Traders Help Moscow Sell Its Oil

"A group of under-the-radar commodity traders are cashing in on Russian oil, stepping in to buy and transport crude to customers as their bigger rivals retreat from the market.

Little-known merchants including Paramount Energy & Commodities SA and Coral Energy Pte. Ltd. are buying unwanted Russian oil at deep discounts. For taking on the risk, the companies can make $20 million or more on one cargo depending on the size of the tanker, say traders. That is up from $600,000 before the sanctions on Russia.

The traders aren't violating sanctions imposed by the West on Russia. The European Union has blocked its companies from doing most business with state-aligned producer Rosneft Oil Co. Switzerland also has enacted some restrictions. That pushed big traders such as Trafigura Group, Vitol, Glencore PLC and Gunvor Group to head for the exit.

That opened a lucrative opportunity for smaller traders. But the trade could be short-lived if the West imposes tougher sanctions on Russia's oil industry or financiers and shipowners pull the plug on companies dealing in Russian energy.

Moscow needs traders to sell the roughly 3.6 million barrels of oil it is exporting by sea each day, a volume that has fallen from 3.8 million in April, according to Kpler.

Paramount is a little-known Geneva-based firm trading an average of 163,000 barrels a day since the start of Russian sanctions, says Petro-Logistics data. The company is bolstering its presence in Dubai to avoid European sanctions, according to a person familiar with the firm.

Dutch founder Niels Troost said in an email that Paramount bought oil from independent companies under long-term contracts entered into before the Russian sanctions, and that the firm has been established in Dubai since 2020.

One supplier to Paramount is Concept Oil Services Ltd., a Hong Kong-domiciled firm founded by Monaco resident Michael Zeligman, according to a person familiar with the company's operations and a lawyer representing Concept. Concept buys oil from Russian producers including a subsidiary of state-owned Gazprom PJSC and sells to Paramount.

"Concept Oil Services complies fully with all international sanctions," the company's lawyer said.

Paramount's building in Geneva is also home to Tenergy Trading SA, a firm Mr. Troost co-founded with Swiss energy trader Michel Tuor. Tenergy has traded oil products with International Petroleum Products, a firm owned by Russian oligarch Gennady Timchenko, a longtime ally of President Vladimir Putin, said a person familiar with Mr. Troost's business interests. Mr. Timchenko was hit with sanctions by the U.S. in 2014. Mr. Troost said his firm traded indirectly with IPP in the open market and no longer works with it. "All of those transactions occurred before sanctions were imposed and were halted immediately when sanctions were put in place," Mr. Troost said. He declined to comment about how Paramount operates, including where it sources oil from.

The ability of firms such as Paramount to ship oil is crucial for Mr. Putin. Oil-and-gas sales accounted for 45% of Russia's federal budget last year, according to the International Energy Agency. High prices for energy, driven in part by the Russian sanctions, are plumping up the Kremlin's coffers.

"Putin could carry on for a very long time because of this flow of cash and he will," said Bill Browder, chief executive of Hermitage Capital Management, a longtime opponent of Mr. Putin and previously a big investor in Russia." [1]

1. The Ukraine Crisis: Traders Help Moscow Sell Its Oil
Hirtenstein, Anna; Wallace, Joe. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 28 May 2022: A.7.