Midstream Upstream

Vitol boosts profits as trading offsets the covid-19 impact

vitol energy trading

Vitol suffered an $85 billion fall on its revenues last year, due to the demand destruction of the covid-19 pandemic; however, strong energy trading has since offset the impact and now has boosted its profits, the company announced this Tuesday on its 2020 review.

Firstly, many upstream companies grabbed energy trading as a shielding strategy from the full impact of the covid-19 pandemic; which prompted one of the world’s hardest economic recessions. As we have reported previously, oil giants like bp and Shell benefited from energy trading during 2020.

Secondly, as Vitol is the world’s largest energy trader, big profits on it, especially oil stocking and reselling, was something to expect. However, although Vitol did not disclose its earnings on that strategy, Bloomberg quoted sources saying the company had a revenue of $3 billion out of oil trading alone.

Moreover, according to Reuters, Trafigura also had record profits on its oil and metals trading during 2020; while Glencore’s trading division had its best year since 2008. As we have reported previously, bp reported a $4 billion profit out of energy trading as well.

Thirdly, what Vitol did say, was that its trading volumes were down on 2020 to 7,1 million barrels per day, compared with 8 million bpd on 2019; the crush in demand after the pandemic lockdowns was the main factor for this decrease.

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Vitol growing its renewables and liquified hydrocarbons trading portfolio

On the other hand, as the upstream sector is taking pressure from a changing economic and political landscape; enduring the crush in demand in one side, and the policy making changing rapidly towards a low carbon future on the other, upstream companies are adapting, Vitol said, and predicted a plunged oil demand for the next decade.

Moreover, Russell Hardy, Vitol’s CEO, said. “We continue to believe that demand for oil will not peak for another decade; nonetheless we must position our business for a lower emissions world. This change cannot be made overnight; so we will steadily build our transitional and new energy offering and portfolio, serving our clients as their needs evolve.”

Consequently, the company is heavily investing on a renewable energy portfolio; as well as on a diversified liquified hydrocarbons portfolio; specifically, LNG, liquified petroleum gas (LPG), power and carbon trading.

Finally, Russel Hardy also said about the matter. “Our investment in renewables is growing and to date we have committed over $1 billion of new capital to identified projects in this sector. We are predominantly focused on wind, solar and renewable natural gas projects.”

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