BY ANNA HIRTENSTEIN
AND JOE WALLACE
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 war.
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 shortlived 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 invasion, 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
war, 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 after Moscow annexed Crimea.
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 war, 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.