At around 65 million tonnes, the refined oil products market is of a comparable size and shows a similar pattern of modest decline over the past five or so years. The hypermarket groups – Intermarche, Leclerc, Carrefour, Systeme U and Auchan – dominate fuel retailing to an even greater extent, servicing around 60% of the sector’s requirements. A well-established pipeline infrastructure moves product from refineries/storage to major consumption points. A key area of difference is the composition of overall demand, with diesel accounting for 52% of total demand vs 35% in the UK. Unlike the UK, heating oil continues to be a material source of fuel/energy for heating purposes.
Rationalisation of the refinery network has been pursued with particular urgency over the past five years with a third (four facilities) shut down since 2010. Around 30 million tonnes per year of nameplate capacity has been shed, leaving 8 plants still operating with La Mede earmarked for conversion to a 100% biofuels manufacturing facility next year.
COMPANY
REFINERY
LOCATION
(000BD)
TOTAL
Gonfreville
Donges
La Mede
Feyzin
Grandpuits
Le Havre
Nr. St Nazaire
Nr. Marseilles
Nr. Lyon
Nr. Paris
240
230
155
120
100
ESSO
Port Jerome
Fos-Sur-Mer
Nr. Le Havre
Nr. Marseilles
235
140
INEOS
Lavera
Nr. Marseilles
210
GRAND TOTAL
1,430
The four closures consisted of two Petroplus facilities – Petit Couronne (Normandy) and Reichstett (Strasbourg), Total (Dunkirk) and the LyondellBasell plant at Berre (Marseilles) – overall capacity has reduced by almost 30%.
Operating five of the 8 facilities, Total is the dominant player, accounting for 60% of overall capacity. Esso’s two plants account for 25%; the balance of 15% is from Ineos Lavera.
Whilst overall nameplate capacity still appears to be slightly in surplus, the network is not configured to service the current pattern of market demand. There is a substantial and growing shortfall of middle distillates, with diesel/gasoil imports equivalent to 53% of inland demand (25% in 2000) and JetA-1 imports are now 60% v 32% in 2000. In contrast, motor spirit exports account for around 40% of refinery production.
Two pipeline systems operated by Trapil SA form the delivery infrastructure centrepiece which is owned principally by Total (35.5%), Pisto SA (31.9%), Esso (17.2%) and BP (6.5%).
LHP Le Havre-Paris (1,380km) connects the refining/imports at Le Havre, running for 200km to the main market in the Paris basin with legs to Tours and Caen.
PMR Mediterranean-Rhone (760 km)connects Fos-Sur-Mer through the Rhone valley to Lyon, with a spur off to Geneva, it supplies c90% of the region’s requirements. Owned by Societe du Pipeline Mediterranee Rhone which, itself, is jointly owned by Trapil (Total, BP, Esso, ENI), Ducrot Distribution and Petrofrance.
Trapil also operates the 2,560 km NATO pipeline system carrying JetA-1 which runs from the Mediterranean ( Fos-Sur-Mer) through Paris to eastern France, and on to Le Havre and Dunkirk.
Last year these systems moved 31.9 million mt of product accounting for just under 50% of total market requirements.
Product/Year
2000
2005
2010
2013
LPG
Motor Spirit
JetA-1
Diesel
Gasoil
Fuel Oil
Other
4
14
6
28
16
5
1
3
11
7
32
15
4
1
4
7
7
31
12
4
2
3
7
7
34
10
3
1
TOTAL
74
73
67
65
The above table (Source: IEA) summarises the trend in finished product demand (million tonnes) in selected years since 2000
Motor spirit demand has halved since 2000, with diesel representing 82% of demand – 80% of cars are currently diesel powered but this may change due to an attitude shift towards diesel with harmful nitrogen dioxide and particulate emissions concerns. Last year diesel accounted for only 60% of new registrations v 67% in 2013. The Government may seek to create parity between motor spirit and diesel pump prices, presumably via excise duty adjustments, to close the current 25 eurocents/litre gap.
Levied on heating oil not transport fuels, a carbon tax on fossil fuels was introduced in 2014, this tax now includes the latter at €14.50 per tonne of CO2, rising to €22 in 2016.
Since 2000 BP and Shell operations in France have seen significant retrenchment. BP’s Lavera refinery was sold to Ineos in 2005 and its retail network of circa 400 sites to Delek Petroleum in 2010 (now owned by EFR Group); BP retains a presence in commercial fuels. Shell sold three refineries in 2007, Petit Couronne and Reichstett to Petroplus, and LyondellBasell – all are now closed. Avia took over most of Shell’s site network with numbers now around 90 sites.
Esso retains its refinery network and commercial fuels presence. In 2013, 43 sites in western France were sold to Delek Petroleum. Earlier this year the divestment was completed with DCC Energy taking 274 unmanned Express outlets, 48 auto route concessions and supply contracts with 75 Esso branded dealers and entering into a term branded wholesaler agreement with the buyer.
The French retail network comprises just over 11,700 sites , down from 14,000 in 2005. Total has the largest network (3,700) and a market share of around 20%; this includes 600 Access sites, urban located these sites compete directly on price with hypermarkets.
Average fuel volumes per site are c 3.5 million litres per year v around 4.4 million litres in UK. France has much lower hypermarket volumes – c4 million litres per year in France v c11 million litres.
Only 35% of sites have shops with 20% having a car wash. Just under 11% of the network are unmanned sites.
Heating oil is known as fuel oil domestique (FOD) and meets the gasoil max 0.1% sulphur spec for space heating. Used by four million households (14%) it is the third largest source of heating after gas (10m) and electricity (8.75m). There are three main channels of distribution – national/regional distributors such as Total, Worex SNC, Bollore Energie, Thevenin & Ducrot and Picoty; hypermarkets and a large network (c 2,100) of independent distributors; all but a handful employ less than 200 people with around 80% employing less than 10.
Total heating oil sales last year were almost 8 billion litres – more than four times UK sales.