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Shift in Energy Trading Talent: Oil Majors to Trading Houses
In recent weeks, notable energy traders have transitioned from oil majors to trading houses, driven by asset shifts and increased bonuses offered by the latter. Trading houses such as Vitol and Trafigura have been capitalizing on tens of billions of dollars worth of acquisitions from oil majors. These moves are fueled by heightened profits since early 2022, largely resulting from the volatility in energy markets due to Russia’s invasion of Ukraine. The trend sees privately-owned trading firms acquiring refineries and terminals, outperforming oil majors facing the challenge of balancing traditional and greener energy investments.
Talent Migration
High-profile hires by trading houses underline this talent migration. Vitol has secured several senior figures, including Mehdi Chennoufi, Shell's head of LNG marketing, crude trader Lionel Ader from TotalEnergies, and Michas Barry, another Shell trader specializing in West African crude. Also, Vitol recruited Jordan Dowle from Trafigura. Similarly, Trafigura recruited at least six traders from oil giants, such as BP’s London-based crude originators Jason Breslaw and Tamoor Ali.
Resignations and Strategic Moves
The exodus from oil majors is marked by key resignations, including BP’s head of trading, Sven Boss-Walker, after a 25-year tenure, who is reportedly joining an independent start-up. Shell has also seen significant exits: Mercuria hired Shell’s head of LNG Steve Hill earlier this year, and last year, Bill McGrath joined as a managing director for low carbon efforts. John Lo, previously a manager at Shell LNG trading and refined products, has pivoted to specialize in carbon credits.
Financial Motivations
The main driver for these shifts appears to be financial incentives. Unlike oil majors, which are publicly listed and beholden to shareholder scrutiny, trading houses reward traders based on a percentage of their book’s profits. This structure has enabled top traders to earn millions in successful years. Vitol, known for making its senior traders company partners, paid out $5 billion in dividends last year. Meanwhile, Trafigura distributed $5.9 billion, resulting in massive payouts to partner-shareholders.
Challenges for Oil Majors
Oil majors like BP and Shell struggle to compete with these lucrative bonuses. Their compensation structures, heavily scrutinized by shareholders, offer less competitive bonuses. For instance, BP’s CEO Murray Auchincloss and Shell’s CEO Wael Sawan each received just over $10 million in salary and bonuses last year, a far cry from the millions top traders at trading houses can make.
