Island Oil Group's Chrysostomos Papavassiliou: From a small Cypriot village to the upper echelons of industry

Chrysostomos Papavassiliou, CEO and Chairman of Island Oil Group, a billion-dollar regional powerhouse in bunker supply and trading, reflects on how his humble upbringing in rural Cyprus shaped his business ethos, explains his mission to make the Group a force for good and confesses an enduring passion for art.

Chrysostomos Papavassiliou points to The Milk by Nikolaos Lytras on the wall, the painting’s loose yet dynamic brushstrokes amplifying the homely intimacy of his office. “It is one of my favourites,” he says.

Nestled inconspicuously on Limassol’s bustling seafront – a tableau of shops, office buildings and perpetual traffic congestion – Island Oil Group’s headquarters contain something unexpected: beyond housing a billion-dollar physical supplier and trader of maritime fuel oil, the office doubles as a treasure trove of paintings. The collection is not a vanity project but a culmination of a lifelong passion.

Even as a young man, Papavassiliou stretched his already modest income thin by striking a cultured bargain with his friend Petros Michaelides, the owner of Peter’s Gallery in Limassol, to buy paintings on an instalment plan – six, eight, sometimes twelve payments at a time. “People tell us that we are an unusual office, having art around all the levels – I like that. It says that, besides being a stringent business, we’re human too.”

A regional powerhouse

Today, Island Oil Group owns and manages a fleet of 10 marine fuel supply and cargo transport tankers, alongside one LPG tanker, having recently sold the Island Trader tanker to streamline its operations. It is a physical supplier in 11 ports and anchorage locations across Cyprus, Israel and Romania, employing 140 onshore staff and approximately 150 seafarers. The Group has also participated in investment projects involving three Handysize and Handymax bulkers, five tankers with a combined carrying capacity of 13,000 metric tons and three medium-range tankers. In 2023, its revenues neared US$1.5 billion.

While this marked a decline of half a billion from the previous year, Chrysostomos Papavassiliou explains that 2022 was an outlier, driven by extreme price volatility stemming from Russia’s invasion of Ukraine. Russia’s role as one of the world’s largest oil producers had triggered fears of supply shortages that sent Brent crude prices soaring to US$120 per barrel by March 2022.

Setting aside the price spike, the Group’s financial trajectory reflects steady growth: in 2021 it generated a little over US$1 billion. “We have anthropocentric values, and we try to combine good humans and good professionals,” Papavassiliou explains as one of the key factors behind the Group’s evolution into a regional powerhouse.

From a small village to the upper echelons of industry

Papavassiliou didn’t exactly plot his course into the oil business. His early years were spent in Limnia, a rural, agricultural village north of Famagusta, splitting his time between schoolbooks and the fields, where he developed a deep respect for the grit and satisfaction that manual labour brings. This upbringing also allowed him to grasp the profound impact that the surrounding environment – or the people – can have on one’s life.

“I learned,” he says, “that by working, we feel good; we especially feel good being in nature and being with good people.” The seeds of his future were planted in his teens, thanks to a part-time stint at his uncle’s shipping agency in Famagusta, where he absorbed the nuts and bolts of logistics, learning the strokes of imports and exports.

Yet his ambition seemed destined for a different track. A bookish young man, he dreamed of a more scholarly life, going into socio-political sciences and journeying into research and writing. Alas, the harsh realities of history derailed him. The Turkish invasion of 1974 uprooted his family, along with nearly half the island’s population.

Taking a more pragmatic approach

With his parents unable to work, Papavassiliou shelved his academic aspirations and pivoted to something more pragmatic. He enrolled in Economics in Greece, where he earned his stripes working at a shipping company, later securing a scholarship for an MBA in the United States, specialising in shipping and transportation. While there, he landed a job with the Orient Overseas Container Line, a Hong Kong-based dominant force in logistics and container shipping.

It was a career path ripe with promise but homesickness proved a formidable adversary. Papavassiliou returned to Cyprus, reuniting with his family and planting roots in Limassol. From the modest confines of a small apartment 33 years ago, he launched Island Oil as a representative office for Tramp Oil, a British bunker supplier and trader.

Back in his office, Papavassiliou shrugs modestly. “What can I say?” he muses, reflecting on a journey that began in a small village to the upper echelons of industry. “One thing led to another. My life has always been about action – creating, tackling challenges head-on and embracing the international dimension of the business.” That global aspect, much like art, converges different cultures, ideas and perspectives. “We learn from each other,” he says.

Survival of the fittest

In the high-stakes world of international bunker supply and trading, where prices change in the blink of an eye and margins tend to be anorexic, success hinges on the Darwinian principle of the survival of the fittest; adaptability isn’t a choice but, instead, the price of admission. Chrysostomos Papavassiliou knows this truth intimately; he also learned that chasing quick profits might exact a heftier cost: long-term relationships. “You might win today,” he says, “but lose a good customer tomorrow. This business is tough – if we promise and fail to deliver, the market will punish us.”

To stay ahead, the Group has adopted a disciplined approach, reinvesting profits back into the business to reduce dependency on external facilities and build resilience. This approach proved particularly invaluable during the 2014-16 oil crunch. A growing supply glut during that period caused oil prices to plummet by 70%, leaving over-leveraged suppliers unable to meet their financial obligations. “Obviously,” Papavassiliou says, “any company has facilities, but it depends whether the ratio of own funds versus loans is a healthy one – we are a very low-leveraged company.”

To survive one of the most volatile markets, the Group has set up good governance systems, like a price risk management department that does not leave its exposure to market fluctuations without any hedging, as it could signal significant losses. Indeed, Papavassiliou indicated that managing price risks will remain the top challenge facing the industry, especially in the low-margin environment where suppliers mainly compete on price.

Credit risk will also be a challenge, as the bunker market operates largely on credit – a practice dating back to the coal era when shipowners deferred payments until the fuel was delivered and consumed. Adding to these challenges is the regulatory avalanche triggered by the lofty ambitions of the Paris Agreement and the relentless drive of the EU and the IMO to meet emissions targets.

FuelEU Maritime Regulation will tighten the screws further

The FuelEU Maritime Regulation will tighten the screws further by demanding unprecedented reductions in the greenhouse gas intensity of energy used by vessels operating within the EU and the EEA. The patchwork nature of global regulations compounds the issue. As Papavassiliou explains, a ship entering the Mediterranean from the Far East needs to burn a different type of fuel. As a result, ships are increasingly being built to run on dual fuel, a nod to the growing complexity of the market.

To support its clients in meeting these targets, the Group has certified two subsidiaries for trading biofuel under the International Sustainability and Carbon Certification (ISCC) scheme. Still, the industry’s energy future remains an open question: LNG, biofuels, ammonia, methanol, liquefied biogas and hybrid solutions are all vying for dominance, while hydrogen looms as a wildcard contender.

Yet, despite the fluid and unpredictable direction the industry is taking, Papavassiliou remains resolute. “Our commitment to sustainability and compliance ensures that we remain at the forefront of these developments, ready to adapt and support our clients through these upcoming regulatory changes,” he says, a sentiment steeped in the Darwinian lessons that have shaped his understanding of the business.

Establishment of Island Bio-Energy

Among its forward-thinking investments in sustainability is the establishment of Island Bio-Energy, which operates a waste-to-energy facility in Marki, just outside Nicosia, where waste is processed into biogas that is then used to power the grid. The Group has also struck a strategic partnership with InoMob, a startup that has developed a proprietary technology to produce and distribute renewable natural gas (RNG), known as biomethane. The startup has recently signed a contract with the Photos Photiades Group to supply biomethane to power its brewery. On the maritime front, Petronav, the Group’s shipmanagement arm, is working with InoMob on an EU-funded cold ironing operation. Petronav led the modification and retrofitting of the barge Althaia, transforming it into a floating biomethane platform.

So, why the focus on biomethane?

Papavassiliou takes a deep breath. “Well, we don’t have a refinery in Cyprus,” he says as a matter of fact. “But there is a lot of waste in Cyprus we can use.”

A 2012 study revealed that Cyprus has untapped biomethane potential, with estimates ranging from a modest 114 to a staggering 697 million cubic metres that could be produced from organic waste. In the broader EU context, the European Commission has laid down ambitious plans, targeting 35 billion cubic metres of biomethane annually by 2030 across the bloc. If Cyprus were to fully unlock its potential, it could punch well above its weight and make a meaningful contribution to this collective goal.

Aspiring to make Island Oil truly useful to society

In tandem with integrating environmental sustainability into the Group’s operations, Papavassiliou harbours a broader ambition: to make Island Oil truly useful to society. The idea isn’t just talk – plans are underway to establish a foundation offering scholarships to students from less privileged backgrounds. “We want to help people who are less fortunate than us,” he says with quiet resolve.

And then there’s the vast art collection that spans genres, geographies and generations. He reveals plans to open a museum, with a smile that suggests he’s thought long and hard about it. Papavassiliou speaks of these projects with a rare blend of pragmatism and idealism. “I’m excited about these developments,” he says. “We must all contribute to a more sustainable environment. And hopefully peace – besides the human loss, war also pollutes the environment, which is something we don’t talk about. War is a horrible thing. We believe in peace and cooperation among people, understanding the differences between people and cultures, learning from each other, tolerating and celebrating what makes us unique.”

(Photo by Giorgos Charal.)

This interview first appeared in the February edition of GOLD magazine. Click here to view it.