Vitol, the largest independent commodity trader in the world, is one of the biggest beneficiaries of the energy crisis. It reported record profits that were far higher than its competitors.
According to sources familiar with the matter, the privately-owned group made close to $15 billion in net profit in 2022.
The trading house made more than the combined earnings over the past six years. They also had higher profits than some of the largest oil producers in the world, such as Eni. This shows how traders have benefited greatly from extreme volatility in the energy markets caused by Russia’s invasion Ukraine.
The blockbuster year will bring Vitamin’s shareholders a huge payout — around 450 senior partners distributed across the trading hubs of London, Geneva and Singapore.
Vitol’s competitors, such as Trafigura Glencore, Mercuria and Glencore, also reported record profits, as they benefited from the wild price rises and dislocations caused by the war. Vitol’s returns have been far greater than those of its rivals.
Vitol’s profit growth was supported by profits in power markets, power generation and refining, as well as trading liquefied gas. According to the company, its turnover almost doubled last year to $505bn.
Vitol has five power plants in the UK. Its partially-owned subsidiary VPI makes it a larger power generator than Centrica. VPI has two additional power plants under construction in the UK, and one in Ireland.
Politicians in many countries have been critical of the profits made by energy companies, including the UK which raised its energy profit tax this year. Although commodity trading houses have not been subject to the same treatment, analysts believe that they may be.
Ed Davey, leader of the Liberal Democrats, responded to Vitol’s profits news by calling for an extension of the UK’s windfall taxes to energy traders.
“It’s simply not right that companies make huge profits from the misery caused Putin’s invasion in Ukraine.”
Vitol, a Dutch-registered business, has large offices in Geneva and London, Houston, Singapore, and Houston.
The group is the largest independent oil trader in the world, but it traded slightly less crude oil last year than it did in 2021 due to a reduction of Russian oil. Vitol stopped trading Russian crude oil in June.
It also controls the largest number of petrol stations in Africa. Through Vivo Energy, it has 3,900 stations across 27 countries.
Russell Hardy, chief executive, stated last week at Commodities Global Summit that a lot the profits were being reinvested in capex projects to increase energy supply such as boosting the efficiency of its power plants.
Hardy stated that the year ahead will be “very different” from last year in terms of profitability, margins, and pricing. He also said that it was a more conservative market moving forward, and that our strategy and approach must reflect that.
Jeff Dellapina, chief financial officer, stated that 2022 was a “cyclical peak” in terms profit.
He stated that “Last Year, performance was good.” “Most of the integrated investments across refining and production were successful, so it was a very positive year.”
Vitol has always returned the majority of its profits over the years to shareholders via buybacks, although there is no formula.
Vitol’s LNG trading business also saw a significant increase in revenue as it shipped LNG to Europe to replace the Russian gas that was lost. Vitol’s LNG cargoes saw a significant increase in value last year. The company also shipped 17.6mn tonnes of equivalent oil to Europe.
Vitol declined comment.