Geneva-based Gunvor came under pressure from banks and put two key assets up for sale - its 110,000 bpd German refinery at Ingolstadt and a 26% stake in a refined products terminal at Russia’s Baltic port of Ust Luga. But with the recovery, the firm is keen to keep the assets it sees as cash cows.
“At Ingolstadt, we were open to having a partner in this one. We had a process and received binding offers ... but we felt that this refinery is performing so well so we decided to put off the sale,” Tornqvist said, adding it was now looking to invest in more midstream oil assets including biofuels. "Ust Luga generates significant cash so we have slowed down the process."
Gunvor also expects a resolution this year with Swiss prosecutors over their investigation into the company’s dealings in Congo Republic between 2009 and 2011. It had already put aside funds in the event of a significant financial penalty last year.
In August 2019 oil trader Gunvor decided against signing a contract for oil products bought through tenders from Russia’s troubled Antipinsky refinery. SOCAR Energoresource, a joint venture between Russian lender Sberbank and a group of investors, holds an 80% stake in the refinery, which has debt exceeding USD5 billion and has filed for bankruptcy.
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