Vitol Hands Traders Record $6.5 Billion Payout After Profit Boom

(Bloomberg) — Vitol Group paid a record dividend of $6.5 billion last year, the latest evidence of how the energy crisis has delivered spectacular riches to the world’s commodity traders. 

The payout represents an average of some $14 million for each of the roughly 450 employees who own the company — with some senior traders likely to have received multiples of that. It means that the world’s largest independent oil trader has distributed more than $25 billion to its partners over the past 15 years, according to the company’s audited accounts seen by Bloomberg News. 

The latest windfall highlights how the period of commodity market volatility sparked by Russia’s invasion of Ukraine became a once-in-a-lifetime bonanza for the traders and executives who own the largest trading houses. The accounts showed blockbuster profits of $13.2 billion last year at the level of Vitol’s main Dutch holding company Vitol Holding BV — down from the $15.1 billion of 2022, but still more than three times the company’s previous annual record. Vitol Holding BV pays dividends, which in turn are used for share buybacks from Vitol partners by its parent company.

The four leading privately-owned energy traders — Vitol, Trafigura Group, Mercuria Energy Group Ltd. and Gunvor Group — have made combined net profits of more than $50 billion in the past two years, according to Bloomberg News calculations. By comparison, in 2018-2019 their combined earnings were just $6.8 billion.

Vitol is owned by between 450 and 500 of its 1,700 employees, a senior executive told a New York court earlier this year, while Trafigura has about 1,400 trader shareholders. Vitol Chief Executive Officer Russell Hardy said in an April interview that no individual owns more than 5% of the company — in contrast to smaller rivals Mercuria and Gunvor where ownership is concentrated in the hands of one or two top executives. 

As well as the bumper payouts, commodity trading houses are also re-investing a chunk of their mega profits into assets, from oil wells and refineries to renewables. In 2023, Vitol made investments in Vortex Energy, a renewable energy developer in Poland, and Delaware Basin Resources, a US shale oil producer.

A Vitol spokesperson declined to comment. 

The huge payouts come at a time of heightened scrutiny from governments, after the fallout from the war in Ukraine focused attention on the commodity trading industry’s role in ensuring energy security. The sector has been further thrust into the spotlight by a series of corruption investigations that have exposed a widespread culture of wrongdoing across the biggest trading houses. In one high profile case this year, former Vitol trader Javier Aguilar was convicted of orchestrating an elaborate scheme to bribe Mexican and Ecuadorian officials.

While Vitol’s share buyback was its largest ever, it was relatively conservative compared to some of its peers. Trafigura, for example, distributed $5.9 billion to its employee-shareholders in its most recent financial year ending September 2023, when it made net profit of $7.4 billion. Trafigura is grappling with a hefty share buyback bill, Bloomberg reported this month, in the wake of a wave of senior departures and several years of blockbuster profits.

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