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Top oil trader Vitol has new CEO as Taylor becomes chairman

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[GENEVA] Vitol Group named Russell Hardy as chief executive officer, replacing Ian Taylor at the helm of the world's biggest independent oil trader.

Mr Taylor, an Oxford-educated trader who led the firm for more than two decades of impressive growth, will remain chairman. Under his watch, Vitol expanded like a Silicon Valley success story, increasing net income from US$22.9 million in 1995 to a record US$2.28 billion in 2009.

The move finally settles the succession questions that have loomed over the company, although Mr Hardy's ascension grew more likely last year when he was appointed Vitol's CEO for Europe, the Middle East and Africa. A chemical engineer by training, Hardy joined Vitol in 1993 and has been a member of the company's executive committee since 2007.

Despite the obvious success of Mr Taylor's tenure, the trader of more than seven million barrels of crude and petroleum products a day, the new CEO faces significant challenges. There are growing signs that the commodity-trading industry's best days are in the past as increased competition, greater transparency and the digital flow of information are shrinking profit margins.

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Dutch Origins Rotterdam-based Vitol was founded half a century ago by a pair of Dutchmen and under Mr Taylor, has aggressively expanded its operations worldwide, with main trading floors now located in London, Geneva, Singapore and Houston. The company plays a crucial role in global energy markets, buying, selling, blending and transporting oil, gas and coal around the world. It has long-standing relationships with national oil companies, refiners, producers and end users. Over half a century, Vitol has never suffered an annual loss.

Along with Glencore's CEO Ivan Glasenberg and Trafigura's late co-founder and former chairman and CEO Claude Dauphin, Mr Taylor is widely regarded as a pioneer of global commodities trading. He started at Royal Dutch Shell in 1978, where he learned oil trading through stints in Singapore and Caracas. He first joined Vitol in 1985 and became CEO 10 years later.

Under the leadership of Mr Taylor, who fought cancer a few years ago, Vitol enjoyed commercial success amid surging oil demand and rollercoaster energy markets. Its employees, who are also the firm's shareholders, were rewarded handsomely. Over the last decade alone its 350 top employees received a total of US$7.5 billion in payouts, according to corporate fillings.

Vitol increased its equity value by 3,500 per cent, from US$278 million in 1996 to about US$10 billion at the end of 2016. Over the same period, Glencore, the world's largest commodities trader, went from US$1.2 billion to US$35 billion, a smaller though still impressive 2,800 per cent rise.

Mr Taylor refused to follow Glencore's path and become a public company, keeping the firm private despite numerous conversations over the years about a potential initial public offering, or selling the business to others, including at one point to now defunct Enron.

The outgoing CEO took his most damaging reputational hit in 2007 after allegations Vitol paid about US$13 million in "surcharges" to the regime of Saddam Hussein to secure oil shipments. An investigation led by Paul Volcker, the former US Federal Reserve chairman, exposed a world of illicit payments, secret bank accounts, and diplomats for hire. Vitol pleaded guilty in the Supreme Court of the State of New York.

Beyond his role in global commodities trading, Mr Taylor is well known in the UK as a pro-European and big donor to the Conservative Party, which has led the government since 2010. Last year, he declined a knighthood amid controversy related to his support for the failed campaign for the country to remain in the European Union.

By choosing Mr Hardy as the new CEO, Vitol passed over the oil trader's other top managers including Mike Loya, who heads the company in the Americas, and Kho Hui Meng, head of Asian operations. Both are close in age to Mr Taylor, who is 62. David Fransen, another Mr Taylor contemporary who was managing director in Switzerland and a member of the firm's management board, retired last year.

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