Russia produces 10 million barrels (1.35 million tons) of oil per day. Of that, 3.5 million barrels per day is sold under state-to-state contracts or through international traders. But Russian oil trading is not open to everyone. According to one Austrian entrepreneur, François Banchet, “Today, you will not get close to the Russian oil, unless you have relevant connections in the Russian government.”

In July, the French newspaper Le Monde published “Geneva: Platform for Kremlin Oil,” writing, “The major traders of Russian oil in Geneva today, and a number of entities managed by Putin’s cronies, are turning over gigantic volumes of oil, almost strangling the competition.” Discussing top Russian oil trader Gunvor Services SA, it continued:

Gunvor Services SA, headquartered in the most prestigious banking area of Geneva, literally poached traders from a competitor, Addax, by offering five times higher salaries than the going rate. The reason is that Gunvor has a constant need for highly qualified professionals due to its meteoric business expansion. The Gunvor client’s brochure says that the company has a turnover of 60 million tons (450 million barrels) of oil per year and revenue of $30 billion. Traditionally, traders have to fight daily for each contract, whereas Gunvor seems to have its own pipeline from the Kremlin, which allows them to trade as much oil as they want.

Gunvor’s founder, former KGB agent Gennady Timchenko, 55, is reportedly close friends with Vladimir Putin. The two apparently met in the 90s when Putin was in charge of the municipal committee for foreign affairs in St. Petersburg. They were members of the same judo club and lived in adjacent countryside houses. At that time, Timchenko was a moderately successful businessman, buying oil products from Surgutneftegas, adding a commission, and then reselling them via two offshore entities (one was Gunvor, incorporated in 1997). In 2001, Timchenko moved to the prestigious Geneva district of Collogny, where he registered a branch of his St. Petersburg company, International Petroleum Products. Two years later, he opened the trading company Gunvor. Timchenko’s name no longer appears on the list of company founders.

Since 2004, Timchenko’s business has been skyrocketing, while that of Yukos’s Geneva trader Petroval has plummeted. In December 2004, following actions in court and at auction, Yukos, then Russia’s top oil producer, lost Yuganskneftegaz (its biggest oil production unit) to the mysterious BaikalFinanceGroup. Timchenko is reportedly a shareholder in the group.

In addition to Timchenko’s Gunvor and International Petroleum Products, there is a third Kremlin-related trader, Energo Impex, headed by Alexey Bogdanchikov (son of Rosneft’s president Sergey Bogdanchikov). His name disappeared from the company’s charter a few months after incorporation. Shortly thereafter, Energo Impex was renamed Highlander International Trading, and its business has been growing ever since.

The re-nationalization of the Russian oil industry has brought billions in revenue to Putin’s people. They were lucky to be in the right place at the right time, and to know the right man. Clearly, behind the high-flying slogans and rhetoric about Russia’s long-term energy strategy are some shady and shadowy business interests. And those interests are close to the center of power in the Kremlin.