Vitol, the world’s largest independent commodity trader, has emerged as one of the biggest winners of the energy crisis, reporting record profits far in excess of its rivals.
The privately owned group, whose top executives are largely based in London, made almost $15bn of net profit in 2022, according to people familiar with the matter.
The bumper profits matched the trading house’s combined earnings for the prior six years and were larger than some of the world’s biggest oil producers, including Italy’s Eni, illustrating how traders have benefited from the extreme volatility in energy markets triggered by Russia’s invasion of Ukraine.
The blockbuster year will mean a bumper payout for Vitol’s shareholders — approximately 450 senior partners spread across the trading hubs in London, Geneva, Singapore and Houston.
Vitol’s rival commodity houses, including Trafigura, Glencore and Mercuria, have also reported record results as the industry profited from the wild price surges and dislocations unleashed by the war. But the scale of Vitol’s returns has far surpassed its competitors.
The jump in Vitol’s profits was bolstered by windfalls in power markets, power generation, refining and the trading of liquefied natural gas. The company’s turnover nearly doubled last year to $505bn, it said last week.
In the UK, Vitol owns and operates five power plants through its partially owned subsidiary VPI, making it a bigger power generator than Centrica. VPI also has three further power facilities under construction in the region — two in the UK and one in Ireland.
The profits made by energy companies have attracted the ire of politicians in several countries, including the UK, which increased its energy profit levy this year. While commodity trading houses have escaped similar treatment, many analysts believe they could be next in line.
The leader of the Liberal Democrats, Ed Davey, responded to the news of Vitol’s profits by calling for the UK’s windfall tax to be extended to energy traders.
“It is simply not right for companies to make enormous profits out of the misery caused by Putin’s invasion of Ukraine,” he told the FT.
Vitol is a Dutch-registered company, with large offices in Geneva, London, Houston and Singapore.
The group is the world’s largest independent oil trader, though it traded slightly less crude last year than in 2021 after curbing the volumes of Russian oil it handled. Vitol stopped trading Russian crude in June.
It is also one of the largest petrol station owners in Africa, where it controls 3,900 petrol stations across 27 countries through its subsidiary Vivo Energy.
Chief executive Russell Hardy told the FT Commodities Global Summit last week that a lot of the profits were being re-invested in capex projects to strengthen energy supply, such as upgrading the efficiency of its power stations.
The year ahead is going to be “very different” to last year, in terms of profitability and margins, Hardy said, adding that “it’s a much more conservative market going forward, so our strategy and approach has to reflect that”.
Chief financial officer Jeff Dellapina told the summit that 2022 was a “cyclical high” in terms of profit.
“Last year, performance was strong,” he said. “Most things were working well in terms of our integrated investments across refining, production, power generation, so this was quite a positive year.”
In the past, Vitol has usually returned the majority of its profits to its shareholders through buybacks over time, though there is no formula for how to do so.
Vitol’s LNG trading operations also experienced a big increase in revenue, as the company shipped LNG to Europe to help replace lost Russian gas. The value of LNG cargoes soared last year, and Vitol’s total LNG shipments rose slightly to 17.6mn tonnes of oil equivalent.
Vitol declined to comment.