BEIJING (Reuters) - Russian oil trader Litasco has hired an ex-Glencore trader to head its Beijing-based China operations, hoping to expand sales of Russian Urals crude to the independent Chinese oil refineries known as “teapots”, traders said.
Li Buhua, formerly head of Glencore’s oil trading operation in Beijing, joined the Russian trader in January, replacing Zhu Tong who retired in late 2016, traders said.
Li was previously with state-owned Chinese oil and chemicals trader Sinochem before joining Glencore (GLEN.L).
Litasco is one of the world’s largest traders and a unit of Russia’s No. 2 oil producer Lukoil (LKOH.MM).
Li confirmed his new posting and said his small team of three - including himself - in Beijing was looking to target Chinese teapot plants to boost sales of Urals crude, a grade similar to Oman that is becoming more price competitive.
“We are starting from a small base, but hopefully we can seize the arbitrage opportunity this year as the Middle Eastern crudes become relatively more pricey due to the (OPEC) supply cuts,” said Li.
Set up in 2000 as the trading arm of Lukoil, Swiss-based Litasco focuses on selling its parent’s crude and products worldwide, serving its refineries in Italy, the Netherlands, Romania and Bulgaria and adding value through trading.
Lukoil said early this month it produced 92 million tonnes of oil (1.84 million barrels per day) last year, including 83.2 million tonnes from Russia. It also operates fields in Iraq and the former Soviet Union.
More than 20 independent refineries have since late 2015 emerged as a catalyst in the global crude oil market, making up the bulk of the 910,000 barrels per day of additional crude oil China bought in 2016 compared with its average daily purchases in the previous year.
The teapots’ buying frenzy elevated Russia to become China’s largest crude supplier last year for the first time on record. The independents have since early this year started taking in Urals crude.
Reporting by Chen Aizhu; Editing by Tom Hogue