(Bloomberg) -- Gunvor Group Ltd., one of the largest independent oil traders, said it will invest at least half a billion dollars in non-hydrocarbon fuels and technology as looks to adapt and profit from the energy transition.
The ambitious commitment by the Geneva-headquartered firm, which will also see it pledge steep emissions cuts from its refining and shipping operations, highlights the shifting strategies of the biggest oil traders. Even after a year of knock-out profits from trading oil, commodities merchants are prepping their businesses for a looming shift to cleaner fuels.
“We did have a great year in trading -- one of our best ever,” Torbjorn Tornqvist, Gunvor’s chairman, co-founder and chief executive officer said in an interview. “We will continue to do trading, but we also think long-term and we do have to address the energy transition.”
Gunvor set up a new unit called Nyera, which Tornqvist says translates from his native Swedish to ‘new era,’ to focus on investments in carbon capture and storage, renewable power and alternative fuels, including ammonia and hydrogen. It hopes to spend at least $500 million on projects in the next three years.
The Swiss firm isn’t abandoning its role as a trader, Tornqvist said. Rather, it hopes to play a bigger part and gain insight in different commodities and technologies, such as hydrogen, that will eventually be more freely traded.
“We are a trading company. The core of our abilities is not investing in new technology,” Tornqvist said.
Gunvor handles about 2.7 million barrels of crude and oil products a day, making it one of the five-largest independent traders. So-called ‘transitional’ commodities including liquefied natural gas - in which it’s the biggest independent trader - and biofuels now account for about 50% of the firm’s trading activity.
“These areas are expanding and proportionally they will take a bigger role. That doesn’t mean trading is going down,” Tornqvist said.
Bigger rivals Vitol Group and Trafigura Group have also ramped up investments in solar, wind, hydrogen and carbon capture deals. Vitol has invested in solar and wind projects as a well as a U.K. carbon capture project. Trafigura started its Nala Renewables unit in 2020.
In addition to Nyera, Gunvor vowed to reduce its direct scope 1 emissions from its owned refineries and ships by 35% by 2025 and its scope 2 indirect emissions by 95% compared with 2019 levels. It will also target scope 3 emissions, which includes the impact of the entire supply chain and use of products.
Gunvor’s three European refineries will switch to running on renewable or carbon-neutral electricity with its facility in Rotterdam developing new processes around hydrogen and vegetable oil processing, Tornqvist said.
The company already owns two biofuel plants in Spain that account for less than 1% of Gunvor’s overall scope 1 and 2 emissions.
Gunvor also said its Clearlake Shipping unit will shift its fleet to be 100% ‘Eco’ vessels by 2022 with ships that surpass industry environmental standards.
©2021 Bloomberg L.P.