(This story is a sidebar to the Special Report, "How China took
control of an OPEC country's oil")
By Joshua Schneyer and Nicolas Medina Mora Perez
Nov 26 Ecuador's Socialist President Rafael
Correa has often railed against allowing private trading firms
to control the country's oil shipments, a top source of export
revenue. Soon after his election in 2006, Correa pledged to cut
But on his watch, the opposite has happened. As the OPEC
country committed to selling the bulk of its export crude to
Chinese state-owned firms, a little-known Swiss trading house
and its business partners have secured a role as intermediaries
in the South American country's oil trade.
Internal shipping schedules from state-owned oil firm
PetroEcuador show that PetroChina Co Ltd. - the main
buyer of Ecuador's crude - engaged a small Hong Kong-based firm
named Ursa Shipping Ltd to help ship the oil. Together, they
handled around two-thirds of the 33 million barrels of oil
Ecuador exported during the second quarter, the schedules
indicate. Around 70 percent of their shipments were sent to the
United States directly or to PanPac, an area offshore Panama
where oil cargoes are often loaded onto U.S.-bound vessels.
Market sources say Ursa acts as a shipper for Geneva-based
oil trading firm Taurus Petroleum, whose mainstay business a
decade ago was selling Iraqi crude under U.N.'s oil-for-food
program. For the past four years, Taurus has played a key role
selling Ecuador's oil along the U.S. West Coast. According to a
Reuters analysis of U.S. oil import data gathered by port
intelligence group PIERS, Taurus's shipments accounted for
nearly 10 percent of California's oil imports in the first nine
months of 2013.
Much of the Ecuadorean oil Taurus sold in California arrived
via Panama, where ships laden with crude allocated to PetroChina
and Ursa have sometimes transferred their loads into other
tankers, according to Reuters tanker-tracking data.
In total, Ecuadorean oil - largely handled by PetroChina's
private trading partners - makes up 17 percent of the U.S. West
Coast region's 1 million bpd crude imports this year. Only Saudi
Arabia and Canada supply more.
It is perfectly legal for PetroChina, the world's No. 2
publicly-traded oil firm, to enlist traders to market Ecuador's
crude, little of which is shipped to China. PetroChina buys
Ecuador's crude under long-term contracts that provide up-front
Chinese funding for cash-strapped Ecuador.
But the role of private entities is a potential political
issue in Ecuador. Under Correa, well-known trading firms such as
Glencore Xstrata, which had previously bought large
volumes of Ecuador's crude, haven't been allowed to purchase
PetroEcuador's oil. Instead, Correa has touted Ecuadorean oil
sales to China as a triumph of trade between friendly
A U.S.-based spokesman for PetroChina said all of its
business with PetroEcuador is "within the boundaries of
applicable laws and corporate policies." The firm declined to
comment on any relationships with trading firms. A spokeswoman
for PetroEcuador declined comment. President Correa's office
didn't respond to questions from reporters.
Taurus, incorporated in 1993, declined to discuss its
business or to make its founder, Benjamin Pollner, available for
an interview. "We are a private company," said Tancrede Baron,
Taurus's finance director, by phone from Geneva in late August.
"Our business is confidential." Calls to Ursa weren't returned.
Valued at around $6 million per day, Taurus's shipments of
oil to California earlier this year were sold to customers
including Chevron, which Correa has declared "an enemy" of
Ecuador. Chevron declined comment on the purchases.
The California oil giant is locked in a massive lawsuit with
Ecuadorean plaintiffs over previous decades of alleged pollution
by Texaco, which Chevron bought in 2001.
This month, Ecuador's supreme court upheld a lower court
verdict against Chevron, ordering it to pay $9.5 billion.
Correa has in the past decried private oil traders as
"corrupt" middlemen who profit at PetroEcuador's expense.
"We are done with intermediaries for our crude," he said in
a speech after his 2006 election. Later, in 2008, he touted a
direct contract for fuel supplies between PetroEcuador and
PDVSA, Venezuela's state oil firm, as cutting out middlemen.
Nevertheless, PDVSA later enlisted traders including Glencore
to procure the fuel supplies.
Some Ecuadorean opposition figures, including a leftist
congressman, Clever Jimenez, have criticized the government and
PetroEcuador for allowing PetroChina to farm out business to
traders. Detractors say traders are able to sell Ecuador's crude
at a big mark-up abroad, which could imply lost revenue for
Correa has said Ecuador receives a fair price from
What Chinese firms do with the oil after they take ownership
of it in Ecuador isn't PetroEcuador's concern, the company's
international trading manager, Nilsen Arias, told Reuters by
phone. "The destination is at their liberty," Arias said. He
declined to comment on PetroChina's trading.
Taurus has been in the spotlight before. A 2005 report by
former U.S. Federal Reserve chairman Paul Volcker identified
Taurus and other Pollner-affiliated firms as having bankrolled
$18.9 million in illicit payments to win Iraqi oil cargoes
during Iraq's U.N.-controlled oil-for-food program. No charges
were brought against Taurus or the other Pollner firms. Taurus
denied any wrongdoing.
During most of 2006, Taurus imported around 105,000 barrels
per day into the United States, including 54,500 bpd from
Ecuador. Its shipments then stopped, the PIERS data shows,
resuming in mid-2010 as PetroChina's role in Ecuador grew.
Ecuador's decision to let PetroChina trade its crude freely
contrasts with the policies of Saudi Arabia, Venezuela and
several other OPEC countries that rarely allow buyers to resell
In recent months, another company appears to have supplanted
Taurus as a key supplier of Ecuadorean crude to California, for
reasons unknown. The PIERS data, based on individual bills of
lading, shows Taurus's last shipment to California arrived at a
Chevron refinery on September 26.
Three days later, New Jersey-based oil trading and logistics
firm Core Petroleum began selling Ecuadorean crude into
California. Several traders who deal in Latin American oil told
Reuters that Taurus and Ursa work with Core Petroleum,
established in 2009.
Core Petroleum's website lists Tancrede Baron - the Taurus
finance director - as its chief financial officer. A Core
employee in New Jersey said Baron was in Geneva and unavailable
to talk. Baron didn't respond queries about his role at Core.
Both Taurus founder Pollner and Core's CEO, William Sudhaus,
were executives of a former Taurus affiliate, Castor Petroleum,
corporate documents show. Castor was acquired in 2009 by a
larger Swiss trading firm. Sudhaus didn't return phone calls
(Reporting By Joshua Schneyer and Nicolas Medina Mora Perez in
New York. Edited by Jonathan Leff and Michael Williams)