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. Last Updated: 07/27/2016

Trader Gunvor Relies on Timchenko's Links

Top-level Russian contacts are the key to the success of oil trader Gunvor, which has become the world's No. 3 player in just 10 years, the founder of the secretive firm said as he planned a global expansion.

Founded 10 years ago, Geneva-based Gunvor handles about 30 percent of Russia's seaborne oil exports, one of the firm's founders, Torbjorn Tornqvist, said in an interview.

The company's competitors say it has used its political contacts to give it favorable crude lifting deals with state-owned energy companies including Rosneft and Gazprom Neft.

Tornqvist said he founded Gunvor as an equal joint venture with prominent businessman Gennady Timchenko, who Russian media say is a close friend of President Vladimir Putin's. Tornqvist, a Swedish oil trader, denied the firm had used political connections to give it an edge.

"Mr. Timchenko has excellent contacts because he is Russian and part of the industry. I also have good contacts. We don't deny we have excellent contacts," Tornqvist said by telephone from Geneva. "But ... to involve Mr. Putin and any of his staff in this dialogue is speculation."

This year, Gunvor expects trading volumes to rise to 83 million tons from 60 million in 2006, allowing it to become the world's No. 3 crude trader behind Glencore and Vitol.

About 60 percent of volumes are crude and the rest products. Turnover should rise to about $43 billion this year from $30 billion in 2006.

Tornqvist said he was confident that Gunvor would maintain its leading positions in Russia. "Russian producers are getting more sophisticated in their marketing. Physical contracts tend to be expensive today and some traders are stepping back," he said.

Gunvor's top three Russian clients are Rosneft, Gazprom Neft and TNK-BP.

Rosneft and Gazprom Neft have signaled that they could start selling all their crude at open tenders, as TNK-BP does.

Tornqvist said Gunvor would need to compete hard with other traders, as it has guarantees only for a small amount of Rosneft's crude, which was used as collateral in loans with Western banks. As Gunvor's positions in northern Europe are likely to remain steady, it will reduce its presence in the south. "It's quite tough on the Russian crude oil in the [Mediterranean]," Tornqvist said.

Tornqvist said the company was planning to expand in West Africa, the Middle East and Asia, where it has opened or expanded offices.

Exploration blocks could be also bought in Russia, but Tornqvist declined to name them.

Another area of expansion within Russia is in oil export terminal management. Gunvor is negotiating contracts for a terminal in northern Russia and another one on the Black Sea.