Trafigura sells stake in Putin-backed oil project to obfuscate Hong Kong trading company
Commodities trader Trafigura has sold a multi-billion dollar stake in a giant Russian oil project to an obscure Hong Kong company that was set up just nine days before Russia invaded Ukraine.
Trafigura said in a statement on Wednesday that its 10% stake in Vostok Oil, a gargantuan Arctic development backed by Russian President Vladimir Putin, had been sold to “an independent Hong Kong-registered trading company,” Nord Axis Limited. .
Company filings in Hong Kong show Nord Axis was incorporated on February 15, the week before Russian tanks crossed the Ukrainian border.
The sale shines the spotlight on a new group of Russian oil traders that has emerged since the invasion. Nord Axis has lifted 20,000 barrels of Russian oil a day since early March, part of a larger group of at least 24 traders new to Russian business who collectively took around 450,000 bpd in the second quarter, according to Petro-Logistics, a Swiss-based freight tracking group.
Although trading in Russian oil is not directly banned by Western sanctions, many of the biggest traders such as Trafigura have scaled back their activities in response to public and political pressure.
It is unclear who is behind Nord Axis or what funds it had to raise to acquire Vostok’s stake. Terms of the agreement between the two private companies were not disclosed, but Trafigura said Nord Axis assumed the $5.8 billion in “non-recourse bank debt” it had borrowed from Russian lenders to fund its initial $7.3 billion purchase of the asset. year.
When Trafigura, with annual sales of $230 billion, signed the deal last year, it was its biggest investment ever and came with a promise of access to millions of barrels of Russian oil that it could market internationally.
Trafigura had to inject $1.5 billion of its own cash into the project and borrowed $5.8 billion from Credit Bank of Moscow, a fast-growing lender linked to state-backed oil company Rosneft and to its general manager Igor Sechin, one of Putin’s closest allies. . Trafigura canceled its equity stake last month.
Documents filed by companies in Hong Kong and Singapore identify people involved in Nord Axis, some of whom share the names of a Singapore-based former Glencore trader and a Turkish energy lawyer.
Nord Axis was incorporated in February by Belize resident Allex Deeraj Heredia. Heredia told the Financial Times that he had no power over decisions related to the business and that his partner in Hong Kong, Asia Business Consultants, had communicated with the ultimate beneficial owner of the business, whom he believed to be Azerbaijani.
The entrepreneur has since changed three times. Current director Murat Sayin was appointed in June. Sayin shares the name with an Istanbul-based energy lawyer, according to a company website.
Documents filed in Singapore show Sayin was one of two new directors registered with CB Enterprises Pte Ltd on Tuesday, the Singapore-registered special purpose vehicle used by Trafigura in 2021 to acquire Vostok’s stake. Sayin did not respond to emails and phone calls seeking comment.
The other new manager registered at CB Enterprises on Wednesday was Sukhjeet Singh Sekhon. A person with the same name was listed in a 2013 court document as a Singapore-based Glencore fuel oil trader. Sekhon could not be reached for comment.
Randhir Ram Chandra was appointed company secretary at the same time, according to filings. An eponymous law firm in Singapore, which says it specializes in corporate structures, did not respond to a request for comment.
It is unknown if any of these individuals ultimately control Nord Axis. Hong Kong filings show that its sole shareholder is a company called Asia Business Consultants Ltd, which is registered at the same address as Nord Axis – a tower in Hong Kong’s Wan Chai district.
Asia Business Consultants is owned by a Hong Kong resident named Yin Chun Lee, according to filings, although he is not believed to be the ultimate owner.
Russia hopes the Vostok Oil project will develop a new oil-producing region on Siberia’s Taymyr Peninsula to rival the US Permian Basin and Saudi Arabia’s Ghawar oilfield. It will bring together existing production of approximately 370,000 barrels per day and exploration assets and link them to markets in Europe and Asia via the Northern Sea Route, a fair weather shipping route between the Atlantic and Peaceful.
Before the invasion of Ukraine led to increased sanctions on the Russian oil industry, including limiting access to Western technology and equipment, it aimed to eventually produce nearly 2 million b/d .
Trafigura had long courted Rosneft, vying with rivals Glencore and Vitol to be the biggest traders of Russian oil. The three companies provided Rosneft with short-term funding permitted by sanctions introduced after Russia annexed Crimea in 2014.
Trafigura said Nord Axis is not a Russian company, adding that it has now stopped marketing all Russian crude oil and stopped taking barrels from Rosneft, although it still handles some Russian refined products from independent producers. .