Unimot sets up in Geneva to target German diesel market

Polish oil products trading firm Unimot has set up an office in Geneva as part of plans to target the German diesel market should the EU go ahead with its proposed embargo on Russian oil imports.

"We assume that sanctions on Russian oil products will be imposed," Unimot chief executive Adam Sikorski said on Tuesday.

The firm is planning to use the Gulfhavn oil terminal in Denmark to supply the German market if sanctions are imposed on Russian diesel. Unimot leased capacity at the terminal to import non-Russian diesel on large vessels earlier this year. In the event of an EU-wide embargo on Russian oil, Unimot sees strong potential to supply Germany with seaborne shipments of diesel, particularly as the future of the 226,000 b/d Schwedt refinery, currently majority owned by Russia's Rosneft, remains uncertain.

The new Geneva office, which will help handle Unimot's international diesel trade, is due to start operating on 1 June. The company has already hired an "experienced trader" to run the office, although it has not said who.

Unimot began importing diesel to the Gulfhavn terminal in the second half of April. It has received two vessels there so far and a third is being planned. To make best use of its leased capacity at the terminal, the company would ideally have two vessels a month, but this will not make commercial sense until EU-wide sanctions on Russian oil are formalised. With non-Russian diesel commanding large premiums against Russian product in Europe at the moment, "unilateral sanctions are very dangerous", Sikorski said.

Unimot has reiterated its interest in expanding commodities trade with Ukraine, including plans to move into agricultural products. The company already supplies fuel to the Ukrainian market and is considering building or co-investing in an oil terminal in the Lviv region in western Ukraine to improve the logistics for oil products trade between Poland and Ukraine. But a decision on whether to go ahead with the terminal is unlikely before the war in Ukraine is over, Sikorski said.

Bumper profits

Unimot's trade volumes declined in the first quarter — down by 11pc on the year for diesel and 6pc lower for LPG. But strong wholesale margins helped the firm deliver a record quarterly profit of 114mn zlotys ($25mn), more than three times higher than the first quarter of 2021.

The company expects strong margins to persist for the foreseeable future, although it does not anticipate margins to be quite as high this quarter. It has some concerns about LPG sales in Poland as falling supply from Russia risks pushing up autogas prices at the pump and weighing on LPG's competitiveness against gasoline in the road fuel market.

By Tomasz Stepien