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As the world's top global energy trading houses prepare for their biggest annual industry get-together this week in London they face a growing problem, what to do with their cash. Most trading houses, which are privately owned and controlled by their employees, disclose little about their cash position, equity or dividends.
But according to more than 10 trading and banking sources calculations, Vitol, Trafigura, Mercuria and Gunvor are collectively sitting on billions of dollars, even after paying out record dividends. "We borrow much less from banks and are waiting for good investment opportunities. But those are slim, especially in loss-making green energy," said an executive at one of the top trading houses, who declined to be named.
Trading houses, which already control large areas of global oil, gas and power markets, are finding it difficult to grow, while poor returns in recent years on wind, solar and hydrogen assets have irked some investors. The cash conundrum is likely to be one of the topics on the table as traders gather for receptions and parties in London ballrooms and pubs for International Energy Week.
Vitol, the world's biggest trader, has increased its total equity to $26 billion even after paying $5 billion in record dividends after earning $15 billion in 2022, its non-public balance sheet. And its equity will probably rise close to $30 billion brd on its 2023 results if Vitol sticks to transferring a significant chunk of retained earnings to equity, two banking sources familiar with the company's performance said.
Meanwhile, Mercuria and Gunvor have accumulated around $6 billion each in equity and retained earnings in recent years, sources familiar with their results told. Equity figures for Vitol, Mercuria and Gunvor have not been previously reported. All three companies declined to comment.
Rival Trafigura disclosed in its latest report its equity grew almost 2.5 times to $16.5 billion in the last 4 years. The equity of the big trading houses is still dwarfed by oil majors such as Shell with $188 billion or BP with $85 billion, according to their latest reports.
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