Singapore's IEG to start trading crude oil, tap China demand
SINGAPORE (Reuters) -- Singapore-based trading start-up International Energy Group (IEG) this year plans to expand its portfolio to crude oil from products such as gasoline and gasoil, looking to tap growing Chinese demand.
World No.2 oil consumer China posted record crude import growth in 2016 on demand from independent refiners, with shipments expected to increase again this year.
"We will probably look at importing crude and some light components (such as ethylene) from the West, particularly the US," Artun Gursel, the company's book leader and trading manager, told Reuters on Tuesday. He is IEG's sole trader.
IEG, a subsidiary of Singapore-listed New Silkroutes Group (NSG), started trading oil products in 2015 by leasing storage in South Korea and selling fuel to Southeast Asian countries, said Gursel, declining to give trade volumes.
"There's growth in products trading in middle distillates because of exports from China," Gursel added, as well as noting the company would look to boosting trade with Southeast Asia.
IEG is also working with an asset management unit under parent company NSG to look at energy infrastructure investment that could support its oil trading.
"Oil markets are so transparent that business models that you develop tend to last no more than two years. So you have to control businesses under your own name through infrastructure investments," said Gursel.
"This environment of low oil prices and logistics costs will not stay," he said, adding that this is a good opportunity to acquire assets such as oil tankers or investing in distribution networks or terminals.
Earlier this month, NSG announced that it had bought an 80% stake in New York-based CG Capital Markets Holdings, which will be renamed New Silkroute Capital.
The acquisition provides NSG access to western funds and a financial platform that allows it to accept the currencies of trading partners, such as the Chinese yuan, said IEG executive director Nelson Goh.
Reporting by Florence Tan and Jessica Jaganathan; Editing by Joseph Radford
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