The coronavirus pandemic was good to the oil trading segment of the energy industry. While oil and gas companies floundered as oil demand tanked and lockdowns ensued, oil traders such as Vitol Group made a killing. And Vitol just shared its spoils with its employees--$2.9 billion of it, anyway.
Vitol Group's $2.9 billion payment was the most it has ever paid out. A fact that seems fitting given the record results that the commodity trader saw in 2020. Its net profit last year was $3.2 billion, most of which was earned during the horrific Q2 that saw oil prices go negative.
But while the rest of the oil industry was hemorrhaging money, Vitol was raking it in.
Overall, according to Bloomberg, citing annual accounts, Vitol has paid out $19 billion over the paid 17 years to its partners. The money that Vitol Group, a privately held company, distributes is paid out to its 350 top employees through share buybacks.
A Good Time to be a Commodity Trader
If that money were to be spread out evenly across those 350 owner-partners, it would equate to more than $8 million. And this would be on top of the $2 billion payouts they received last year. And this would also be on top of their regular salaries, of course.
Speaking of salaries, Vitol increased that too. In 2020, Vitol saw a 67% increase in its salary bill, to $1.23 billion, which is spread across 2,480 employees.
Vitol's banner years in 2019 and 2020 were under the leadership of a new CEO, Russell Hardy, who was presented with unique challenges-and volatile oil prices-as 2020 started out with warmer than usual weather, tensions in the Middle East, the oil price war, and the coronavirus lockdowns.
Vitol trades about 7 million barrels of crude oil and products per day.
When asked in February 2020 whether Vitol would be able to make money off this volatility, Hardy replied, "Well, volatility is not our business."
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More