War on Ukraine The excellent Russian connections of a small Geneva trader
Agathe Duparc and Adrià Budry Carbó, 5. April 2022
A small business specialising in Russian crude greatly intrigues the oil sector in Geneva. Since Public Eye and other media published lists of the biggest exporters from Russian ports, questions have been asked concerning Paramount Energy & Commodities SA. Last February and March, when the Russian army was already positioned on the Ukrainian border and during the invasion, this trading company, registered in Geneva in 2017 and virtually unheard of, obtained a total of 11.7 million barrels of oil, loaded aboard 16 tankers at the port of Kozmino in the Russian Far East, near Vladivostok. As a result, Paramount Energy is ranked the fourth biggest buyer of Russian crude, behind the giants Litasco, Trafigura and Vitol. A highly risky business in the current situation.
Contacted by Public Eye, Paramount Energy has confirmed these figures through its sole director: Maurice T. He manages approximately twenty companies, many of which are linked to oil, and maintains that the barrels purchased in Russia were negotiated under long-term contracts, “well before 24 February” and that the quantity in question is “in line with volumes we usually handle”. Maurice T. also explained that the company’s business model is “to market crude oil produced by independent (non-state) producers” who are not subject to the sanctions, and whose names he does not want to release due to his “professional secrecy”.
Passionate about oil and cycling
The profile of the small trader is all the more intriguing. Although minimalist, its website boasts that “Paramount’s key management and personnel have a vast experience and have traded well in excess of 2 billion barrels of oil.” We also discovered that the company “has a particular focus on Russia and the countries of the former Soviet Union”, marketing crude oil and petroleum products on a global scale. However, only one name appears under the Management heading: that of its “founder” Niels T., described as “a real entrepreneur at heart” and “a keen cyclist”. This Dutch citizen, who has worked in the oil industry since 1992, is also behind the creation of Tenergy SA, in 2009, together with a certain Michel T., a Swiss citizen from Vevey who also worked in hydrocarbons.
At 22 rue de Villereuse, on Geneva's left bank, the twin companies openly share the same address and even the same brass nameplate. The building also houses the office of director Maurice T. and some of the 23 entities he manages in Geneva. A small trading hub in its own right.
According to several industry sources, the founders of Paramount and Tenergy enjoyed a good relationship with Gennady Timchenko, co-founder of oil trading giant Gunvor and a close friend of Vladimir Putin. When this Russian billionaire was still living in Geneva, the duo was invited to his luxurious villa in Cologny, states a source. Michel T. used to play tennis with Timchenko, who is now targeted by numerous sanctions in the United States, Europe and Switzerland. It is this proximity in particular that would have allowed their companies to establish themselves with such success on the Russian market. Another interlocutor, recalling that friendly relations with Timchenko, a prominent oligarch, unquestionably opens many doors in Russia, adds:
“Not a single drop of oil is leaving Russia today without high-level approval, especially when it comes to such volumes".
When confronted with this, Maurice T., the director of Paramount and Tenergy, stated that “neither Paramount nor [either of its two founders] have any business relationship with Mr Timchenko”.
The niche of small producers
On the internet, there are some traces of the oil business of the above-mentioned two traders. In January 2019, Reuters announced that they had obtained eight shipments of “ESPO Blend crude” of 100,000 tonnes each at the port of Kozmino. All of which was purchased from “small producers” whose names do not appear in the dispatch. “ESPO Blend crude” designates a blending of crude oil that transits via the ESPO pipeline from Eastern Siberia to the Pacific Ocean where the port of Kozmino is located. This oil terminal is fully controlled by Transneft, the Russian state giant that owns all the pipelines in Russia.
Then, in May 2019, a memo from Energy Intelligence Group noted that Tenergy had, in previous years, loaded “between three and four cargoes per month” from small producers, but “these volumes were recovered by Paramount”.
Apparently, the two Geneva traders occupy a niche by sourcing from what are known as “malychi” (babies). This stands for around one hundred small crude oil producers in all four corners of the huge country: in Tatarstan, in the Samara region, in the Urals, in Ufa and in Western Siberia. “If you take them individually, their production is not enough to fill a tanker. You have to collect all these small volumes, tranship them in a pipeline, and then load a cargo ship. It's a real headache”, explains a Geneva trader who made his mark on the Russian market.
To obtain a port as popular as Kozmino, very good relations with the Russian Ministry of Energy are essential. “The technical schedule for all exports abroad is drawn up by this ministry, which ultimately also assigns the ports of departure. Transneft then takes over by agreeing to tranship the oil through its pipelines”, adds the trader. He also states that he “never wanted to get involved in this business which required solid connections in order to obtain a slot in the supply chain, with all the risks of corruption that this may entail”.
But the business is worth the effort. The prices at which small producers sell oil are much lower than those in the so-called “spot” markets. This is the ransom to be paid to be able to export hydrocarbons abroad and access pipelines, passing after national giants like Rosneft, Surgutneftegaz and Litasco. “The pocketed margins are very important”, concludes the trader.
According to our research, the small trader Paramount does not always deal directly with small producers. In the first half of 2021, the trader lifted at least 19 cargoes of crude and oil products from Russia's state-owned Gazprom Neft (the gas giants oil branch), according to customs data consulted by us. In August 2020, the specialised agency Argus indicated that Paramount partnered with Concept Oil Services, a company in Hong Kong, also active in the port of Kozmino. This “intermediary buys small volumes to fill tankers and sells them to its partner Paramount Energy. The main volumes of Concept Oil Services are bought from the Irkutsk oil company (INK), RNG, Gazprom Neft and Yargeo, a joint venture between Novatek and the Energia fund of former Russian energy minister Igor Yusufov. Gennady Timchenko is himself a shareholder of Novatek.
When asked about these points, Paramount said it did not "intended to enter into a dialogue [with Public Eye] by providing you with confidential information," adding that the company "respects and has always scrupulously respected all its legal obligations and in particular those arising from the Swiss and international sanctions.
Ties to the lord of the pipelines
The rapid rise of Concept Oil Services has not gone unnoticed. In 2020, according to Forbes, this structure rose to 11th position among the largest buyers of Russian crude oil, with a volume of 6.5 million tonnes (a little less than 47.7 million barrels), alongside giants like CNPC, Litasco and Total. In Geneva, an employee of a major trading house said he was approached, a few years ago, by the director of Concept Oil Services who offered him an oil deal. But, when asked to answer a KYC (Know Your Customer, a banking procedure to verify the identity of clients) questionnaire, the Latvian citizen who presents himself as the company's main shareholder refused to give the names of all the beneficial owners of the company. “At the time, we concluded that Concept Oil Services was controlled by Transneft executives”, he adds.
In Geneva, the make-up of Paramount and Tenergy is also worth investigating. The sole director of the two companies, Maurice T., is well-known in Geneva oil circles, with a marked preference for Russia and the countries of the former USSR. The Russian-speaking director manages some 24 structures based in Geneva and Zug. His company MFT Services provides “services in the field of international commodity trading, and its financing”.
Apparently, it provides ready-made solutions for establishing and managing trading companies and, in addition, takes care of finding banks willing to finance the operations.
The Genevan also officiated for a long time within Steval Management SA, whose name is cited in another dubious affair.
An investigation by the OCCRP shows that this fiduciary, who was removed from the Geneva commercial register in 2017, managed the oil business of Anatoly Ternavsky, a Russian living in Belarus, whose company Univest-M started its activity by becoming the exclusive oil trader for the Russian giant Rosneft. In March 2012, this oil baron was placed on the European Union sanctions list because of his close proximity to the Belarussian dictator, Alexander Lukashenko. Back then, he controlled an obscure network of offshore companies. Documents leaked as part of the Panama Papers prove that two weeks after these sanctions, Steval helped Anatoly Ternavsky conceal his ties to a company registered in the British Virgin Islands: Roping Marketing and its British subsidiary Uni-Trade. The legal trick consisted of producing a declaration signed by Natalya Ternavskaya, the daughter of the oil magnate, stipulating that she was the beneficial owner of these entities. What’s more, the document was predated. “This timing indicates that the action was likely in response to the EU sanctions”, OCCRP notes on its site.
Finally, the serial manager Maurice T. also had a mandate, in December 2020, to liquidate Taurus Petroleum, a trading company which, from the beginning of the 2000s, has been embroiled in several scandals. Within this legendary company Niels T., the founder of Paramount, made his name as a “senior crude trader” between 1994 and 2007. His name is mentioned in the oil-for-food scandal, a UN programme aimed at ensuring the humanitarian needs of the Iraqi people after the first Gulf War and which was accompanied by a vast system of secret commissions benefiting Saddam Hussein, among others.
And since the world is small, and Geneva is a world in itself, Maurice T. took care to leave a note on the door of his building in Villereuse to guide delivery people through his universe. “Below are the contact numbers in case the door is closed”, followed by a list of 26 companies, three numbers to call, but only one name: that of Maurice T.