Rosneft Oil Co and Others Exits Market: Smaller Firms Takes Advantage

May 27, 2022 at 17:08 PM EDT

Rosneft Oil Co. and other major oil-trading firms have withdrawn from the market, and smaller companies are seeking to profit by buying and transporting Russian oil. Small firms like Paramount Energy & Commodities SA, Coral Energy Pte. Ltd. and other little-known entities are purchasing Russian oil at a discount and transporting it to customers as their more prominent rivals pull out of the market.

The traders can make millions of dollars on a tanker if the company takes on the risk, in addition to the $600,000 they would have made before the war. The EU has banned its firms from doing most business with state-supported Rosneft Oil Co.

The Swiss government has also implemented some restrictions. Big traders like Trafigura Group, Vitol, Glencore PLC, and Gunvor Group left the country because of the EU’s restrictions.

Smaller traders seized the opportunity opened up by that decision. The trade might be over if the West tightens sanctions on Russia’s oil industry or financiers and shipowners discontinue working with Russian energy companies.

Kpler estimates that Russia exports roughly 3.6 million barrels of oil a day by the sea, falling from 3.8 million barrels a day in April.

Paramount, a Geneva-based firm headquartered in a brown eight-story office building near Lake Geneva, has been trading an average of 163,000 barrels a day since the invasion, according to Petro-Logistics data.

A person familiar with Paramount’s operations said the company is boosting its presence in Dubai to avoid European sanctions. Niels Troost, its Dutch founder, is the company’s majority shareholder. Mr Troost and his team of traders are working in Dubai, the person said.

According to Mr Troost, Paramount has been based in Dubai since 2020 and has been purchasing oil from independent companies under long-term agreements made before the Ukraine incursion.

According to a person with intimate knowledge of the company’s operations, Hong Kong-based Concept Oil Services Ltd. supplied Paramount Pictures with oil.

Concept buys oil from Gazprom’s subsidiary, Gazprom PJSC and sells it to Paramount.

Mr Zeligman co-founded Tenergy Trading SA with Swiss energy trader Michel Tuor in Geneva. Mr Troost’s business interests include International Petroleum Products, a firm owned by Russian oligarch Gennady Timchenko, a longtime ally of President Vladimir Putin, according to a person with knowledge of his business interests.

Mr Tuor and Mr Timchenko used to play tennis together, according to a person with knowledge of Mr Timchenko’s business interests. Mr Timchenko was hit with sanctions by the U.S. in 2014 after Moscow annexed Crimea after he was hit with sanctions by the U.S.

Paramount’s ability to ship oil is crucial for Mr Putin. According to the International Energy Agency, oil-and-gas sales accounted for 45% of Russia’s federal budget last year.

The Kremlin’s coffers are being plumped up by high energy prices, in part because of the war. Because of a 25% increase in business in April, Coral Energy traded around 260,400 barrels of crude and refined products per day in Moscow, according to Petro-Logistics data.

As of May, so far, the company has averaged 213,600 barrels per day. According to people familiar with the matter, the drop resulted from a shift in business to subsidiaries.

Founder Tahir Garayev established Coral in 2010. Russian oil accounted for about a fifth of Coral’s trade before the war, according to Chief Financial Officer Ahmed Karimov. A quarter of the fuel is purchased from Rosneft, a private refiner, and a fifth of it is purchased from private refiners, according to Mr Karimov, Coral has no subsidiaries, he added. It is winding down its Russian business, Mr Karimov explained, because many banks are unwilling to finance Russian trades.

In March, the European Union imposed sanctions on Rosneft, and Coral told the state firm that it was withdrawing from a long-term deal to buy virgin gas oil, following emails from The Wall Street Journal and Mr Karimov.

Rosneft is giving better terms to customers like Coral to encourage them to switch to Russian fuel, as banks are restricting them. According to Mr Karimov and two people familiar with the deals, Coral no longer has to secure its payments through a bank. Rosneft did not respond to a request for comment. This business will continue in Singapore with the help of Geneva staff relocated there, a person familiar with Coral said.

The EU and Swiss sanctions on dealing with Russian state firms don’t apply to Singaporean firms. Coral plans to open an office in Singapore but will hire local workers and will not use the team to trade with Russia, according to Mr Karimov.

The post Rosneft Oil Co and Others Exits Market: Smaller Firms Takes Advantage appeared first on Best Stocks.

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Rosneft Oil Co and Others Exits Market: Smaller Firms Takes Advantage

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