Page 11 - FSUOGM Week 41 2019

FSUOGM INVESTMENT FSUOGM
Gunvor downplays plan to sell Ust-Luga oil terminal stake
RUSSIA
Gunvor suffered its first annual loss last year, but has since recovered.
GLOBAL commodities trader Gunvor has shelved plans to divest a refinery in Germany and an oil product terminal in Russia, following a return to profit, its CEO told Reuters.
The Swiss group considered selling non-core assets after suffering its first-ever annual loss of $330mn in 2018 as a result of write-offs and other impairments. It soon recovered, however, post- ing a gross income of $800mn for the first three months of 2019.
“We actually covered all our losses from last year. We spent a lot of time overhauling the busi- ness,” CEO and founder Torbjorn Tornqvist told Reuters on October 9. “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.”
After swinging to loss last year, Gunvor put up for its sale its 110,000 barrel per day refinery in Ingolstadt, Germany, as well as a 26% stake in a refined products terminal in the Russian Baltic port of Ust-Luga. With the lift in performance, it now wants to hang on to these assets, which it views 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. “Ust Luga generates significant cash so we have slowed down the [sales] process.”
The share in the Ust-Luga terminal –the main outlet for Russian fuel exports – represents Gun- vor’s only remaining asset in Russia. The com- pany divested most of its Russian operations after the oil price crash.
Ust-Luga
Ust-Luga is capable of annually exporting 18mn tonnes of “dark” oil products such as fuel oil and vacuum gas oil and 12mn tonnes high- er-value “light” oil products including gasoline and diesel. Its owners, which besides Gunvor include state oil pipeline operator Transneft and businessman Andrei Bokarev, now want to upgrade the terminal to ship more light products, reflecting changing export trends in Russia.
Global demand for dark oil products is fall- ing, in part because of tougher IMO restrictions on sulphur emissions and the rise of LNG as a shipping fuel. Between 2020 and 2022, the Ust- Luga terminal plans to expand is capacity for exporting light fuels by 2-4mn tonnes per year, its deputy general director for production, Alek- sey Radchenko, said at a conference in Moscow on October 11.
Ust-Luga handled 26.9mn tonnes of fuel exports last year, including 15.8mn tonnes of dark and 11.1mn tonnes of light oil products and condensate. ™
Week 41 16•October•2019 w w w . N E W S B A S E . c o m P11