Vitol, Atlas buy Petroplus Swiss plant
GENEVA (Reuters) - Vitol, the world's largest oil trader, has teamed up with the co-founder of Petroplus PPHN.S, Marcel Van Poecke, to buy the insolvent refiner's Swiss plant, as part of a strategic drive among trading houses to snap up physical assets.
Oil traders traditionally play the role of middle men, buying and selling oil cargoes on global markets, but are showing a growing interest in acquiring production, storage and refining assets as trading profits shrink and stricter derivatives regulations loom.
The purchase mirrors a recent move by rival trader Gunvor, co-owned by a Russian tycoon, which on Thursday completed the acquisition of Petroplus' Antwerp plant in Belgium.
"(This transaction) provides us with access to a quality, niche refinery and a supply chain of storage assets and wholesale marketing opportunities and will become a valuable source of growth for the Vitol Group," said Vitol's Chief Executive Ian Taylor.
Vitol, which first moved into refining in 1994, has expressed interest in buying Petroplus assets in Britain and Germany which also went up for sale after the Swiss-based company filed for insolvency in January, a victim of high debts.
The expansion of traders and private investors into the European downstream market comes as majors like Total (TOTF.PA) seek to sell refineries, often at knock-down prices, as rising demand for natural gas and tough environmental rules have crushed margins for crude processing.
"Traders are being squeezed by regulators. The trading fraternity has been looking to acquire assets to diversify for pure trading to become more multinational companies," said Roy Jordan, consultant at FACTS Global Energy.
Regulators may impose limits on derivatives trading unless firms can prove they need them for hedging purposes due to exposure to physical assets.
Ownership of refineries is also helpful for traders as many oil exporting countries such as Saudi Arabia require it to qualify for lucrative oil term contracts.
Spokesmen for Vitol and Atlas declined to comment on the purchase price, but a source familiar with the negotiations said it was sold for "substantially less than $50 million".
Varo Holding SA, the joint venture between Vitol and Van Poecke's AtlasInvest, will complete the Cressier purchase by the end of June, Petroplus administrator Wenger-Plattner said on Thursday.
Varo's main rival for the Cressier plant was former Russian energy minister Igor Yusufov via his investment arm Fund Energy, according to a source familiar with the negotiations.
The 68,000 barrel per day plant will resume activities after the handover is completed, it added, ruling out the prospect that the plant will be converted to storage.
Marcel Van Poecke, who founded Petroplus in 1993 and oversaw its operations for 13 years during the so-called "golden age" of refining, has also been involved in offering a temporary lifeline to Petroplus' Coryton plant in Britain.
His company AtlasInvest holds stakes in downstream market player North Sea Group, midstream oil company Hestya and industry newsletter Energy Intelligence.
The sale of Cressier, which employs around 270 people and was the least profitable Petroplus plant in the third quarter of last year, will likely come as a relief to Swiss authorities.
Two Swiss-based industry sources said they were approached by authorities and asked to submit a bid for the plant, but ultimately declined.
"It's an expensive plant to run since it has such a long pipeline. It's tough in a backwardated market," said a senior source at a Swiss trading house.
'Backwardation' refers to a structure in the oil market where future prices are at a discount to spot prices, meaning that traders are punished for holding on to crude stocks.
Cressier is fed with crude oil via a 769 kilometer pipeline linked to the Fos terminal in southern France.
"The government of Neuchatel is delighted that the Cressier refinery will soon restart and that the jobs will be preserved," said Thierry Grosjean, economy minister of the Swiss canton of Neuchatel.
Landlocked Switzerland has only one other refinery, the Collombey plant, owned by Libyan-controlled Tamoil.
(Reporting by Emma Farge; Editing by Mark Potter and Jon Loades-Carter)
- U.S. small businesses borrowed more money in January than they did a year earlier, signaling continued growth in the economy despite a spate of cold weather that has been blamed for weakness in many other indicators of activity.
BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.