Chapter 576 Big Oil Order

"Mr. Alekperov, we are very sincere. If you can agree, we can directly buy enough of your production at a fixed price..." Duane Hurst, CEO of British Fortune Times (BFT) Fund, said to the Russian in front of him. He is now in the headquarters of Lukoil in Moscow, the capital of Russia. The Russian in front of him, Vagit Alekperov, is the president and CEO of Lukoil, the largest oil company in Russia. "If it is really as you said, it will involve nearly half of our annual production, so we need to verify whether it is feasible." Hearing Wadget's words, Duane Hurst smiled and said: "This is a rare opportunity, sir. You should know that although the international oil price has been rising, at the same time, the oil-producing countries around the world are stepping up their efforts to extract oil, so no one knows when the critical point of oil price decline will come, but our order can allow you to lock in the profits of high oil prices without risk." This time when he came to Russia, as the head of the BFT Fund, Duane Hurst's task was to negotiate with Russian oil companies and sign a long-term large-scale purchase with them. His first stop was to find Russia's largest oil company, which is also one of the top ten oil companies in the world at this time-Lukoil. Duane's words also made Wadget Alekperov very excited. Just as he said, no one can predict how the future trend of oil prices will be. The current international oil price has reached $90 per barrel. Perhaps by next year, the oil price will rise to a higher level and break through $100 unprecedentedly? But it is also possible that the international oil price will reach its peak and then start to fall rapidly...

Who knows?

The other party has thrown out a super order of up to 20 billion US dollars, and there is enough money as a guarantee. If this contract can be signed, then it can be said that Lukoil will be able to fix their lucrative profits at the current high oil price.

At this time, Lukoil's annual production is only more than 70 million tons, and the 20 billion US dollars order is close to half of their production!

But out of caution, Vagit Alekperov still needs to discuss with the board of directors, and even if they decide to sign this agreement, the orders of their original customers... also need to be adjusted and coordinated.

Wagit also understands that if they increase the production of production, they can barely reach an agreement on this order...

But do they need to take such a gamble?

It doesn't seem that there will be much loss...

Of course, Lukoil is not Duan's only target. Other large oil companies, including Rosneft, are also the objects of Duan's negotiation next.

Since November, Duan, CEO of BFT Fund, has been traveling around the world, from Russia to Indonesia to Africa. They have signed crude oil purchase agreements with eight large oil companies, stipulating that from March next year to September, they will purchase crude oil from these companies at a fixed price of $90 per barrel, with a total value of $60 billion.

Of course, the provisions of the agreement are very specific, including the amount of crude oil they need to deliver each month, the mode of transportation, etc.

The penalty for breach of contract for this agreement is set at 20%...

In order to convince the other party to agree to this agreement, BFT Fund will deposit 50% of the transaction amount, or $30 billion, as a guarantee in the bank accounts designated by these oil companies.

Is Barron really going to buy so much spot crude oil?

Of course not - at least in the early stages, the refining projects he invested in, including Colo and Huaxia, will consume a certain amount of spot crude oil.

But compared to when oil prices continue to rise, especially in July next year, when crude oil prices rise to an all-time high of nearly $150 per barrel, no oil company will be stupid enough to continue to implement this agreement. They would rather pay a 20% penalty and sell their crude oil at a higher price.

Therefore, there is no need to wait until July next year. In mid-March, when crude oil prices rise to $108 per barrel, which is a critical point of more than 20% of the contract price of $90 per barrel, these oil companies will probably start to consider whether they need to default...

If you calculate it this way, the BFT Fund has a total of $55 billion in funds. In addition to the part used to buy gold, the other $30 billion is anchored to orders worth $60 billion. Even if there is a partial default, I am afraid that I can get a penalty of $10 billion...

Of course, if the other party would rather not default and deliver spot crude oil...

That's not bad. If most of the orders are resold to major energy importers such as China, Japan and South Korea, the difference that can be obtained will be much higher than this amount.

Anyway, no matter what, the BFT Fund will make a profit.

And most importantly, this will not delay BFT Fund's investment in bargain hunting after the massive outbreak of the subprime mortgage crisis...

In early November, Citigroup, JPMorgan Chase and Bank of America announced the establishment of a $75 billion reserve fund to support SIVs (Structured Investment Vehicles).

According to information obtained by Barron's, Citigroup is currently facing a liquidity crisis in its $100 billion SIVs.

On November 26, HSBC announced that it would invest US$35 billion to rescue its two SIVs.

Under this circumstance, Citigroup's stock price fell another 6% that day, closing at $29.80, a new low in five years.

According to statistics, Citigroup's share price has fallen by 46% since the beginning of this year, and its market value has shrunk by US$129 billion.

Also on this day, Citigroup officially announced that the Abu Dhabi Investment Authority (ADIA), the UAE's sovereign fund, will invest US$7.5 billion to purchase 4.9% of the group's equity.

The injection of funds will enable the group's capital adequacy ratio to return to the established target in the first half of next year.

The statement pointed out that Citigroup will sell equity units that can be converted into ordinary shares to the Abu Dhabi Investment Authority. At the same time, the Abu Dhabi Investment Authority agrees to hold ordinary shares of no more than 4.9% of Citigroup’s total share capital, and in Citigroup has no privileges in its management, ownership and corporate control.

In addition, the Abu Dhabi Investment Authority does not have the power to appoint directors to Citigroup's board of directors.

Although the shares purchased by the Abu Dhabi Investment Authority account for less than 5% of Citigroup's total share capital, it is enough to exceed the shareholding ratio held by Citigroup's largest individual shareholder, Prince Al-Waleed of Saudi Arabia.

At this time, Barron has returned to Lanai. Soon, they will end their vacation on Lanai and go to Australia.

He also knows that it is not the best time to invest in the American banking industry - everything has just begun.