Vitol tops $300 billion in revenue

CNN MONEY [28/02/13]

By Brian O'Keefe

Oil giant Vitol would rank higher than Chevron on the Fortune Global 500 list if it were public.

Vitol oil distribution center in Cape Canaveral, Florida

FORTUNE -- The world's largest independent oil trader, the Vitol Group, has surpassed $300 billion in revenues for the first time.

According to results released on Thursday by Vitol, which is privately held, the trading giant's gross sales reached $303 billion in 2012. That figure was up modestly from 2011, when Vitol reported $297 billion in revenues.

If Vitol were a public company, the $303 billion in revenues would be enough for it to rank in the Top Ten of Fortune's Global 500 list of the world's biggest companies, ahead of companies such as Chevron (CVX) and Toyota (TM). (For more on Vitol read The unseen hand that moves world's oil from the March 18, 2013 issue of Fortune.)

Vitol, with a trading business based in Geneva and offices in 30 countries including a regional center in Houston, is primarily engaged in the physical trading of crude oil and other petroleum products. Volume in that business has grown 45% since 2005. But it actually declined slightly last year, from 272 million metric tons in 2011 to 260 million metric tons in 2012. The company says it got a boost from a large increase in the trading of carbon and natural gas.

In a phone interview, Vitol CEO Ian Taylor characterized his company's 2012 results as "steady." Taylor said Vitol turned in a "very solid trading year" despite challenging conditions. The fluctuation in prices between different petroleum products and between regions, said Taylor, was relatively narrow -- not the most friendly environment for a trader looking to capitalize on price dislocations.

"The market was pretty congested," said Taylor. "It didn't provide for lots of opportunities in terms of physical arbitrages around the world."

Taylor expects a more dynamic trading environment this year, driven in part by robust new oil production in the U.S.  "I expect that 2013 is probably going to be a little more exciting," said Taylor. "Maybe just a little bit more challenging. Particularly, the U.S. incremental production is beginning to have some impact this year. It began to have some impact last year. But I think this year it could be very significant."

Vitol expects to get a boost in oil trading volume this year from a new pre-financing deal it struck recently with Rosneft, the Russian state-controlled oil giant.

Vitol and Glencore International, the Swiss commodities giant that ranks No. 14 on the Global 500, have partnered to arrange loans reportedly worth up to $10 billion to help Rosneft finance its acquisition of TNK-BP. In return, Rosneft has agreed to long-term supply contracts with Vitol and Glencore.