Switzerland has witnessed an inflow of Russian oil traders, bolstering the country’s claims to be the world’s leading trading centre for physical oil, industry executives said.
State-owned Rosneft, Russia’s largest oil producer, and Bashneft, a top refiner and fast-growing oil producer, have registered trading operations in Geneva and Zurich, respectively, over the past few weeks.
Both currently trade from Moscow.
The arrival of the two Russian oil companies comes in the footsteps of TNK-BP, which announced plans for a Geneva-based trading arm last November.
Switzerland saw the first inflow of Russian oil traders in the late 1990s following the collapse of the Soviet Union.
The Geneva Trading and Shipping Association, the industry body, claims the Swiss city handles about 75 percent of Russia’s oil exports.
Russia is the world’s top oil producer, after overtaking Saudi Arabia last year.
Rosneft registered last week a subsidiary called Rosneft Trading on the Rue du Rhône in Geneva, within walking distance of rivals Trafigura, Gunvor and Mercuria, the world’s third, fourth and fifth-largest oil trading houses, respectively.
Bashneft has set up Bashneft Trading in the outskirts of Zurich.
Oil executives and bankers said the new arrivals would add to Switzerland’s rising role in physical oil trading at the expense of London, which has seen the departure of several teams.
GTSA believes the Swiss city now “ties with London as Europe’s number-one oil trading hub”.
But oil executives said the balance was turning in Geneva’s favor with the new arrivals.
Established companies such as Trafigura are also moving some teams from London to Geneva.
The arrivals and transfers come amid broader financial industry complaints about stiffer regulation in London.
Geneva and London have fought for dominance in physical energy trading since the first oil crisis in 1973-74, which saw the emergence of the initial cadre of oil traders in Geneva and Zug, another Swiss city.
In the mid-1980s, London started to gain business and by the 1990s the UK capital was eclipsing Geneva.
Since the mid-2000s the Swiss city has won back market share, executives said.
Oil traders said the plans of Rosneft were unclear.
In the past, the company has sold some of its output through Gunvor and the rest via competitive tenders.
The launch of a trading arm could see an overhaul of the system.
“There is a general view that Rosneft are going to restructure the way they handle their export volumes,” a senior Geneva-based oil trader said.
The Russian company said: “The new entity is registered for meeting growing needs of Rosneft for its international activates.”
Gunvor said it purchases oil products through competitive tenders - in Russia and globally.
“We do not see this [Rosneft new trading arm] affecting our business,” it said.
Bashneft said it planned to start trading its own oil and refined products output from Switzerland and move later into third-party oil deals.