• About
  • Advertise
  • Privacy Policy
  • Contact
Sunday, July 13, 2025
  • Login
The Vaultz News
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2DNew
  • Jobs & Scholarships
    • Job Vacancies
    • Scholarships
No Result
View All Result
The Vaultz News
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2DNew
  • Jobs & Scholarships
    • Job Vacancies
    • Scholarships
No Result
View All Result
The Vaultz News
No Result
View All Result

Global Energy Traders Confront Multi-Billion Cash Quandary

February 26, 2024
Stephen M.Cby Stephen M.C
in Extractives/Energy
0
Global Energy Traders Confront Multi-Billion Cash Quandary

As the world’s leading energy trading houses gear up for their annual industry summit in London, a pressing issue looms large: what to do with their substantial cash reserves.

Despite their status as privately owned entities, these trading houses typically keep tight-lipped about their financial metrics, including cash positions, equity holdings, and dividend payouts.

However, insights gleaned from over 10 industry sources and Reuters calculations reveal that major players like Vitol, Trafigura, Mercuria, and Gunvor collectively find themselves awash with billions of dollars, even after distributing record dividends.

RelatedPosts

Ghana Poised to Kickstart Nsuta-Tarkwa Manganese Refinery Project

Barker-Vormawor Defends E&P in Legal Dispute

Lands Minister Charged to Back Off Azumah-E&P Goldmine Dispute

“We borrow much less from banks and are waiting for good investment opportunities. But those are slim, especially in loss-making green energy,” said an executive at one of the top trading houses.

Trading houses, which already control large areas of global oil, gas and power markets, are finding it difficult to grow, while poor returns in recent years on wind, solar and hydrogen assets have irked some investors.

The cash conundrum Is likely to be one of the topics on the table as traders gather for receptions and parties in London ballrooms and pubs for International Energy Week.

Vitol, the world’s biggest trader, has increased its total equity to US$26 billion even after paying $5 billion in record dividends after earning US$15 billion in 2022, its non-public balance sheet, which was seen by Reuters, shows.

And its equity will probably rise close to US$30 billion based on its 2023 results if Vitol sticks to transferring a significant chunk of retained earnings to equity, two banking sources familiar with the company’s performance said.

Meanwhile, Mercuria and Gunvor have accumulated around US$6 billion each in equity and retained earnings in recent years, sources familiar with their results told Reuters. Equity figures for Vitol, Mercuria and Gunvor have not been previously reported. All three companies declined to comment.

Rival Trafigura disclosed in its latest report its equity grew almost 2.5 times to US$16.5 billion in the last 4 years. The equity of the big trading houses is still dwarfed by oil majors such as Shell, opens new tab with US$188 billion or BP (BP.L), opens new tab with $85 billion, according to their latest reports.

Most Traders Prefer Few Assets

Until a decade ago, most traders preferred to have few assets, low equity or cash positions and pay out most of their profits in dividends to their employee shareholders.

The exception was Glencore (GLEN.L), opens new tab, which began trading as Marc Rich in the 1970s and gradually amassed coal and metals assets. It went public in 2011, raising US$11 billion.

Total equity is calculated as the difference between assets, including retained earnings, and liabilities and is key to determining how much a company is worth.

Trading houses have bought assets over the past decade, from oil refineries to wind farms and metals mines, using profits and money borrowed from banks while keeping their cash reserves low.

That changed in 2022 when gas prices soared after Russian gas supplies to Europe dropped as a result of Western sanctions that aimed to punish Moscow for its invasion of Ukraine.

Traders often hedge their positions with derivatives, usually borrowing 90% of the money to buy them while using their own cash to cover the remainder.

If prices soar, exchanges ask traders to contribute more of their own cash in so-called margin calls. “We all faced margin calls and rushed to borrow from banks. This is when we decided it was prudent to put aside more cash,” a second trading house executive said.

Traders such as Trafigura work with up to 150 banks and have as much as US$50 billion of credit lines available.

At the peak of the margin call crisis traders used the lines in full and some banks refused to boost lending, while encouraging traders to find alternatives.

Meanwhile, most traders decided to retain earnings as equity. “We beefed up our equity and as a result more of our trade became self-financed,” a third trading executive said.

When traders borrow less, banks earn less in interest and cannot increase their lending to other clients if they keep large credit lines open if these are not used.

“Banks didn’t like going above credit limits in 2022. But they equally disliked it when traders barely used the lines in 2023,” said a banker at a top U.S. bank active in the sector.

Bank borrowing would rise again once interest rates fall and traders spend more on investments, one of the three trading executives said. But that was not happening yet.

“Sometimes traders just borrow money and put it back on a deposit with the same or different bank so it pays interest,” a fourth trading executive said.

READ ALSO: Denmark Ends Nord Stream Blast Investigation

Tags: Global Energy TradersLondon BallroomsMercuriaTrafiguraVitol
Please login to join discussion
Previous Post

Arnold Slams Hajia4Reall’s PR, Legal Teams

Next Post

Free SHS, EduWatch Urges Government To Prioritize Children From Poorest Households

Sign up for The Vaultz analytic wire

Get weekly news analysis from top editors at The Vaultz and stay informed on trending economic and business issues from across the globe.

Related Posts

Kow Abaka Essuman, Violence, President
General News

Ayawaso Lessons Resurface Amid Fresh Concerns Over Political Violence

July 13, 2025
Ablekuma North rerun raises questions on anti-vigilante laws
General News

Aboagye Faults Anti-Vigilante Law Post Ablekuma North Rerun Violence

July 13, 2025
AratheJay Opens Up About His Music Journey
Entertainment

AratheJay Opens Up About His Music Journey

July 12, 2025
IMF Team to Arrive in Ghana for Talks on Economy and 2025 Budget
Economy

IMF Flags Ghana as High Risk for Debt Distress Despite Debt Being “Sustainable”

July 12, 2025
Sudan Urges ICC Probe Into Foreign Interference
Africa

Sudan Urges ICC Probe Into Foreign Interference

July 12, 2025
NPP blamed for defeat in Ablekuma North rerun
General News

Basintale Criticizes NPP’s Poor Strategy In Ablekuma North 

July 12, 2025
Kow Abaka Essuman, Violence, President
General News

Ayawaso Lessons Resurface Amid Fresh Concerns Over Political Violence

by Silas Kafui AssemJuly 13, 2025
Ablekuma North rerun raises questions on anti-vigilante laws
General News

Aboagye Faults Anti-Vigilante Law Post Ablekuma North Rerun Violence

by Lilian AhedorJuly 13, 2025
AratheJay Opens Up About His Music Journey
Entertainment

AratheJay Opens Up About His Music Journey

by Esther Korantemaa OffeiJuly 12, 2025
IMF Team to Arrive in Ghana for Talks on Economy and 2025 Budget
Economy

IMF Flags Ghana as High Risk for Debt Distress Despite Debt Being “Sustainable”

by Stephen M.CJuly 12, 2025
Sudan Urges ICC Probe Into Foreign Interference
Africa

Sudan Urges ICC Probe Into Foreign Interference

by Lawrence AnkutseJuly 12, 2025
NPP blamed for defeat in Ablekuma North rerun
General News

Basintale Criticizes NPP’s Poor Strategy In Ablekuma North 

by Lilian AhedorJuly 12, 2025
Kow Abaka Essuman, Violence, President
Ablekuma North rerun raises questions on anti-vigilante laws
AratheJay Opens Up About His Music Journey
IMF Team to Arrive in Ghana for Talks on Economy and 2025 Budget
Sudan Urges ICC Probe Into Foreign Interference
NPP blamed for defeat in Ablekuma North rerun
[/vc_row_inner]

Recent News

  • Ayawaso Lessons Resurface Amid Fresh Concerns Over Political Violence
  • Aboagye Faults Anti-Vigilante Law Post Ablekuma North Rerun Violence
  • AratheJay Opens Up About His Music Journey
  • IMF Flags Ghana as High Risk for Debt Distress Despite Debt Being “Sustainable”
  • Sudan Urges ICC Probe Into Foreign Interference
The Vaultz News

Copyright © 2021 The Vaultz News. All rights reserved.

Navigate Site

  • About
  • Advertise
  • Privacy Policy
  • Contact

Follow Us

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2D
  • Jobs & Scholarships
    • Job Vacancies
    • Scholarships

Copyright © 2021 The Vaultz News. All rights reserved.