INSIGHT-Lord of the RINs? Vitol’s Ethanol Credit Bonanza
by Cezary Podkul (Reuters) Swiss trading company Vitol SA is among the biggest beneficiaries of an opaque U.S.-government-mandated trading scheme established to help boost the share of ethanol in the nation’s fuel supply, market sources say.
As refiners scrambled this year to meet an expected steep rise in the amount of ethanol that must be blended into gasoline, trading in little-known credits used to enforce the quotas turned white-knuckled. RINs, or renewable identification numbers, have traded for years in a niche market for pennies apiece. In mid-July they soared to nearly $1.45 from about 5 cents last December, providing huge opportunities for oil traders and others in the market.
Oil refiners such as PBF Energy Inc railed against the rally, blaming it on a flawed renewable fuels program and rampant speculation.
“They’re the success story of it all,” said one source who trades with Vitol. Other market participants confirmed that the company was among the largest traders they saw in the RINs market, despite its owning no U.S. refineries or fuel stations.
Spokeswoman Andrea Schlaepfer said Vitol “buys and sells RINs on a regular basis” because it has its own biofuel blending obligations to manage.
It was the country’s biggest importer of ethanol last year as its shipments more than tripled, and has long employed a unique arrangement importing Brazilian ethanol via an El Salvador processing plant, according to U.S. government data, an activity that can help it generate RINs.
In 2010 Vitol built a $130 million oil terminal on Florida’s east coast and added a biofuel facility last year, giving it a major foothold in the import-dependent state. It maintains ethanol storage, supply and distribution facilities in all key U.S. energy hubs, including New York Harbor, Chicago, Florida, Houston, San Francisco and Los Angeles. READ MORE and MORE and MORE (Platts)