Trafigura pays £1.4bn Ukraine war windfall

Trafigura’s top traders have shared in a £1.4 billion windfall after profits more than doubled on market volatility caused by the war in Ukraine.

The payout pool, which is paid to more than 1,100 senior employees who are shareholders, has increased from £895 million a year ago. It would mean each would receive an average of £1.28 million.

Switzerland-based Trafigura transports raw materials around the world and its services have been in high demand amid turbulence in energy markets following the Russian invasion of Ukraine.

Net profit of £5.7bn for the year to the end of September was more than double the £2.5bn reported in 2021 and the third year in a row of record profits. Turnover rose by almost 40 per cent to £261 billion.

Chief executive Jeremy Weir said: ‘Europe’s energy crisis and the war in Ukraine underlined the fragility of global supply chains and why security of supply is vital in a world of increasing geopolitical uncertainty.

“Our oil and petroleum products teams performed exceptionally well, adapting quickly to changing trade flows and identifying supply bottlenecks.

“Especially in the field of liquefied natural gas (LNG)… we have navigated policy, price volatility, market liquidity and increasingly complex logistics to bring a greater number of shipments to Europe to help offset the decline in Russian gas flows.”

Trafigura recently signed a £2.5bn deal to supply Germany with LNG, a form of the fuel that has been supercooled to allow it to be transported in liquid form over long distances in tankers.

Demand for it has risen sharply in Europe because the route for importing gas, via a pipeline from Russia, has been closed by the Kremlin.

Trafigura said it “condemned the war unconditionally” by terminating long-term contracts with Russian state-owned companies and selling its 10 percent stake in Russia’s Vostok Oil.

Weir said: “In a complex and rapidly changing environment, we have had to deliver exceptional levels of service to our customers, who have also had to adapt to changing trade flows, the impact of rising commodity prices and broader inflationary pressures.”

He said the crisis has shown that the company has become “not only more complex, but also more critical and sought after than ever before.”

Trafigura’s profits soared even though traded oil volumes fell from 7 million barrels per day to 6.6 million.

Weir warned markets could be disrupted by further unrest in the coming year.

While the new fiscal year has started well, we must remain focused and vigilant in a period likely to be at least as challenging as 2022, with further market turbulence as the war in Ukraine continues and central banks raise rates to try and and suppress inflation,” he said.