Trafigura

Trafigura Beheer BV
Private
Industry Commodity
Founded 1993
Headquarters

Lucerne, Switzerland
(Head office)

Amsterdam, The Netherlands
(Registered office)
Area served
 Global
Key people
 Claude Dauphin, (Chairman)
Products Raw materials/merchant
Revenue US$ 127.6 billion (2014)[1]
US$ 2.2 billion (2013)[1][2]
Number of employees
 5,326 (2014)[2]
Website www.trafigura.com

Trafigura Beheer BV is a Dutch[3] multinational commodity trading company founded in 1993 trading in base metals and energy, including oil. It is the world's third largest private oil and metals trader after Vitol and Glencore Xstrata.[4][5] Trafigura was set up by Claude Dauphin and Eric de Turckheim. It split off from a group of companies managed by Marc Rich in 1993.[5] Dauphin owns less than 20% of the company, with the rest owned by 500 senior staff.[6] Trafigura has been named or involved in several scandals, particularly the 2006 Côte d'Ivoire toxic waste dump.

History

Trafigura Beheer BV was established as a private group of companies in 1993 by six founding partners: Claude Dauphin, Eric de Turckheim, Graham Sharp, Antonio Cometti, Daniel Posen and Mark Crandall.[7][8] Claude Dauphin, Chairman and CEO, and the last remaining founder in an executive position, owns less than 20 per cent of the group’s equity while more than 700 senior managers control the rest.[9]

Initially focused on three regional markets – South America (oil and minerals), Eastern Europe (metals) and Africa (oil) – Trafigura has since diversified and expanded globally.[10] The group currently operates from 81 offices in 56 countries.[11]

In November 2013 it was announced that Tory peer and former leader of the House of Lords Lord Strathclyde would be joining Trafigura as a non-executive director. He had previously stood down from the board of the group’s hedge-fund arm following the 2009 controversy over the Côte d'Ivoire incident.[12]

Investments

In 2003 the group established its fund management subsidiary, Galena Asset Management.[13] In 2010, Trafigura bought 8% of Norilsk Nickel.[14]

In February 2013 Trafigura invested $800 million in the Australian energy market, acquiring more than 250 petrol stations, two oil import terminals and five fuel depots in three separate acquisitions by its subsidiary Puma Energy.[15][16] At the time, there was interest in Australia among energy traders due to a combination of rising demand and the closure of outdated, high-cost refineries.[17] The same month, Trafigura joint venture DT Group partnered with Angola’s state oil firm Sonangol to form a new company, Sonaci DT Pte Ltd, to market Angola’s new liquefied natural gas (LNG) exports.[18]

In March, Trafigura announced a deal with South Sudan to export Dar Blend crude oil from Port Sudan.[19]

In October 2013 Trafigura secured USD 1.5 billion in financing for an upfront loan to Russian oil producer OAO Rosneft. The prepayment facility, which provided a loan for advance payment for more than 10 million tons of products over five years, was the largest such deal ever completed by Trafigura.[20]

A month later Trafigura signed an agreement with Dallas-based pipeline operator Energy Transfer Partners to transport crude oil and condensate via a partially converted 82-mile pipeline from the Eagle Ford oil field in McMullen County, Texas, to Trafigura’s deep-water terminal at Corpus Christi Bay, near the Gulf of Mexico.[21][22]

Oil-for-food scandal

The company was named in the Iraq Oil-for-Food Scandal in connection with the Essex, a Liberian registered "turbine-tanker" that had UN approval to load Iraqi crude at Iraq’s main export terminal at Mina al-Bakr. The tanker was chartered by Trafigura Beheer BV and according to its captain, Theofanis Chiladakis, the Essex was at least twice 'topped off' with an extra 272,000 barrels of crude after UN monitors had signed off the cargo.[23] This was on May 13 and August 27, 2001. Elf-Aquitaine employees had first talked about this scheme in February 1998.[24]

A Trafigura subsidiary called Roundhead, Inc. had bought the oil from a subsidiary of the French oil trader, Ibex Energy and claimed it paid Ibex a "premium" of 40 cents per barrel over the official United Nations selling price. In early October 2001, the Essex was intercepted off the coast of Curaçao before it could offload its illegal cargo. This resulted in more than US$5 million in additional shipping costs for Trafigura, and led them to sue Ibex in a London court for having misled them. But Ibex managing director Jean-Paul Cayre claimed in an affidavit that Trafigura had cooked up the scheme to "make up for an earlier loss on an Iraqi oil deal that fell through in 1999."

Waste dumping in Côte d'Ivoire

The 2006 Côte d'Ivoire toxic waste dump was a health crisis in Côte d'Ivoire caused by a Trafigura ship offloading waste in Abidjan, in order to avoid the extra dumping costs requested by Amsterdam Port Services BV due to local complaints about the smell. A local contractor dumped the toxic waste at as many as 12 sites in and around the city of Abidjan in August 2006.The gas caused by the release of these chemicals is blamed by the UN and the government of Côte d'Ivoire for the deaths of 17 and the injury of over 30,000 Ivorians, with injuries that ranged from mild headaches to severe burns of skin and lungs. Almost 100,000 Ivorians sought medical attention for the effects of these chemicals.[25]

The substance was claimed by Trafigura to have been "slops", or waste water from the washing of the Probo Koala's tanks. An inquiry in the Netherlands, in late 2006, revealed the substance was more than 500 tonnes of a mixture of fuel, caustic soda, and hydrogen sulfide for which Trafigura chose not to pay a €1,000 per cubic metre disposal charge at the port of Amsterdam. The Probo Koala was turned away by several countries before offloading the toxic waste at the Port of Abidjan.[26][27]

Trafigura denied any waste was transported from the Netherlands, saying that the substances contained only tiny amounts of hydrogen sulfide, and that the company did not know the substance was to be disposed of improperly. In early 2007, the company paid US$198 million for cleanup to the Ivorian government without admitting wrongdoing, and the Ivorian government pledged not to prosecute the company.[28] A series of protests and resignations of Ivorian government officials followed this deal.

In 2008, a civil lawsuit in London was launched by almost 30,000 Ivorians against Trafigura. In May 2009, Trafigura announced it would sue the BBC for libel after its Newsnight program alleged the company had knowingly sought to cover up its role in the incident. In September 2009 The Guardian obtained and published internal Trafigura emails showing that the traders responsible knew how dangerous the chemicals were. Shortly afterwards Trafigura offered an unnamed settlement figure to the class action suit against it.[29]

Chemical explosion in Norway

On May 24, 2007 an explosion occurred in Sløvåg Gulen, Sogn og Fjordane, Norway in a tank owned by Vest Tank, it had severe environmental and health consequences for people living nearby. In 2008 the Norwegian Broadcasting Corporation published the 50 min documentary "Dirty Cargo" disclosing what had happened in the small community prior to the explosion. The company Vest Tank was trying to neutralize the same kind of chemical waste that was dumped in Côte d'Ivoire when the explosion occurred. The owner of the waste was Trafigura, on whose behalf Vest Tank was working.[30][31][32]

Bond issuances and reported earnings

In 2008, the company had equity of more than $2 billion and a turnover of $73 billion that generated $440 million of profit.[5]

In March 2010 Trafigura made its first venture into capital markets, issuing Euro 400m ($539m) in five-year Eurobonds.[33]

The following month Trafigura listed its first perpetual subordinated bond on the Singapore Exchange (SGX) at a fixed rate of 7.625%.[34] The issuance raised $500m in long term capital that is treated as equity by international accounting rules, leaving existing shareholders undiluted.[35][36] By 2011, its revenue had increased to $121.5 billion and its profits to $1.11 billion,[1] with profits falling 11% in 2012.[37]

In 2013 as a consequence of the Singapore listing, Trafigura released financial statements for the first time, reporting Q1 profits of $216.1 million – up 3.2 per cent on the previous year. Revenue grew 7.9 per cent to USD 31.2 billion.[38]

Price fixing in Malta

In February 2013, Trafigura Maritime Ventures Limited, the Malta based subsidiary of Trafigura Maritime Logistics PTE Limited based in Singapore; along with Total’s oil trading arm became involved in an oil price fixing controversy that led to the barring of both companies from the tendering process by the Enemalta oil purchasing board.[39]

Activities

Trafigura is the third largest physical commodities trading group in the world behind Vitol and GlencoreXstrata.[40] Trafigura sources, stores, blends and transports raw materials including oil, refined petroleum products and non-ferrous metals (iron ore and coal).[41][42]

In the year ending 30 Sept 2013, the group traded approximately 2.4 million barrels of physical oil per day.[43] Oil is primarily sold to major state-owned, public and private energy companies including distributors, refiners and utilities.[44]

Trade in non-ferrous and bulk commodities – mainly copper, lead and zinc concentrate, alumina, refined metals of copper, lead, zinc and aluminium as well as the iron ore and coal trading books – made up 15% of Trafigura’s overall trading turnover in 2013. The group traded 32.9 million metric tons of non-ferrous and bulk commodities during 2013.[45][46]

In January 2013, Trafigura bought three medium range crude oil tankers to add to the existing six vessels that are operated by the joint venture company DT Group, and in May 2013 confirmed its order for up to eight medium-range product tankers.[47][48] In 2013 Trafigura's fleet of chartered tonnage consisted of between 50 and 60 tankers and 30 to 40 bulkers at any given time.

In support of its arbitrage-based business model, Trafigura ensures a degree of control over supply, storage and logistics through industrial subsidiaries: oil storage and distribution business Puma Energy, in which Trafigura holds an 80% interest;[49]

Trafigura is involved in paper trading through its subsidiary Galena Asset Management, which was set up in 2003 to invest in commodity funds.[42][50]

Corporate structure

Some of Trafigura's major international units include:

References

  1. ↑ 1.0 1.1 1.2 "2014 Trafigura Financials".
  2. ↑ 2.0 2.1 "2014 Trafigura Financials" (PDF). Retrieved 2010-07-24.
  3. ↑ Rob Evans (23 July 2010). "Trafigura fined €1m for exporting toxic waste to Africa". London: The Guardian. Retrieved 24 July 2010.
  4. ↑ Ammann, Daniel (2009). The King of Oil: The Secret Lives of Marc Rich. New York: St. Martin‘s Press. ISBN 0-312-57074-0.
  5. ↑ 5.0 5.1 5.2 Leigh, David (16 September 2009). "Inside Trafigura: Accusations, sour deals and friends in high places". London: The Guardian. Retrieved 2009-09-17.
  6. ↑ Blas, Javier (28 January 2013). "Trafigura boss doubts rally will return". Financial Times. Retrieved 10 March 2013.
  7. ↑ Blas, Javier; Sakoui, Anousha (11 March 2010). "Publicity-shy Trafigura pushes for bond issue". Financial Times. Retrieved 28 May 2013.
  8. ↑ "U.S. Rare Earth: co-créateur de Trafigura au conseil" [U.S. Rare Earth : co-creator of Trafigura board]. L’AGEFI (in French) (Geneva). 7 January 2013. Retrieved 1 December 2013.
  9. ↑ Serafin, Tatiana (2 August 2013). "Riding Glencore Wave, Commodity Trader Claude Dauphin Becomes a Billionaire". Forbes. Retrieved 29 May 2013.
  10. ↑ Bond Prospectus 17 Apr 2013 PDF (1.4 MB)
  11. ↑ "Trafigura". BNamericas.com. Retrieved 29 May 2013.
  12. ↑ Blas, Javier; Farchy, Jack (14 April 2013). "Trafigura adds Lord Strathclyde to board". Financial Times. Retrieved 20 November 2013.
  13. ↑ Blas, Javier (3 June 2011). "Big traders emerge from the shadows as demand grows". Financial Times. Retrieved 28 May 2013.
  14. ↑ "Mining Journal - Trader Trafigura buys 8% of Norilsk". Retrieved 2010-12-21.
  15. ↑ "Trafigura to Spend $68 Million on Australian Import Terminal". Hellenic Shipping News. 5 February 2013. Retrieved 28 May 2013.
  16. ↑ Shumsky, Tatyana (28 February 2013). "Trafigura’s Puma Energy Snaps Up Central Combined Group". Wall Street Journal. Retrieved 28 May 2013.
  17. ↑ Blas, Javier (3 February 2013). "Trafigura bets $800m on Australia energy". Financial Times. Retrieved 28 May 2013.
  18. ↑ Farge, Emma (28 February 2013). "Angola, Trafigura JV form LNG trading group". Reuters. Retrieved 20 November 2013.
  19. ↑ Farge, Emma (27 March 2013). "Trafigura signs oil export deal with South Sudan". Reuters. Retrieved 20 November 2013.
  20. ↑ Kent, Sarah (4 October 2013). "Trafigura Signs $1.5B Prepayment Deal For Rosneft Supply". Wall Street Journal. Retrieved 1 December 2013.
  21. ↑ Murtaugh, Dan (7 November 2013). "Energy Transfer to Covert Texas Gas Pipeline to Carry Crude". Bloomberg Businessweek. Retrieved 1 December 2013.
  22. ↑ Pickrell, Emily (7 November 2013). "New crude pipeline provides more access to Gulf Coast for Eagle Ford". Fuel Fix. Retrieved 1 December 2013.
  23. ↑ Kuchinsky, Valery (2001-12-31). "Letter from the Acting Chairman of the Security Council Committee (sic) concerning the situation between Iraq and Kuwait" (PDF). United Nations, New York, USA: United Nations Security Council. p. 26. Retrieved 2010-07-25. Permanent Mission of the Netherlands to take the same measure with regard to the company Trafigura Beheer B.V. On 23 November, the Office of the Iraq Programme provided the Committee with proposals for additional operating procedures for crude oil monitoring.
  24. ↑ Hoyos, Carola (2005-10-28). "Big oil groups implicated in oil-for-food scandal". Financial Times. Retrieved 2007-05-18.
  25. ↑ "Ivory Coast Government Panel Releases Toxic Waste Findings". Voice of America. 23 November 2006. Retrieved 27 July 2010.
  26. ↑ Papers prove Trafigura ship dumped toxic waste in Ivory Coast. David Leigh and Afua Hirsch. The Guardian, Thursday 14 May 2009
  27. ↑ "In pictures: Ivorian toxic waste" bbc.co.uk Link 7 September 2006.
  28. ↑ Trafigura to pay $198 mln settlement to Ivory Coast. Reuters. 13 February 2007.
  29. ↑ The Guardian, 17 September 2009, How UK oil company Trafigura tried to cover up African pollution disaster
  30. ↑ "Vest Tank sweetened coker gasoline". NRK. 2008-06-24. Retrieved 2008-09-05.
  31. ↑ "A small pawn in the game". NRK. 2008-06-24. Retrieved 2008-09-05.
  32. ↑ "Coker gasoline – low quality". NRK. 2008-06-24. Retrieved 2008-09-05.
  33. ↑ Blas, Javier; Pearson, Samantha (31 March 2010). "Trafigura to sell €400m in Eurobonds". Financial Times. Retrieved 28 May 2013.
  34. ↑ Peaple, Andrew (12 April 2013). "Trafigura Bond Opens Up Traders' World". Wall Street Journal. Retrieved 20 November 2013.
  35. ↑ Pierre Lorinet, CFO Trafigura and Javier Blas, FT commodities editor (16 April 2013). Bond markets lure trading houses. Financial Times. Retrieved 28 May 2013.
  36. ↑ Blas, Javier; Farchy, Jack (10 April 2013). "Trafigura raises $500m with perpetual bond". Financial Times. Retrieved 20 November 2013.
  37. ↑ Blas, Javier (20 December 2012). "Trafigura earns nearly $1bn twice in a row". Financial Times. Retrieved 28 May 2013.
  38. ↑ Narayanan, Pratish (23 April 2013). "Trafigura Profit Rises as Increased Oil Volumes Boost Revenue". Bloomberg. Retrieved 28 November 2013.
  39. ↑ Trafigura and Total are barred from fuel tenders accessed on 4 June 2013 http://www.timesofmalta.com/articles/view/20130221/local/Trafigura-and-Total-are-barred-from-fuel-tenders.458549
  40. ↑ Geoff, Hiscock (14 April 14). "Global commodity traders get deal fever". The Australian. Retrieved 7 June 2014. Check date values in: |date= (help)
  41. ↑ Blas, Javier (20 April 2010). "Rare glimpse as Trafigura debuts". The Financial Times. Retrieved 7 June 2014.
  42. ↑ 42.0 42.1 Bond Prospectus 17 Apr 2013 PDF (1.4 MB)
  43. ↑ "Trafigura lüftet zum ersten Mal den Schleier" [Trafigura lifts the veil for the first time]. Neue Zürcher Zeitung (in German). 17 December 2013. Retrieved 7 June 2014.
  44. ↑ Farge, Emma (23 April 2013). "Trafigura profit lifted by higher oil revenues". Reuters. Retrieved 17 June 2013.
  45. ↑ Bond Prospectus 11 Feb 2014 PDF (1.33 MB)
  46. ↑ Hoffman, Andy (16 December 2013). "Trafigura Weighs Sale of Stake in Impala Amid Squeeze on Margins". Bloomberg. Retrieved 7 June 2014.
  47. ↑ Sheridan, Rob (21 January 2013). "Trafigura Agrees to Buy Oil-Product Tankers as Ship Returns Gain". Bloomberg. Retrieved 7 June 2014.
  48. ↑ Kelley, Aaron (28 May 2013). "Trafigura confirms buy". Trade Winds. Retrieved 17 June 2013.
  49. ↑ Blas, Javier (3 February 2013). "Trafigura bets $800m on Australia energy". Financial Times. Retrieved 17 June 2014.
  50. ↑ Sormani, Angela (10 January 2013). "Galena Closes First Tranche of Resource Fund". PE Hub. Retrieved 17 June 2013.
  51. ↑ Douglas Hamilton Johnson (January 16, 2003). The root causes of Sudan's civil wars. International African Institute in association with James Currey. p. 163. ISBN 978-0-85255-392-3. Retrieved 21 December 2010.
  52. ↑ Puma Energy website, downloaded 17 November 2010
  53. ↑ "Cautionary Statement". 7 May 2012.
  54. ↑ David Leigh and Rob Evans, "Lord Strathclyde severs links with oil trader Trafigura after waste scandal", The Guardian, 17 September 2009.

Literature

Ammann, Daniel (2009). The King of Oil: The Secret Lives of Marc Rich. New York: St. Martin‘s Press. ISBN 0-312-57074-0.

External links