Fredriksen's Arcadia Petroleum said to scale back business

By Sherry Su, Laura Hurst and Javier Blas on 9/8/2017

LONDON (Bloomberg) -- Arcadia Petroleum Ltd., the commodities house owned by shipping billionaire John Fredriksen, is dramatically scaling back in oil trading and cutting jobs, according to people familiar with the matter.

The trader, which operates from London, Houston and Singapore, plans to reduce its presence in the crude market -- the commodity where it started in 1988 -- and refined petroleum products, the people said, asking not to be named because the information is private. 

Arcadia is winding down several oil trading books and it’s unclear what presence, if any, it will retain in the crude market, they said. Arcadia plans to retain its power, gas and agriculture desks.

A representative for Fredriksen declined to comment.

Arcadia, once owned by Japan’s Mitsui & Co., has a fraught history: attempts at expansion followed by quick pull-backs, bitter internal battles, including a lawsuit against a former chief executive officers, and several runs in with regulators.

The company which reported operating profit of $19.9 million in its fiscal year to the end of March 2016, down 40% from the previous year, expanded this year into agriculture, hiring a team of traders in Europe and Asia. 

Fredriksen, the 73-year-old Norwegian-born shipping tycoon who build a fortune in oil supertankers, acquired Arcadia from Mitsui in 2005. The company is a storied presence in the North Sea and U.S. oil domestic market and has a history of controversial trades.

In 2000, Tosco, then a U.S. based independent refiner, sued the trading house alleging Arcadia built a dominant position in the physical Brent market to drive prices higher. Arcadia settled the lawsuit out of court. 

In 2014, Arcadia paid $13 million in fines to U.S. regulators after the Commodity Futures Trading Commission alleged the firm built "a dominant and controlling position in physical WTI crude oil" with the intent of affecting WTI futures prices.

The following year, Arcadia sued its former CEO and chief financial officer over an alleged $287 million fraud. Peter Bosworth, the former CEO, and Colin Hurley, who was head of finance, left the company in 2013. Both have previously denied the allegations.

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