Swiss traders boss fuel sales to Egypt
LONDON - Reuters
Traders such as BB Energy and AOT Trading have almost completely stopped supplying Egypt. AP photoEgypt is relying increasingly on large Swiss trading houses for fuel supplies as it struggles to avoid energy shortages and unrest, while smaller players cut back on deliveries for fear of non-payment.
Egypt’s finances have been crippled by a fall in tourism revenue since the 2011 revolution, a weakening of its currency and a rise in fuel subsidies, which account for one fifth of government spending. It owes over $5 billion to fuel suppliers.
Traders such as BB Energy, AOT Trading, Eminent, Augusta and Sahara have almost completely stopped supplying Egypt, leaving big players - such as Vitol, Glencore, Gunvor, Trafigura, Litasco and Mercuria - to dominate the market.
“We’re not looking at Egyptian tenders any more,” one trader at a small firm said. He was burned last year when Egypt’s financial difficulties delayed its payment for cargoes, leading to demurrage charges. He then spent months trying to recoup those charges.
All the trading houses declined to comment.
The dominance of major traders mirrors events in Greece last year during the peak of its financial troubles, when its largest refiner Hellenic had to rely on Vitol and Glencore for oil supplies after it could no longer receive bank guarantees.
Like Hellenic, Egyptian state oil firm EGPC has to pay hefty premiums to secure supplies as traders face additional shipping and credit expenses.
In Egypt’s latest and biggest tender to buy gasoil, the premiums it paid over regular Mediterranean prices amounted to $17-$23 a tonne, up from the already high $16-$19 premiums at the end of 2012.
Vitol, Litasco and Glencore will supply around $1.7 billion worth of gasoil to Egypt, or 55 out of around 70 cargoes, to the ports of Alexandria, Dekheila and the Red Sea port of Suez in the six months from July through December.
Gasoil is essential to help meet peak summer fuel demand for harvesting crops, travel and air-conditioning.