Switzerland-based commodity trading house Trafigura said Monday that falling oil prices, significant volatility, structural oversupply and the emergence of contango price structures have created significant opportunities in the crude and products markets, which helped its Oil and Petroleum Products Division have a very strong year.
Trafigura, whose financial year runs October-September, said trading volumes for crude oil and petroleum products rose to 146.3 million mt in 2015, or over 3 million b/d, as it increased the scope of its service offering and expanded business relationships with customers and refiners in the face of a more transparent and regulated market.
Crude volumes led the way, increasing 45% to 70.9 million mt.
The global trader added that its North American crude business grew strongly, supported by its partnership with Buckeye Partners in the Corpus Christi terminal in South Texas, while it also has a greater presence in the Far East and close commercial ties with Russian oil group Rosneft.
With new markets such as sanctions-hit Iran likely to open up next year following the international agreement on Iran's nuclear program, Trafigura is upbeat about prospects for 2016. This comes after recording a rise in net profit in 2015 to $1.1 billion.
The crude market was also impacted by erratic output from Libya due to civil unrest, the conflict in Iraq, tensions between Baghdad and the Kurdistan Regional Government and the transition to a new government in Nigeria.
STRONG TIES WITH ROSNEFT
Trafigura has become one of the largest exporters of Russian crude through a series of pre-payment schemes with Rosneft.
The oil division has benefited from some oil-for-loans arrangements that have helped to boost volumes.
Under the 2013 deal with Trafigura, Rosneft agreed to supply up to 10.1 million mt of crude and products over five years in exchange for a pre-payment of up to $1.5 billion.
Its strong commerical relationship with Rosneft has also provided access to new crude grades -- notably Sokol and ESPO in Asia.
Meanwhile, the contango structure has enabled the trader to take on significant storage and, for a period of time, a number of VLCCs for use as floating storage.
NORTH AMERICAN BUSINESS PERFORMS WELL
Trafigura expanded its extensive US domestic lease activity both in the Eagle Ford Shale and the Permian regions of Texas, helping it to double volume at Eagle Ford and tripling volume at the Permian basin.
"These relationships and volumes enabled us to make optimal use of the Corpus Christi terminal in Texas, in which Trafigura has a 20% stake and commerical throughput rights," it said.
