Big Oil Argued for U.S. Crude Exports to Fend Off Iran, But First Exporter Vitol Group Also Exported Iran's Oil

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The American Petroleum Institute (API) successfully lobbied for an end to the 40-year ban on exporting U.S.-produced crude oil in part by making a geopolitical argument: Iran and Russia have the ability to export their oil, so why not unleashย America?

What API never mentioned โ€” nor the politicians parroting its talking points โ€” is that many of its member companies maintain ongoing business ties with both Russia andย Iran.

Andย The Vitol Group,ย the first company set to export U.S. crude after the lifting of the ban (in a tankerย destinedย for Switzerland), has or had its own ties to both U.S. geopoliticalย rivals.

Who is The Vitolย Group?

In short, The Vitol Group is the most powerful oil and gas company you’ve likely never heard of, and one the Telegraph (UK) said โ€œpulls the levers of the global economy.โ€

โ€œThe Vitol Group is an energy and commodities company,โ€ says its website. โ€œPhysical trading, logistics and distribution are at the core of the business, but are complemented by refining, shipping, terminals, exploration and production, power generation, mining and retailย businesses.โ€

Vitol makes an appearance in CNBC reporter Kate Kelly’s book, โ€œThe Secret Club that Runs the World: Inside the Fraternity of Commodity Traders.โ€

As The Telegraph described, Vitol’s reach goes far beyond just oil andย gas.ย 

โ€œCrude oil, diesel, aviation fuel, benzene, alumina, bitumen, ethanol, methanol, coal, iron ore, liquid natural gas, sugar, maize, wheat, rice, soybeans and rapeseed,โ€ theyย wrote.

โ€œVitol continually ships thousands of tonnes of nearly every major commodity and raw material around the planetโ€ฆSimply put, Vitol is one of the biggest trading companies on theย planet.โ€

Vitol is the ninth biggest company in the world by revenue, sitting only behind the likes of BP, ExxonMobil, Walmart, Saudi Aramco, Shell and Sinopec. ย And it’s willing to do business with just about anyone, including but not limited to Russia andย Iran.

VItol in Geopoliticalย Hotspots

Where oil moves, Vitol frequently tends to serve as the mover, often in geopolitical hotspots. One of those was Kurdistan, where the Iraqi government claims it owns the oil andย โ€” au contraireย โ€” the Kurdish Regional Government claimsย ownership.

As The Telegraph explained, the Kurds may never have started exporting oil withoutย Vitol.

โ€œIn 2012, the company helped the Kurds sell their first cargo of oil independently of the Iraqi government,โ€ Telegraph wrote. โ€œVitol took delivery of a 12,000-tonne shipment of condensate, a light crude oil, worth more than $10m and has been at the heart of the booming development of Kurdistanโ€™s oil industry everย since.โ€

Vitol also aided in the controversial overthrow, alongside the North Atlantic Treaty Organization (NATO), of former Libyan dictator Muammarย Gadaffi.ย 

โ€œIts savvy traders had managed to avoid a barrage of NATO bombs and a naval blockade to send dozens of tankers to rebel-held ports,โ€ The Telegraph reported. โ€œSupplies of diesel, petrol and fuel kept creaking power stations under rebel control from grinding to a halt and ultimately proved vital to efforts to overthrowย Gadaffi.โ€

In return for that diesel, petrol and fuel, Vitol landedย an exclusive fuel-supply contract with Libya’sย National Oil Corporation (NOC) to move NOC‘s fuel to globalย markets.ย 

Enter Iran andย Russia

In the midst of the European Union (EU) and U.S. trade embargo with Iran in 2012, Reuters revealed that the Switzerland-based Vitol helped the country move its oil to market, to the chagrin ofย some.

โ€œVitol last month bought 2 million barrels of fuel oil, used for power generation, from Iran and offered it to Chinese traders,โ€ Reuters exposed. โ€œThe tale of the cargo of Iranian fuel oil involves tanker tracking systems being switched off, two ship-to-ship transfers, and blending of the oil with fuel from another source to alter the cargo’s physicalย specification.โ€

Vitol confirmed its wheelings and dealings with Iran in a statement โ€” since removed from its websiteย in the aftermath of the Reutersย investigation.ย 

And just months after Reuters published its piece, Russia’s state-owned oil company Rosneft announced its entrance into a long-term oil supply contract with Vitol and later a liquefied natural gas (LNG) supply contract.

โ€œWe are privileged to have another significant opportunity of working with Rosneft, as it continues to build its position as a global leader in oil and gas,โ€ said Ian Taylor, President and CEO of Vitol Group, in a press release announcing the LNG deal. โ€œThis landmark development will diversify and strengthen our supplies of LNG and enable us to expand the possibilities of serving our clients in Asia-Pacificย region.โ€


Ian Taylor (on left) with Rosneft President Igor Sechin (center), March 2013; Photo Credit:ย Rosneft

Taylor responded to criticism of dealing with unsavory governments this way in aย 2013 interview with Fortune Magazine:

Because we’re going to trade everywhere around the world, we will occasionally be trading in countries where people feel maybe we shouldn’t be. Now, okay, we do have our own internal moral sort of values that we do occasionally apply to this. But in general, we feel it’s the right thing to do, which is to carry on participating in most countries, providing there are no sanctions, in which case we immediately will abide by them, obviously. Or providing there’s not a situation which we feel is bluntly not acceptable, according to ourย values.

Andrea Schlaepfer, a spokeswoman for Vitol, responded directly to DeSmog about the company’s relationship and business ties withย Russia.

โ€œVitol is fully compliant with all relevant international sanctions,โ€ she said, also stating that Vitol’s collaboration with Rosneft โ€œpredates any international sanctions in respect ofย Russia.โ€

โ€œUnseenย Handโ€

Fortune describes Vitol as the โ€œunseen hand that helps steer global energy markets.โ€ What’s visible from lobbying disclosure forms, though, is that the company paid an influential father-son team of lobbyists to reverse the oil exports ban beginning in 2014.

The father:ย J. Bennett Johnston, a former Democratic Party U.S. Senator, formerย member of Chevron’s Board of Directors and formerย head of the U.S. Senateย Energy and Natural Resources Committeeย from Louisiana from 1972-1997 who was offered and declined the U.S. Secretary of Energy job in 2001 by George W. Bush. Bennett Johnston has a Chevron-owned oil vessel named after him.

J. Bennett Johnston; Photo Credit: Wikimediaย Commons

The son: Hunter Johnston, who also lobbies on behalf of API.

In May 2014 โ€” at the same time he was lobbying for Vitol, which has business ties with Russia โ€” Bennett Johnston wrote an opinion piece for the New Orleans Times-Picayune titled, โ€œThe United States can use its energy prowess to discipline Russia.โ€ย 

The fact that Bennett Johnston was simultaneouslyย lobbying for Vitol was not disclosed to Times-Picayuneย readers.

Schlaepfer, the Vitol spokeswoman, claimed that the company โ€œdid not spend money to lobby the federal government (or anyone else) to the ban on the export of US crude liftedโ€ and pointed to the fact the lobbying disclosure form only says in a vague manner that the company lobbied for โ€œoil exportย policy.โ€

โ€œYou have erroneously assumed that Vitol was lobbying for the lifting of the ban on domestically produced US crude,โ€ saidย Schlaepfer. โ€œWe stand by our statement that we did not spend money to lobby for the ban on US produced crude to beย lifted.โ€

Schlaepfer did not clarify which aspect of โ€œoil export policyโ€ Vitol lobbied for, nor did she specify whether the company lobbied for the lifting of the light oil export ban the industry won at the end of 2014, a key first step in the eventual wholesale export ban repeal. She also denied comment on if the company lobbiedย against the possibility of an oil export ban, though of course given the premise of this article, that appears highlyย unlikely.ย 

Cognitiveย Dissonance

As a former senior environmental policy advisor to the climate change-denying Heartland Institute, the Russia article is not the first timeย Bennett Johnstonย has conveyed cognitive dissonance.ย Before advising Heartland, he expressed alarm about the threat of climate change at the same 1988 congressional hearing in which NASA climate scientist James Hansen made his first and now-famous testimony about the threat of climateย disruption.ย 

Bennett Johnston statedย at the 1988 hearing that โ€œthe greenhouse effect [is] becoming not just [cause for] concern, butย alarm.โ€

Cognitive dissonance, in reality, sits at the center of this story not only in the case of the oil industry, Vitol andย Johnston.

Look no further than to when Congress and the Obama White House started discussing pulling the policy levers on lifting the oil exportย ban.ย 

That is, right in the thick of the United Nations COP21 climate change summit in Paris, a conference the U.S. walked away from claiming a global leadership role in tackling the ever-worsening quagmireย of globalย warming.

Representatives from API and Bennett Johnston did not respond to repeated requests for comment sent by DeSmog for thisย story.

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Steve Horn is the owner of the consultancy Horn Communications & Research Services, which provides public relations, content writing, and investigative research work products to a wide range of nonprofit and for-profit clients across the world. He is an investigative reporter on the climate beat for over a decade and former Research Fellow for DeSmog.

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