Gunvor Group Ltd., the independent energy trader, may sell as much as $500 million of bonds this year and plans to build new refineries, according to its chief executive officer and co-founder Torbjorn Tornqvist.
The company may issue five-year, dollar-denominated debt, which it hopes will close in the second quarter, Tornqvist said in an interview in Davos, Switzerland, where he is attending the World Economic Forum.
“The market is good for this right now,” Tornqvist said, referring to the bond. “We are actually planning to construct a couple of refineries around the world and we are looking for investment opportunities outside Russia as well.”
Tornqvist declined to say where the refineries would be built. The company last year purchased plants in Ingolstadt, Germany and Antwerp, Belgium from insolvent refiner Petroplus Holdings AG.
Billionaires Gennady Timchenko and Tornqvist founded Cyprus-registered Gunvor in 1999 to trade Russian oil. The company, which has offices in Geneva and Singapore, is diversifying its business beyond the commodity, the company’s chief financial officer, Jerome Schurink, said in an interview by phone from Geneva last month.
“The bond process is all very early stage, and we have not decided on the amount,” Seth Pietras, a Geneva-based spokesman for Gunvor, said in an e-mailed statement, following the interview with Tornqvist. “It will all largely be dependent on the market conditions, which at this time appear favorable.”
Two leading banks will underwrite the bond, Tornqvist said, without naming any.
The Gunvor CEO also said oil prices are being pulled in both directions because of new supply from places such as the U.S. and political tension in Middle Eastern and African nations. Prices will drop if Iran resolves its differences with Western countries over nuclear research, he said in the interview. Brent crude was trading at about $112 a barrel in London today.
Gunvor competes with oil companies and independent trading companies from BP Plc to Vitol Group in buying and selling crude and refined oil products. The privately held company has no plans for an initial public offering, Tornqvist said. One of its competitors, Glencore International Plc, sold shares to the public in May 2011.
The company’s trading volume rose 10 percent in 2012 versus a year earlier, Pietras said in December. Russia is “the single most important country in our activity from trading and investment,” Tornqvist said in Switzerland today.
Crude and oil products from the country account for more than 25 percent of Gunvor’s trading volume, Tornqvist said in Moscow in September, the month when Gunvor lost a tender worth about $12 billion from state-run OAO Rosneft. In October it signed a one-year contract to export refined products from several Rosneft refineries in Russia.
Tornqvist, who was born in Sweden in 1953, said Gunvor can probably extract more value from refineries than bigger organizations such as major oil companies, though any investments need to be carefully selected.
“The problem in the refining sector has been exaggerated,” he said. “It is true Europe still has an overcapacity but also the refining industry in Europe is very fragmented.”