Gunvor Sells Ust-Luga to Bokarev as Trader Cuts Russian Assets

Gunvor Group Ltd. sold a majority stake in its Ust-Luga oil-products terminal to coal and transportation billionaire Andrei Bokarev, capping a series of deals by the commodity trader to dispose of Russian assets after its co-founder was sanctioned for close ties to Vladimir Putin.

A company controlled by Bokarev bought a 74 percent stake in the operator of the terminal, Cyprus-based Gunvor, which will retain a 26 percent interest, said in an e-mailed statement Monday. It didn’t disclose the price paid for Ust-Luga, one of the world’s largest rail-to-ocean transhipment terminals.

The deal is Gunvor’s biggest divestment since it embarked on a plan to sell its Russian terminals, pipelines and coal mines after the U.S. imposed sanctions on Gennady Timchenko because of his ties to President Putin. Timchenko sold his 44 percent stake in Gunvor to fellow co-founder Torbjorn Tornqvist the day before he was sanctioned in March 2014.

“Having a strong, independent Russian partner will ensure the export terminal continues to provide fair access for the whole of the Russian oil industry,” Tornqvist said in the statement.

Bokarev is chairman and co-owner of Kuzbassrazrezugol, Russia’s second-largest producer of thermal coal and an investor in a terminal for the fuel at Ust-Luga. He is also president of train manufacturer Transmashholding and a minority investor in Transoil LLC, an oil logistics company controlled by Timchenko, according to the Russian news agency Interfax.

Total Spending

Ust-Luga in the Gulf of Finland handles a “significant” proportion of Russian refined petroleum product exports that were previously shipped through the Baltic states, Gunvor said in a 2013 bond prospectus. Total capital expenditures on the project were “slightly less than $1 billion,” according to the prospectus, with Gunvor paying $56 million to acquire land and assets related to the terminal.

Ust-Luga’s capacity is now 30 million metric tons per year, according to the statement.

OAO Gazprombank agreed to buy Gunvor’s 50 percent interest in the Nevskaya Pipeline Co., raising the bank’s stake to 74 percent, Ekaterina Trofimova, the lender’s first vice-president, said June 25. She didn’t disclose financial terms of the deal to buy the pipeline, which connects to Ust-Luga.

Gunvor, which has trading operations in Geneva, said in April it had sold its 30 percent stake in Russian coal producer MC Kolmar to a company controlled by Bokarev. Financial terms of that agreement were also not disclosed.

A deal by Gunvor, one of the world’s five-largest independent oil traders, to sell its 50 percent stake in the Novorossiysk terminal on the Black Sea coast has yet to be finalized.

Gunvor’s cash reserves increased by 56 percent to about $1.5 billion, the closely held company said in its annual results in April. As it sells its Russian assets, Gunvor is seeking acquisitions in Asia, Africa, the U.S. and Europe, Chief Financial Officer Jacques Erni said April 30.

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