NEW YORK: Torbjorn Tornqvist spent three decades building Gunvor Group into one of the world’s largest energy traders – from early days exporting fuel from post-Soviet Russia, to today’s sprawling global business that trades enough oil every day to supply the United Kingdom and France combined.
On Monday, the 72-year-old Swede announced an abrupt departure from the company he cofounded, striking a deal to sell his 86% stake to a group of employees.
His exit is a dramatic move to contain the fallout after the US Treasury Department called Gunvor “the Kremlin’s puppet” last month.
It was an allegation that was made without presenting evidence but which evoked longstanding questions about the trader’s past ties to Moscow, despite its repeated denials.
Now, as its new leader, Gunvor has turned to a relative outsider: a veteran American oil trader it hired only last year.
Gary Pedersen, who previously ran Gunvor’s business in the Americas, cut his teeth trading petrol at Koch Inc, where he worked for two decades, and most recently did a stint at hedge fund Millennium Management before joining Gunvor.
Current and former colleagues describe the one-time Iowa State linebacker as a down-to-earth manager who prowls the trading floor and is willing to listen to ideas, even the risky ones, but places a high emphasis on access to sophisticated market analysis.
In an interview on Monday, Pedersen, 56, said Gunvor’s new shareholder structure – the majority stake is being acquired by about 60 current employees – means that traders will have greater incentive to find new opportunities for profit.
Investments in the United States will remain a big focus for the company, he said, including in oil, natural gas and power.
“Everybody’s going to feel the ownership, think like an owner and act like an owner,” he said. “I’m going to work across the desks and co-ordinate with them on those opportunities as they come up.”
Gunvor and Pedersen emphasised that the leadership transition was long planned, and formed part of the discussions when he was hired.
Still, the new chief executive officer’s US credentials and experience may help to reassure the US administration that Gunvor really has achieved the “definitive reset” it touted in announcing Tornqvist’s sudden departure.
The management buyout is being financed in part by a loan from Tornqvist, which means a connection to the company will continue even after his exit.
The Treasury’s announcement last month that it would block Gunvor’s deal to buy the international assets of Lukoil PJSC sent shockwaves through the industry.
Commodity traders rely on massive bank credit lines to fund their dealings, and Bloomberg reported shortly afterwards that Spain’s Banco Santander SA had pulled funding commitments from Gunvor after the US Treasury comments, but that its other lenders remained supportive.
Pedersen declined to comment on the deliberations that influenced the timing of the announcement of Tornqvist’s departure, noting only that it was “the right time for him and the right time for the company”.
In its statement, Gunvor said that “misperceptions about its past have become an impossible distraction.”
Gunvor hasn’t disclosed financial terms of the management buyout, but Tornqvist’s 86% stake likely means that he exits the company as one of the biggest financial winners of the energy crisis wrought by Russia’s invasion of Ukraine, which generated windfall profits for the companies that buy, sell and ship commodities around the world.
And his departure marks the end of an era for a trader who has often epitomised his industry’s willingness to take risks and go where others won’t in search of profit.
Born in Stockholm, Tornqvist started in the industry in the late 1970s at what was then British Petroleum.
He founded Gunvor in its current form in 2000 with Russian trader Gennady Timchenko, but the firm’s big break came a few years later when it was offered a major role in helping to keep huge volumes of Russian oil flowing to the world after the government seized the oil fields of Yukos Oil.
“I understood this was the chance of a lifetime,” Tornqvist told Bloomberg reporters Javier Blas and Jack Farchy, as recounted in their book The World for Sale.
A decade later, the company’s Russian ties were already causing challenges.
In 2014, the US sanctioned Timchenko for his relationship with President Vladimir Putin.
It also said that Putin had investments in Gunvor and “may have access to Gunvor funds”. Gunvor denied any links with the Kremlin or Putin, and Tornqvist bought out Timchenko’s 44% stake.
By then, the company also shifted its focus away from Russia. — Bloomberg
