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No. 4, 2012


VOICE OF GENEVA COMMODITY TRADING


Oil of Russia magazine talks to Jaques-Olivier Thomann, President of Geneva Trading & Shipping Association (GTSA)

Geneva Trading & Shipping Association (GTSA) is a non-profit-making organization established on September 30, 2006. One of the founding members of GTSA is LITASCO - LUKOIL's subsidiary responsible for oil major's international trading activities. The Association represents the interests of the Geneva-based community of international trade, freighting of goods and financing, and services related to it. GTSA, in collaboration with different specialized institutions, has developed different types of training programs to either allow employees to upgrade their knowledge or students to start their careers in an industry full of opportunities. LITASCO and other "local" oil traders, who are interested in top-flight employees, actively cooperate with GTSA in this area.

Q: What was the impetus for creating Geneva Trading & Shipping Association in 2006? How has the Association changed through these years?

A: Geneva has a long history as a center for international trade and negotiation; it is a commodity trading hub that has developed over the years.

Indeed, after the destruction in Europe caused by World War II, the infrastructures in Geneva/Switzerland were good, and the political system stable, it was the perfect location for international companies to settle. Moreover, following Nasser's coup d'etat in Egypt, many cotton traders moved out and some chose Geneva. The city also benefited from oil trading companies moving here after the first and second OPEC oil price hikes in 1973 and 1980, respectively. With the collapse of the USSR it was the turn of some Russian firms to choose Geneva as their new base. Switzerland has also long associations with Asia, when the Orient Express chose Lausanne as one of its stops, this made the region attractive to traders of the time. So too did the expansion of Nestle in Vevey.

The lemanic region has therefore become over the years the only hub gathering almost all different actors of commodities: commodity finance banks, commodity traders, shipping and inspection companies, auditors, lawyers and other service companies.

Six years ago, no one had yet quantified the Trading Hub. However, numbers of key commodity trading or shipping companies were of the opinion that the industry had taken so much importance in Geneva and in Switzerland that it was necessary to organize and represent our activities to the authorities.

This is why in 2006 actors such as Cargill, SGS, BNP Paribas, Vitol and LITASCO have decided to create an Association on the impulsion of Geert Descheemaeker, then Secretary-General of GTSA and Chairman and CEO of Sam Shipping.

One of the main motivations was the lack of training and public communication in Geneva. And because there was no spokesperson for the sector, there was a real risk that the authorities, not knowing the specificities and the significant role of commodity trading, could take initiatives with negative consequences on the industry.

In 2012, GTSA has become ideal contact for the local and national authorities for all matters related to the sector. The Association has made an inestimable contribution to the promotion of the region as a center of global know-how in international trading, notably through the creation of two successful and innovative academic programs with the University of Geneva.

The Association represents now more than 70, large, medium, small size companies and banks active in trade finance.

Q: How important is the commodity trading sector to the Geneva and Swiss economies?

A: The sector is very important for the following reasons:

  • It contributes to about 10% of cantonal revenue in Geneva.
  • A true cluster of excellence in commodity trading and related finance.
  • An estimated 8,000 employees work directly in the sector.
  • There are about 400 trading/shipping companies in the region.
  • One third of exported crude and derivatives in the world is traded through Geneva.
  • Switzerland is ranked first for coffee, cereals and vegetable oils.
  • Geneva is ranked first in Europe for sugar and cotton equally with London .
  • 22% of world movements of "dry" - iron minerals, coal, grain - are traded through Geneva.
  • 10% of global steel trades are initiated from Geneva.

Q: How many people are employed in the sector? Where did these people come from?

A: An estimated 8,000 employees work directly in the sector in Geneva and the Canton de Vaud.

A lot of service companies are gravitating around commodity traders, such as auditors, ship brokers, insurance or recruitment agencies, same for lawyers. We estimate that these represent from 1,000 to 2,000 additional employments.

All nationalities are represented; commodity trading is, by definition, an international business. Being located in Switzerland, the majority are of course, Swiss and Europeans.

Q: What are the major projects in which GTSA is involved now?

A: We offer to our members and the community the sharing of knowledge and experience within our sector through various working groups and, when appropriate, we represent the view of our members to the authorities, other official bodies and the media.

The Association works therefore on the development of projects which have a common interest for our members.

One example is education and the creation of academic programs, including a Master's Degree given by the University of Geneva, for young people who wish to make a career in this business sector and we are still implanting further training programs to offer young people interesting career perspective in our industry.

Another example is the eGTSA Software. A service (Saas) cloud based solution to the challenge of managing Documentary Credit exchanges between trading companies and multiple banks.

Q: What are, in your view, the main current challenges for GTSA? What do you see as the mission of GTSA in the long term perspective?

A: The world is changing at tremendous speed and GTSA constantly adapts. To enter a further phase of development, GTSA will strengthen its team to better promote the success and reputation of our community in Switzerland. We will carry on developing projects of common interest to the industry creating fruitful synergies between our members and partners.

Moreover, while we enjoy good dialogue with local and national authorities enabling us to explain the specificities of our sector, we also wish to intensify the discussions with leaders, regulators, public opinion and the media so that they have a better understanding of the diversity and specificities of our industry. This is essential for all.

Q: How large is oil and gas traders' representation in GTSA?

A: GTSA gathers companies active in soft commodities, metals and energy but also shipping companies and banks or service companies, such as the SGS or Cotecna.

One third of exported petrol in the world is traded through Geneva. Oil trading companies are well represented in GTSA: a third of trading companies members of GTSA are oil/energy traders.

Q: How significant is the role of Russian oil companies in the activities of GTSA?

A: We are very pleased of counting Russian oil companies among GTSA Members, such as LITASCO who has proven to be a strong ally in developing the Geneva trading hub and is contributing to the education of young professionals through the Master and the Diploma. The recent visit of the port of Rotterdam organized by LITASCO is a fantastic occasion for the students to better grasp all difficulties that can arise in a port and better understand the significance of their daily tasks when they are back at work.




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Oil of Russia, No. 4, 2012
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