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

Cross-Posted from DeSmogBlog

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 unleash America?

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

And The Vitol Group, the first company set to export U.S. crude after the lifting of the ban (in a tanker destined for Switzerland), has or had its own ties to both U.S. geopolitical rivals.

Who is The Vitol 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 "pulls the levers of the global economy."

"The Vitol Group is an energy and commodities company," says its website. "Physical 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 retail businesses."

Vitol makes an appearance in CNBC reporter Kate Kelly's book, "The Secret Club that Runs the World: Inside the Fraternity of Commodity Traders."

As The Telegraph described, Vitol's reach goes far beyond just oil and gas. 

"Crude oil, diesel, aviation fuel, benzene, alumina, bitumen, ethanol, methanol, coal, iron ore, liquid natural gas, sugar, maize, wheat, rice, soybeans and rapeseed," they wrote.

"Vitol continually ships thousands of tonnes of nearly every major commodity and raw material around the planet...Simply put, Vitol is one of the biggest trading companies on the planet."

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.  And it's willing to do business with just about anyone, including but not limited to Russia and Iran.

VItol in Geopolitical 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 and — au contraire — the Kurdish Regional Government claims ownership.

As The Telegraph explained, the Kurds may never have started exporting oil without Vitol.

"In 2012, the company helped the Kurds sell their first cargo of oil independently of the Iraqi government," Telegraph wrote. "Vitol 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 Kurdistan’s oil industry ever since."

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

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

In return for that diesel, petrol and fuel, Vitol landed an exclusive fuel-supply contract with Libya's National Oil Corporation (NOC) to move NOC's fuel to global markets. 

Enter Iran and 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 of some.

"Vitol last month bought 2 million barrels of fuel oil, used for power generation, from Iran and offered it to Chinese traders," Reuters exposed. "The 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 physical specification."

Vitol confirmed its wheelings and dealings with Iran in a statement — since removed from its website in the aftermath of the Reuters investigation. 

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.

"We 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," said Ian Taylor, President and CEO of Vitol Group, in a press release announcing the LNG deal. "This landmark development will diversify and strengthen our supplies of LNG and enable us to expand the possibilities of serving our clients in Asia-Pacific region."

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

Taylor responded to criticism of dealing with unsavory governments this way in a 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 our values.

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

"Vitol is fully compliant with all relevant international sanctions," she said, also stating that Vitol's collaboration with Rosneft "predates any international sanctions in respect of Russia."

"Unseen Hand"

Fortune describes Vitol as the "unseen hand that helps steer global energy markets." 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: J. Bennett Johnston, a former Democratic Party U.S. Senator, former member of Chevron's Board of Directors and former head of the U.S. Senate Energy and Natural Resources Committee 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: Wikimedia Commons

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

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

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

Schlaepfer, the Vitol spokeswoman, claimed that the company "did not spend money to lobby the federal government (or anyone else) to the ban on the export of US crude lifted."

Schlaepfer, the Vitol spokeswoman, claimed that the company “did not spend money to lobby the federal government (or anyone else) to the ban on the export of US crude lifted” and pointed to the fact the lobbying disclosure form only says in a vague manner that the company lobbied for “oil export policy.”

“You have erroneously assumed that Vitol was lobbying for the lifting of the ban on domestically produced US crude,” said Schlaepfer. “We stand by our statement that we did not spend money to lobby for the ban on US produced crude to be lifted.” Schlaepfer did not clarify which aspect of “oil export policy” 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 lobbied against the possibility of an oil export ban, though of course given the premise of this article, that appears highly unlikely.

Cognitive Dissonance

As a former senior environmental policy advisor to the climate change-denying Heartland Institute, the Russia article is not the first time Bennett Johnston has conveyed cognitive dissonance. 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 climate disruption. 

Bennett Johnston stated at the 1988 hearing that "the greenhouse effect [is] becoming not just [cause for] concern, but alarm."

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

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

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 quagmire of global warming.

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