Noble exits global oil trading

Heavy losses, high debts force commodities firm to restructure

LONDON • Noble Group is closing down its London oil desk and winding down its Asia oil operations, sources familiar with the matter said, as heavy losses and high debt force what was once Asia's biggest commodities trader to restructure.

The closures follow the sale of its larger oil trading business in the US to Vitol, announced last October, and a nine-month loss of some US$3 billion (S$4 billion) reported in November.

Since then, Noble has been winding down its remaining oil trading operations in London and Singapore, with many key traders leaving to join competitors.

"That (US oil business) comprised the material share of Noble's oil business. The rest... has either closed or is in the final process of sale," said a source.

The company, which had a market capitalisation of US$6 billion in early February 2015, was plunged into crisis after a report by blogger Iceberg Research later that month questioning its accounting.

Noble stood by its accounts and rejected the report's claims but, coupled with a commodities downturn, it could not recover investor confidence. Its market value has shrunk to around US$215 million.

The closure of its London and Singapore desks marks the company's effective exit from the oil trading business. In 2016, the number of employees at NCFL (Noble Clean Fuels Ltd) in London was 25, down from 35 the year before.

The Singapore-listed company, founded in 1986 by Mr Richard Elman, is returning to its roots as a hard commodities business in Asia, mainly involved in coal marketing, a business that is partly financed by Mercuria Group.

Traders said they have not seen activity from the company in several months and its head of crude, Mr Chris McAleese, left late last year. He was hired about a year ago to rebuild the business during a brief upswing in the company's finances. Noble's star gasoline trader in the United States, Mr Dimitri Sinenko, was poached by Gunvor at the end of last year. Two distillate traders recently moved from the London office to Unipec.

From Noble's Singapore oil desk, a senior crude trader just moved to Statoil and Mr Morten Buur-Jensen became Singapore managing director of Africa-focused oil trader Mocoh in November. A source in Asia said the firm was winding down some old contracts.

In November, the company said it would keep LNG and some Asia-focused distillates businesses, which complement its hard commodities. In an effort to stay afloat, Noble has been forced to sell key parts of its global business across commodities but the firm continued to post major losses and some asset sales have fetched less than expected.

Mr Paul Brough, a restructuring specialist who oversaw part of the liquidation of Lehman Brothers, was appointed chairman last year.

Noble had bank debt of about US$1.2 billion and bonds aggregating to about US$2.3 billion as of mid-December.

Noble shares yesterday ended 4.7 per cent lower at 20.5 cents.

REUTERS

A version of this article appeared in the print edition of The Straits Times on January 11, 2018, with the headline 'Noble exits global oil trading'. Print Edition | Subscribe