Gunvor is preparing for sale: former oil trader Gennady Timchenko may be bought by Algerian Sonatrach

Gunvor, one of the largest oil traders, founded in the late 90s by Gennady Timchenko and Swedish entrepreneur Torbjorn Tornqvist, is looking for a buyer, RBC writes with reference to Bloomberg. According to the agency, the Algerian oil and gas state company Sonatrach may become the new owner of the oil trader.

Read more. Sonatrach has already launched a due diligence procedure to assess the value of Gunvor, and then buy a stake in it or the company entirely from its main owner Torbjorn Tornqvist, Bloomberg writes, citing its own sources. Discussion of the deal is at an early stage, whether the deal will take place or not is still unclear.

• Gunvor and Sonatrach are considering another option: creating a joint trading venture.
• Gunvor is not the first trader with whom Sonatrach is negotiating. Other potential partners included Glencore and Vitol. According to Bloomberg, preliminary negotiations with them have not yet led to anything.
• In 2017, Gunvor’s net profit dropped to its lowest level in seven years and amounted to $162 million. Compared to the previous year, the trader’s profit collapsed by more than 48%.
• In December 2016, Reuters valued Gunvor at $2.3 billion.

Context. Oil trader Gunvor was created in 1997 by Vladimir Putin’s longtime acquaintance Gennady Timchenko and Swedish entrepreneur Torbjorn Tornqvist. The trader grew up trading Russian oil and petroleum products. The company's business boom coincided with Putin's rise to power. The company was the main exporter of Surgutneftegaz and Rosneft, which received the main assets of YUKOS in the 2000s. By the end of the 2000s, Gunvor was third in terms of revenue among global traders. But by 2012, Gunvor began to lose tenders to Rosneft and noticeably lost ground - the market believed that this was due to the conflict between Timchenko and Igor Sechin (they themselves denied this).

Timchenko remained a co-owner of Gunvor until 2014, after which it was announced that he had sold his stake - 43.5% - to the co-founder. Timchenko managed to get rid of the asset exactly one day before American sanctions against him came into force. After the annexation of Crimea, the US Treasury Department was one of the first to punish Timchenko - as a person from Putin’s inner circle. As a result, Törnqvist ended up with 87% of the company; he subsequently reduced his stake to 60%.

Find out more. You can read an interview with Timchenko about the creation of Gunvor here .

Valeria Pozychanyuk