Socar hires UK-based oil trading team from Phibro

Socar on Tuesday said it had recruited Phibro’s London-based team to build on the Azeri group’s presence in the crude oil and refined products trading business in Europe, Africa and Asia.

"Following Occidental Petroleum’s announcement in late 2014 of its intention to pull back from proprietary trading of crude oil, Socar Trading took the opportunity to recruit Phibro’s London trading team and increase significantly its presence in the London oil market,” the company said.

In recent years, national oil and gas companies of smaller, resource-rich countries have set up trading arms in key hubs as entry points to international commodities markets.

Oil producers from Gulf states and former Soviet Union members, which traditionally sold commodities through longer-term contracts, have been among those doing so.

Established in 2007, Socar Trading has its headquarters in Geneva, has big offices in Singapore and Dubai and a smaller presence in other cities around the globe.

"Until now, Socar only had a representative desk in London but now they have a fully-fledged London operation that will use the credit lines of Socar Trading,” said a spokesperson.

The new team, which starts in London on Tuesday, will primarily handle crude oil, but will branch out into refined products as well, he said.

Phibro’s trading business was expected to be wound down by the end of this month.

"It has long been our company strategy to expand our geographical presence and to diversify our trading portfolio,” said chief executive Arzu Azimov in a statement.

In recent years, the trading arm of the state-owned oil and gas company has become active in European and Asian products trading, as well as Iraqi Basrah crude.

The group said it aimed to treble its oil and products volumes sales in the five years to 2016.

Last year, Socar hired traders from rivals Trafigura and Arcadia to form part of this team, the spokesperson said.

"A trading arm for a national oil company is beneficial in order to build up knowledge about oil and product flows, changing customer demand, investment opportunities, competitive behaviour and of course to manage risk,” said Roland Rechtsteiner at consultancy Oliver Wyman. "But scale is key in order to compete.”

Oil and gas account for more than 90 per cent of the Azerbaijan’s exports and three-quarters of government revenues.