Eni and Mercuria to form partnership to trade energy commodities
Italian oil major and Swiss trading house aim to secure large profits that have been notched up by some rivals
Italian oil major Eni is to form a partnership with Swiss trading house Mercuria to jointly trade global energy commodities.
The companies will announce details of their joint venture, which will trade oil, gas, liquefied natural gas and biofuels, on Wednesday, according to people with knowledge of the plans.
The partnership, to be equally owned by Eni and Mercuria, will draw on both companies’ international footprints but will operate on a standalone basis.
The joint venture will allow Eni to quickly expand its oil and gas trading business, after rivals BP, Shell and TotalEnergies reaped huge returns from energy price volatility.
Some traders made enormous profits as the US-Israeli war against Iran roiled energy markets this year. They made even bigger gains from whipsawing energy prices following Russia’s full-scale invasion of Ukraine in 2022.
Eni chief executive Claudio Descalzi told the FT in February that the oil company was in talks with Mercuria and other businesses about a potential partnership that would revive its trading operations after a seven-year hiatus.
Trading “is not in our DNA”, he said. “So I thought to become commercial we have to have a partnership to understand the business.”
Representatives of Eni and Mercuria declined to comment on the joint-venture plans.
Mercuria will gain important data from Eni’s oil and gas production business through the partnership.
The trading units at Europe’s three biggest oil companies — Shell, BP and TotalEnergies — earned as much as $4.75bn from the turmoil in global energy markets in the first quarter of this year, according to estimates by analysts.
Energy prices were buffeted by the US intervention in Venezuela in January, and then the US-Israeli war against Iran that began at the end of February.
Shell, BP and TotalEnergies, which trade derivatives such as futures and options as well as physical oil and gas, have a significant competitive advantage over some rivals.
But independent commodities traders have also reaped high profits. Trafigura this month reported net profit of $4.1bn for the six months to March 31 — more than double what it recorded in the same period one year ago.
Energy traders tend to perform best during volatile periods, when they can profit from buying and selling oil and refined products at different prices across markets. More of their customers seek to hedge against price moves in these circumstances.