January 31, 2017 / 3:38 PM / 3 years ago

Exclusive: Glencore challenges Trafigura by ramping up Russian oil

MOSCOW (Reuters) - Glencore has become the largest buyer of Russian Urals oil from Rosneft, overtaking rival Trafigura after taking a stake in Russia’s biggest oil major last month, a Reuters analysis of trade data showed.

The logo of commodities trader Glencore is pictured in front of the company's headquarters in the Swiss town of Baar November 20, 2012. REUTERS/Arnd Wiegmann/File Photo

Ivan Glasenberg, Glencore’s chief executive, said last week during a meeting with Russian President Vladimir Putin that the company was studying cooperation with Rosneft in a number of areas, including supplies to India and China.

Glencore was able to secure the bigger share of Urals oil after it teamed up with the Qatar Investment Authority (QIA) to buy a 19.5 percent stake in Rosneft. As part of the deal, Glencore was given access to additional Rosneft volumes.

This has ended a long streak of dominance in the Urals market for Trafigura, which has been buying crude from Rosneft under two long-term agreements. However, Trafigura remains the biggest buyer of Rosneft crude of all blends after China’s CNPC.

Data supplied by traders showed Rosneft increased Urals supplies to Glencore by 300,000 tonnes to 1.2 million tonnes in the Baltic Sea this month, while deliveries to Trafigura fell by 280,000 tonnes from December to 740,000 tonnes.

“Rosneft has pinched the volumes for Glencore from Trafigura,” said one trader.

Rosneft, Glencore and Trafigura declined to comment.

As part of the agreement with Glencore and QIA, Rosneft has concluded a deal with a company called QHG Trading, linked to the new shareholders, to supply up to 55 million tonnes of crude in total over a 5-year period.

Rosneft will supply QHG Trading with 4.5 million tonnes to 11 million tonnes of oil per year, with the price being set according to a formula pegged to global oil prices.

The tie-up with Glencore has allowed Rosneft to start supplying oil to Hungary and Slovakia with Glencore, expanding into new markets. Glencore acquired 160,000 tonnes of Urals to ship oil via Druzhba pipeline to those destinations.

Glencore started to receive fuel oil volumes from Rosneft under the new deal in January, a market source told Reuters.

Trafigura remains the second largest buyer of oil from Rosneft after China’s CNPC, which receives more than 25 million tonnes of Russian crude oil per year by pipeline under a state agreement. In addition to Urals it also acquires Asia-bound ESPO blend and Sokol.

The data supplied by traders showed that Rosneft planned to supply Glencore with a total of 1.36 million tonnes of oil this month, with 1.58 million tonnes of oil going to Trafigura.

Rosneft has said it also plans to cooperate closely with Trafigura in international trading and crude oil swaps, including through a joint purchase of Indian refiner Essar Oil last year.

Additional reporting by Dmitri Zhdannikov; Writing by Vladimir Soldatkin; Editing by Alexander Smith

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