Oil Giant Vitol Bulks Up Power Trading in Shift to Electricity

Vitol Group is bulking up its power trading business as the world’s biggest independent oil trader eyes a looming shift to cleaner fuels.

Chief Executive Officer Russell Hardy confirmed in an interview that the oil trading giant is boosting investment in its power operations with a series of high-profile hires. It’s part of a long-term transition toward electricity and renewable fuels and away from hydrocarbons, the bedrock of the company for more than half a century.

“We’re now turning our attention to hiring a number of power traders because we need some experienced people in those markets to help us build those businesses,” Hardy said in an interview.

Vitol handled more than 8 million barrels of crude oil and petroleum products a day in 2019 but is preparing for a multi-year transition away from hydrocarbons to cleaner-produced electricity as consumers, particularly in mature markets such as Europe, demand greener fuels.

In response, traditional dealers in oil, such as Vitol, are beefing up natural gas and electricity trading. They’re also making investments in renewable power projects, including solar and wind.

“If you are going to invest in the space, you need the trading capability as well,” Hardy said. “If you take an example of a wind farm somewhere, you may have to take some of that risk on to your own books and you’re going to need people who can manage that risk.”

Green Expansion

Vitol owns a power plant in the U.K. and launched a 200 million euro ($237 million) fund in 2018 to invest in wind farms. It’s also backed solar-power fields and is building a carbon capture, storage and hydrogen facility near its power plant operations in Britain.

The green energy investments are currently a minuscule part of the trading house’s overall asset portfolio, which includes oil storage tanks, refineries and retail fuel stations. However, its low-carbon operations are expected to grow significantly over time. Hardy said Vitol wants to have the same heft in power trading that it does in oil, to take advantage of its growing portfolio of gas and electricity-generating assets.

“We had some good people in our power team, but it wasn’t a deep enough bench,” Hardy said. “So we’ve been steadily increasing the gas bench and the power bench to get us to a place where we feel we’ve got the resources.”

Among those joining Vitol is veteran power trader Mark Flowerdew from BP Plc, according to people familiar with the matter who asked not to be named because the hires haven’t been announced.

Hardy declined to comment on specific names but said Vitol was hiring several analysts and traders to ensure it had the needed scale in power trading to be a major player, as it has previously done with its gas trading desks.

Vitol needs bulked up power and gas trading desks to “re-ignite our own activity,” Hardy said. “It’s not making them bigger than other businesses it’s just getting them up to the scale that we like here.”

©2020 Bloomberg L.P.

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