Exclusive: Glencore turns setbacks into supremacy in Russian oil

Thu Jan 31, 2013 3:46am EST
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By Dmitry Zhdannikov

DAVOS (Reuters) - The world's largest trading house Glencore is fast turning itself into a Russian oil trade leader from an outsider by mending fences in just one year with Rosneft, the Kremlin's national energy champion.

Through a $10 billion oil funding deal with state-controlled Rosneft, the Swiss-based firm that has been big in Russian coal, grains and aluminum for two decades is extending this grip to a sector where it played second fiddle to companies such as rival trader Vitol or Royal Dutch Shell.

"It shouldn't come as a surprise because Russia is one of the world's largest commodity producers and Glencore is the world's largest commodities trader," a high level source close to the situation said.

However, the speed of Glencore's expansion in Russian oil exports has been extraordinary.

Just a few years ago, Glencore's biggest investment in Russian oil, through minority stakes in mid-sized firm Russneft, seemed at risk of expropriation while its attempts to cooperate with Rosneft had long been unsuccessful.

Glencore was the only major trader or oil company not allowed to participate in Rosneft's huge oil export tenders, unlike arch-rival Vitol and oil majors Shell and BP.

Russian industry sources said the failure was partly due to tensions between Rosneft Chairman Igor Sechin, a close ally of President Vladimir Putin, and tycoon Oleg Deripaska, who has links to Glencore through the aluminium trade.

Deripaska controls aluminium giant Rusal, in which Glencore has a minority stake.   Continued...

The logo of commodities trader Glencore is pictured in front of the company's headquarters in the Swiss town of Baar November 20, 2012. REUTERS/Arnd Wiegmann