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Vitol chairman seeking JVs with Middle East producers

March 21, 2018/ 12:15

Geneva. World's biggest independent oil trader is looking for deals with producers such as Abu Dhabi, Kuwait and Bahrain.

Ian Taylor, the legendary oil trader who stepped down as chief executive officer of Vitol Group this month to become chairman, is seeking joint ventures and long-term structured deals with some of the Middle East’s largest oil-producing nations.

“I am going to be visiting Africa and the Middle East and trying to promote Vitol and do some structural deals,” Taylor said in his first interview since the world’s biggest independent oil trader announced Russell Hardy was taking over as CEO.

Taylor said Vitol is in talks to strike joint ventures or long-term offtake and supply deals with producers such as Abu Dhabi, Kuwait and Bahrain as the wider oil-trading market remains challenging.

The 62-year-old said there is no certainty that any of the deals would be completed.

“You always want to do them if they make sense,” Taylor said. “But they are bloody tough to do and bloody tough to find. I’ll be slightly more inefficient because I’ll be spending more time chasing things that might not happen.”

Taylor’s move to chairman marks the end of a 24-year era during which he presided over spectacular growth for the trading house that now handles more than 7 million barrels of oil per day.

Hardy, an engineer by training who was previously Vitol’s head of EMEA, had already been running the company’s day-to-day operations, said Taylor, who has been focusing on building and nurturing relationships with producer countries and companies.

Share Sales

Vitol is planning to sell down a portion of its stake in Varo Energy BV as the refining, fuel station and European storage company sells shares to the public. It’s also planning a potential public offering of Vivo Energy, its African fuel service station business.

Taylor declined to confirm a report by the Australian Financial Review that it’s also considering an IPO of its Australian refining, retail and storage business Viva. “We’ve made it work,” he said. “We’re very happy with it. We’ll see where we take it from there.”

The oil market optimism expressed by some top executives at rival trading houses at the FT Global Commodities Summit in Lausanne may be premature, he said, amid shrinking margins and a lack of volatility that helps drive earnings.

“It is pretty bloody tough,” Taylor said. “And I don’t think anybody is making a lot of money.”

Crude prices could rise to $70 a barrel or above in the short term as demand from refiners for the summer season grows, but will likely decline toward $60 a barrel in the second half of the year, he said.

Vitol bought Noble Group Ltd.’s US oil liquids trading business last year in a deal that gave it greater access to the Colonial Pipeline.

“US exports are the big feature,” Taylor said. “Pipelines in the US are going to be very critical.”

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