Geneva-based Gunvor has signed up for a new $540m loan to expand its biodiesel trading activity in a bid to promote greener energy in line with the European Union’s climate targets.
The borrowing base facility, whose bookrunners are Credit Agricole and Rabobank, is structured around the trading giant’s biofuel assets including inventories and production plants.
“Biofuels, along with other ‘transitional’ commodities, are increasingly important to Gunvor’s trading mix,” said Gunvor chief financial officer Muriel Schwab in a statement.
“Our banking partners have expressed considerable support for trading cleaner products as Gunvor pursues its energy transition strategy.”
Participating banks in the syndicated loan include Citibank, Unicredit, Mizuho Bank, UBS, Societe Generale and Sumitomo Mitsui Trust Bank.
Gunvor described the facility’s pricing as “competitive” but did not disclose more details.
As of end-June, roughly half of Gunvor’s total trading volume consisted of biofuels, natural gas and LNG — the so-called “transitional” commodities as defined by the EU.
During the transition to a carbon-neutral economy, such fuels — already available on a commercial scale — are intended to ease the social and financial impact on consumers of fossil fuels-based energy.
Europe-based trading houses have been seeking to move into clean energy, with the EU targeting net-zero greenhouse gas emissions by 2050.
Trafigura, whose senior management is also based in Geneva, recently invested $62m in H2 Energy Holdings to develop hydrogen fuel cells.
Biofuels drive
In recent years, Gunvor has increased its biodiesel activity while closing its coal trading desk.
The company traded about 4m tonnes of biodiesel in 2019, doubling from the 2015 level.
Gunvor also wholly owns two biodiesel plants in Spain with a total production capacity of at least 40,000 tonnes per year, while operating several blending facilities in Asia, the US and Europe.
Its customer base is composed of retailers and other types of downstream suppliers. Gunvor is not directly involved in biofuel bunkering.
Some industry players believe biofuels will play an important role in decarbonising shipping, with the consumption of biofuels considered a carbon-neutral process. The organic matter used to produce biofuels roughly absorbs as much CO2 as it releases when burned.
But waste-based biofuels are generally preferred because there have been worries that biofuel produced from crops would lead to higher food prices.
Some vessel operators, including Stena Bulk, have increased their use of biofuels as drop-in fuels and have generally not found any mechanical issues.
