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Abu Dhabi National Oil Company and energy trading house Gunvor are extending an exclusivity period in deal talks as they try to reach an agreement on a possible investment.
The discussions could lead to Adnoc taking a minority stake in Gunvor, whose net profit soared to $841 million in the first half of last year, higher than its full-year profit in 2021, as energy markets took a hit from Russia, the people said. full scale invasion of Ukraine.
Exclusive period of talks to begin last summer, The deal was originally set to expire at the end of December, according to people familiar with the matter.
Adnoc, the state-owned oil producer of the United Arab Emirates, which produces about 4 percent of global crude supplies, is trying to diversify its revenue streams and build a trading arm.
Gunvor – co-founded in 2000 by CEO Torbjörn Törnqvist and Russian oligarch Gennady Timchenko – is looking to raise capital to fuel growth.
As part of plans to expand the division, Adnoc’s trading division is preparing to open its first Swiss office this year.
CEO Sultan Ahmed Al Jaber, who will also serve as Chair of this year’s UN climate summit When the UAE hosted the conference in November and December, it had previously said he wanted to “Stretch value” Adnoc oil per barrel through investment in refining and trading capacity.
But the talks have sometimes hit setbacks, with the two companies coming from very different backgrounds: Adenok, a state-owned energy giant that set up a trading arm less than five years ago, and Gunvor, known for its progressive culture and history with Russia. .
Gunvor is one of a handful of large independent commodity traders, including Trafigura, Vitol and Mercuria, which play a major role in global energy transactions, acting as middlemen and operators of infrastructure such as terminals and refineries.
Trading firms have enjoyed unprecedented profits over the past year amid volatility in oil and gas markets sparked by Russia’s invasion of Ukraine.
Törnqvist controls almost 90% of Gunvor and has been considering a sale for some time. He held unsuccessful talks with Algeria’s state-backed energy company Sonatrach in 2019 and has discussed potential tie-ups with other trading houses in the past, according to people familiar with the matter.
Gunvor, with its roots in Russian oil trading, has expanded in recent years to become one of the world’s largest traders of liquefied natural gas.
In 2014, shortly before Gunvor co-founder Timchenko was sanctioned by the U.S. government over his alleged ties to President Vladimir Putin, the Russian trader sold his stake to Törnqvist and has since left company. The State Department claimed at the time that Putin himself may have “acquired funds from Gunvor” without providing evidence.
Gunvor has staunchly denied allegations of links to Putin and has diversified its operations away from Russian territory in the nine years since Timchenko’s exit, such as selling a majority stake in its Ust Luga oil terminal near the Estonian border.
The commodities trader, despite posting a record half-year profit in 2022, is also under financial pressure after charging trading firms high margins due to extreme volatility in energy markets last year.
Adnoc and Gunvor declined to comment.
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