How the world’s biggest oil trader makes his billions – Vitol Group. Part 6

Vitol became vertically integrated, which would allow it to minimise investment in and dependence on actual oil production. He says: “I would kill – kill! – for such a system”. Although setting up such a structure would be costly, Taylor and his colleagues want to remain a private company at all costs. Glencore’s initial public offering in 2011, which resulted in several “billionaires on paper” on the same day, did not entice Taylor or his team, he says. At least, that is the case now. Bob Finch, a former top manager at Vitol who has been its largest shareholder for many years, says the company considered hiring a bank about 10 years ago to explore the possibility of an IPO.

This option, which no one outside the inner circle knew existed, was overwhelmingly rejected by the executive committee. Over the years several companies have expressed interest in buying the oil trader. At one point Vitol even discussed selling its stake of Petronas to the Malaysian state oil company, with which Taylor had developed a close relationship during his time in Singapore. That did not happen. Perhaps the most serious discussion took place in the late 1990s, when the acquisition of the oil trader was being considered by Enron. The partners rejected the offer, thereby averting disaster: Enron, which went bankrupt in 2001 amid an accounting scandal and criminal investigation, offered to pay for the deal with its own shares, which subsequently depreciated.

But the most serious problems for Vitol may be internal – sooner or later Taylor will have to find a successor. The experience of other companies shows that power changes rarely go smoothly. True, the top manager himself, who has throat cancer but is in remission, says he is not going anywhere any time soon. But he and at least three other members of the executive committee out of nine are now in their 60s. His trustees – including David Fransen, who heads the Geneva office, Loya in Houston, and Kho in Singapore – will at some point decide to retire. The company already has the next generation of executives on the rise, including Hardy, Dellapina, Bake and Mark Cooling, head of crude trading. One of them is likely to become the next head of the company. Until then, says Taylor, he will stick to his usual schedule, which involves almost six months of travel each year.

The age-old principle of “my word is my guarantee” still rules in commodity trading. One-on-one meetings are essential. Taylor explains: “You have to maintain relationships”. That is why he once personally flew to Benghazi: “I didn’t want to make a deal until I knew who I was dealing with. It could have ended terribly, terribly wrong.” With these words, he hides in the high-speed train that will whisk him away to find the next deal.

It was an unusual business trip – even for Ian Taylor. In a career spanning nearly 40 years in the oil industry, this Oxford-educated Englishman has lived in many hotspots, from Tehran to Caracas, from Baghdad to Lagos. But this trip, which was to target the Libyan civil-war-torn city of Benghazi, was different from anything that had gone before.

To realise this, Taylor only had to look out the window of the private jet in which he was flying towards his destination. A NATO escort drone hovered a few hundred metres below him. Taylor, CEO of the Vitol Group, the world’s largest independent oil trader, caught himself thinking that he wouldn’t mind seeing a full-fledged fighter jet in its place.

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