Oslo-based metformin producer Vistin Pharma says its energy trading division had lost NOK 101.3 million (US $11.8 million) as of Wednesday (3 January) on financial derivative contracts to take advantage of the global change in sulphur specifications for marine fuel in the global shipping industry in 2020.
The oil derivative contracts entered into by Vistin Pharma are based on the price difference between bunker fuel with 3.5% sulphur content and 0.5% sulphur content.
Vistin Pharma says it expects the market price for fuel with a low sulphur content will increase, while the price for high sulphur fuel will decrease due to IMO 2020.
“As of 31 December 2018, the market-to-market value of these contracts was negative NOK 85.0 million, which will be recognised as an unrealised financial loss in 2018. No financial losses or gains relating to these contracts have been realised in 2018,” it reveals.
“The market-to-market value as of 3 January 2018 was negative NOK 101.3 million.
“The derivative contracts, which are entered into with a commercial bank as a counter party, do not result in physical delivery of the oil products, but the market-to-market value of the derivatives is settled when the contracts are terminated by Vistin Pharma.
“The contracts expire at the end of 2020, but may be terminated at any time by the company.”
As part of the agreement for the derivative contracts, a margin call of approximately 20% of the total contract exposure is deposited with the counter party as security.
The margin call deposited with the counter party as of 31 December 2018 was NOK 163.5 million.
The preliminary consolidated cash and cash equivalents for Vistin Pharma ASA as of 31 December 2018 was NOK 320.6 million, which included the amount deposited as margin call.
Torbjørn Kjus, Head of Energy Trading at Vistin Pharma ASA, on Wednesday (3 January) decided to resign from his position to pursue other interests.
Published: 7 January, 2019
Garren Hay will be responsible for sales of the PANOLIN range of Environmentally Acceptable Lubricants for the Singapore sole distributor agent Gealubes Consulting & Trading Pte Ltd.
Universal Alliance, BMS United, Digiland International, Goodwood Associates, Southernpec (Singapore), and Taigu Energy were involved in alleged circular fictitious trades of fuel oil during July 2015.
Bunker orders of ISO 8217:2010 spec LS 380 cSt 0.5% for Nord Gemini, Nord Titan, Ocean Rosemary, and Luzern were placed through global commodities trading and logistics house Trafigura Pte Ltd.
While Covid-19 concerns are important, Captain Rahul Choudhuri was quick to note this does not mean bunker fuel related issues have indeed disappeared from the shipping sector.
‘Therefore, representing the players of the Malaysian bunker industry, we sincerely hope that this matter can be refined and reconsidered immediately so that all parties benefit together,’ says communication.
Maureen Poh, a Director of Helmsman LLC, offers plain practical tips on the differences between US and EU Sanctions and shares some thoughts on what companies could do if they are potentially exposed to sanctioned entities.