Abu Dhabi to be the logical owner of Gunvor

LONDON, Oct 4 (Reuters Breakingviews) – Mohamed bin Zayed Al Nahyan may be about to deploy his fossil fuel windfall. Abu Dhabi National Oil Company (ADNOC), one of the crown jewels of the United Arab Emirates’ president, is considering a takeover of Geneva-based private commodity trader Gunvor. “MbZ” is the right to express interest.

The risk of buying a trading business is that its main asset — its employees — goes out the door. Gunvor was majority-owned by Gennady Timchenko until 2014, sanctioned He has been criticized by the United States for his ties to Russian President Vladimir Putin. While Swede Torbjorn Tornqvist bought his stake and ran the company, the history may make some Western buyers hesitant.

However, the UAE is not as restricted as the Western bloc. It has a neutral stance on Ukraine. Before the war, Gunvor had only sourced about 10 percent of its goods from Russia and said it had closed deals with Russian-related counterparties.

Also, Tornqvist has what MbZ wants.Gunvor trades 2.7 million barrels a day, less than a quarter of Shell’s (shell) and the volume of BP, and is smaller than Torque or Vidor. However, it is one of the largest liquefied natural gas (LNG) traders, a market that Abu Dhabi is salivating as Europe strives to displace Russian energy. With the UAE’s annual LNG export capacity set to more than double to more than 15 million tonnes, it can tap a large number of customers to seal token but limited supply deals with countries such as Germany.

Assessing Gunvor involves guesswork. Oil majors conflate their trading arm with other lines of business, obscuring their profits. But Bernstein believes Shell could reach $15 billion in EBITDA in 2022, and $12 billion in a less-special year. Even at a low value of 2.4 times 2022 EBITDA for broader group deals, Shell’s trading arm would be worth nearly $30 billion.

Gunvor doesn’t disclose EBITDA, but it accounts for about one-fifth of Shell’s trading volume. Assuming it’s worth one-fifth of the unit’s assumed value, it could sell for at least $6 billion. This may be underestimated. ADNOC’s Saudi rival Saudi Aramco (2222.SE) Although it trades less than 5 million barrels a day, it has been touting its trading business for $30 billion.

Even $6 billion is a lot of money.However, the UAE alone is likely to make $125 billion from oil and gas sales in 2022, nearly triple 2020 revenue. Given the strategic logic, MbZ probably thinks it’s worth the money.

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Background news

Abu Dhabi National Oil Company (ADNOC) is in early talks to acquire or take a stake in energy trader Gunvor Group, a source with direct knowledge of the matter told Reuters in a Sept. 21 article.

Gunvor and ADNOC declined to comment. In March, Gunvor co-founder and CEO Torbjorn Tornqvist said he was looking for partners to help expand the business and inject capital.

Tornqvist is a major shareholder in the company, which posted record profits in both 2021 and the first half of this year.

Edited by Neil Unmack and Streisand Neto

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