UPDATE 1-Galp plans to move oil trading to Geneva-sources

Tue Nov 29, 2011 1:29pm EST

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By Emma Farge

LONDON, Nov 28 (Reuters) - Portuguese oil company Galp Energia plans to move its oil traders from Lisbon to Geneva in the next few months, oil industry sources told Reuters, as it seeks to build a bigger client base for its future Brazilian crude volumes.

Low corporate taxes and a culture of secrecy have made Geneva a magnet for oil trading firms such as Trafigura and Gunvor and around a third of the world's oil is now traded there.

A new company called Galp Trading was registered in August with the goal of pursuing "commercial activities particularly in the sale of oil, oil products and natural gas...", according to an online commercial registry for the Canton of Geneva.

"Initially it will be the oil business and then the rest later," said a trading source familiar with the company's activities. "This is on the back of having success with production in Brazil," he added.

The firm has around ten energy traders in Lisbon, the source said.

Galp Energia, a mid-sized oil producer and refiner with a stake in the Angolan upstream, declined to comment.

Oil traders reiterated the view that Galp's decision to relocate was likely motivated by the need to be among other traders and potential clients as it expands its upstream production.

Galp's oil traders are currently active in the West African, North Sea and Mediterranean crude markets as well as oil products and gas, trading sources said.

PARK-SIDE ADDRESS

The initial office location will be on Rue Saint-Leger in central Geneva, the commercial registry showed, next to a leafy park with fountains and giant chess boards.

The planned move follows Trafigura's decision to shift all of its traders there from London earlier this year.

Some traders said Galp's move might herald a strategic shift from a model of buying crude for its own refining system to a more sophisticated trading strategy involving bigger bets aimed at exploiting regional price differences.

Galp is developing massive oifields in Brazil's deepwater sub-salt region - site of the largest oil discovery for more than 30 years - in a move that should increase available crude oil volumes for trading.

Most of its production is currently in Angola but it expects this to shift to Brazil in the next few years with the development of the Lula and Cernambi area.

"Historically, they are purchasing for the system and not trading. Maybe they have aspirations to do something different. That would be a fundamental step," said a West African oil trader.

In 2010, the company bought around 83.9 million barrels of crude oil sourced from around 16 countries including top African producers Angola and Nigeria, according to its website.

It has two refineries in Portugal with a combined capacity of around 330,000 barrels per day and is an exporter of gasoline and fuel oil. (Reporting by Emma Farge; editing by Keiron Henderson)

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