Exclusive: Energy trader Mercuria posts record profit for volatile 2020

© Reuters. FILE PHOTO: A flag with the logo of Mercuria commodity trading house is pictured in Geneva, Switzerland, October 11, 2016. REUTERS/Denis Balibouse

By Julia Payne

LONDON (Reuters) - Mercuria Energy Group had a boom year in 2020, buoyed by the extreme volatility seen in oil markets caused by the COVID-19 pandemic, as well as very strong returns across its portfolio, particularly gas and power.

The Geneva-based firm had its best year ever in 2020, making $786 million, compared with $576 million in 2019, according to a source with direct knowledge and Reuters records. The company does not typically disclose its financial results but confirmed the 2020 figures.

Revenues fell in line with commodity prices to about $85 billion, versus $116 billion the previous year. Gross profit on sales was $1.86 billion, up from $1.35 billion in 2019.

"This is what I will retain from 2020, a year of extreme volatility and a very strong live test of our risk management fundamentals ... we've been testing all of our extreme scenarios and been successful at that," Guillaume Vermersch, chief financial officer, said.

"The results have been very positive, I think we are quite proud of our acceleration in terms of investments in activities dealing with ESG (environmental, social, and governance). It's the key focus for us, it remains the case in 2021 and will be the 10-year focus."

The firm, founded in 2004, is among of the top five global oil traders, moving just under 2 million barrels per day of oil and refined products.

However, Mercuria's traded volumes have gradually shifted to be majority non-oil, including natural gas, emissions, metals, coal and power. In 2019, Mercuria's total traded volume was 368 million tonnes.

Vermersch said that oil only accounted for 38% of the company's revenues and that margins remained thin at under 1.5%. He added that now the firm has shifted to reflecting power more and its traded volumes were 33,412 terawatt hours in 2020.

The firm will continue to focus on the energy transition and has a pipeline of green projects amounting to over $1 billion.

Mercuria has spent $400 million over the last eight months in green assets relating to renewable energy, power grids and electric vehicles.

Demand for basic commodities, particularly oil, crashed in April last year when 4 billion people were under some form of lockdown. Prices rebounded late in the year, particularly after a push for vaccinations began.

Trading firms had a boom year as they were able cash in on the paper volatility as well as in the physical market where they stored cheap, unwanted oil that was later resold at much higher prices.

Mercuria's bigger rivals Trafigura had a record year while Glencore (OTC:GLNCY)'s marketing arm had its best performance since 2008. Earnings from trading also served as a vital boost in a dismal year for majors like Royal Dutch Shell (LON:RDSa) and BP (NYSE:BP).