RPT-Large Swiss traders dominate sales of fuel to Egypt

* Small to mid-sized traders sidelined

* Egypt's financial situation worsens

* Swiss trading giants become consistent bulk suppliers

* Litasco, Vitol, Glencore to supply about $1.7 bln gasoil

By Julia Payne

LONDON, June 21 (Reuters) - Egypt is relying increasingly onlarge Swiss trading houses for fuel supplies as it struggles toavoid energy shortages and unrest, while smaller players cutback on deliveries for fear of non-payment.

Egypt's finances have been crippled by a fall in tourismrevenue since the 2011 revolution, a weakening of its currencyand a rise in fuel subsidies, which account for one fifth ofgovernment spending. It owes over $5 billion to fuel suppliers.

Traders such as BB Energy, AOT Trading, Eminent, Augusta andSahara have almost completely stopped supplying Egypt, leavingbig players - such as Vitol, Glencore,Gunvor, Trafigura, Litasco and Mercuria - todominate the market.

"We're not looking at Egyptian tenders any more," one traderat a small firm said. He was burned last year when Egypt'sfinancial difficulties delayed its payment for cargoes, leadingto demurrage charges. He then spent months trying to recoupthose charges.

All the trading houses declined to comment.

The dominance of major traders mirrors events in Greece lastyear during the peak of its financial troubles, when its largestrefiner Hellenic had to rely on Vitol and Glencore foroil supplies after it could no longer receive bank guarantees.

Like Hellenic, Egyptian state oil firm EGPC has to pay heftypremiums to secure supplies as traders face additional shippingand credit expenses.

In Egypt's latest and biggest tender to buy gasoil, thepremiums it paid over regular Mediterranean prices amounted to$17-$23 a tonne, up from the already high $16-$19 premiums atthe end of 2012.

Vitol, Litasco and Glencore will supply around $1.7 billionworth of gasoil to Egypt, or 55 out of around 70 cargoes, to theports of Alexandria, Dekheila and the Red Sea port of Suez inthe six months from July through December.

Gasoil is essential to help meet peak summer fuel demand forharvesting crops, travel and air-conditioning.

Litasco, the trading arm of Russian oil firm Lukoil, is emerging as the biggest supplier of gasoil for thesecond half of 2013 after having little presence previously,according to information on major 2012 and 2013 tenders.

Vitol held a significant position in 2012 and holds an evenlarger one in 2013. Glencore, dominant in 2012, has been lessimportant this year. BP was the only Western major tosupply significant volumes of gasoil over both years.

RISK

Egypt, which produces its own energy, became a net oilimporter in 2008 as its population grew fast and fuel subsidiesmushroomed. It is also moving rapidly to become a net importerof natural gas after years of being a large exporter.

But it has been slow to pay for fuel imports, and suppliersface consistent discharging delays, which leads to highdemurrage charges.

"The cost of doing business has gone up. Tankers sometimessit for a long time before discharging, and this incursadditional costs," a source at a trading house said, explainingone of the reasons that traders expect Egypt to pay heftypremiums.

The hurdles have discouraged some big companies such asShell and BP, which have cut back steeply on fuel oildeliveries, traders say. BP and Shell declinedto comment.

"Traders are dominating the picture, although I do not thinkmajors have completely given up," one trading source said.

Cairo is seeking a $4.8 billion loan from the InternationalMonetary Fund, which wants Cairo to reform its fuel subsidies,but the government has been hesitant due to fears that such amove could trigger public discontent.