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With heating oil consumption already in decline in Northern Ireland, plans to extend the gas network are not a welcome development to distributors already under pressure reports Irish correspondent, Aine Faherty. Market share peaked in 2005 with 75% of households using heating oil; reduced to 68% in 2009.
Speaking at the company’s base 20 miles from the urban Belfast centre, Ken Hylands, managing director, Hylands Fuels, recalled the impact of a similar gas expansion in Belfast and surrounding areas.
“We just had to adapt in advance,” said Ken. “I would advise businesses in targeted areas (see box right) to do the same and be prepared. The secret is to continue providing a service at a competitive price and to ensure customers remain loyal to a product they still want. Nowadays customers just want to pay for what they can afford, so it’s important to have easy payment options with credit card, direct debit and standing order options.
In Ken’s experience, customers may not opt for gas, even when available, preferring to stick to what they know best. “Some may not have the option to switch; a majority of homes on an estate/road must opt for change before the high cost of running a pipeline into the area is warranted.”
Expansion is due to start in 2015, north and north west towns under consideration include Dungannon, Cookstown, Magherafelt, Coalisland, Omagh, Enniskillen/Derrylin and Strabane. Hillsborough, Ballynahinch, Downpatrick, Saintfield and Crossgar are being considered in County Down.
Not overly concerned is Malcolm Hill, business development manager with Solo Petroleum and AH Fuels which has most business in rural County Tyrone. Whilst Malcolm is confident that as a long established business, customers will remain happy with oil, he is concerned about the knock-on effect on ‘an oversubscribed fuel business.’
“Any increase in gas coverage will have a detrimental effect on the oil business, pushing its customer base away from the inner city/towns and into the more rural areas,” reported Michael Strain, general manager, Topaz Direct.
Gas is already in the main towns in which Kelly Fuels operates. “It will just be another competitor and we’ll have to deal with it,” said Derek McAuley. He likens the presence of gas to the new competition posed by the selling of home heating oil on forecourts.
The Northern Ireland Oil Federation (NIOF) has little doubt that the extension will go ahead as planned with oil customers targeted to switch. “This represents a real threat,” said David Blevings, NIOF executive director.
However, David did point out that the Northern Ireland Housing Executive (NIHE), which currently manages 90,000 social housing dwellings, may not hurry to changeover, despite gas being its preferred fuel. “With oil boilers only installed at many of these dwellings in recent years, these boilers are not at the end of their useful life so I anticipate gas conversion rates will take awhile. Whilst this is good news in the short term, we really do need to sit up and take notice of impending changes.
“We need to lobby direct store delivery (DSD) to support and introduce the Kingspan/Carillion Pay As You Go system to public sector housing and others that will allow oil to compete on a level playing field.
“If the oil sector is to retain a healthy market share it needs to think long term about the services it offers to the customer and become an energy provider offering energy services, not just oil.”
A recent report by the Fuel Poverty Action Group has called on fuel oil distributors to establish a priority register* for vulnerable customers
James Owen, S Owen and Sons, Shropshire
“We’ve noticed that many of our customers are ordering smaller quantities of oil as they’re struggling to pay for larger deliveries. We do have a lot of elderly customers who prefer to pay cash on delivery and we’re happy to accommodate them. Although we don’t advertise this fact, if a customer were to come to us and ask for £100 or £200 worth of fuel, we would do it as it spreads the cost for them and also means that we get paid on time.”
Kevin Bennetts, Consols Oils, Cornwall
“We always keep an eye open for vulnerable customers potentially in fuel poverty and do as much as we can to assist them which may, on occasions, mean a relaxation of very tight credit terms to accommodate them. We also actively encourage cash-strapped customers who are able, to come to the yard with four or five cans and fill them at a sensible price so that they purchase fuel in bite size chunks rather that incur a much larger bill for a bulk delivery that overwhelms their budget. As a result kerosene sales from the yard have increased considerably.”
John Cooper, Stevenage Oils, Hertfordshire
“As a smaller company we have a long relationship history with many of our customers, particularly our older and more vulnerable ones and we do try to be as flexible as we can with them.”
John Roberts, White Rose Fuels, Yorkshire
“Whilst we don’t have anything specific in place for our more vulnerable customers, we do offer all of our customers the option to spread payments across the year, using our budget payment plan. We’ve also done the odd emergency delivery for our longer standing, more vulnerable customers. We have one or two nursing homes on our books; they’re extremely loyal customers and we would always endeavour to get out to them quickly if the need arose.”
Peter George, managing director UK and Ireland marketing, Phillips 66
“Phillips 66 does not intend to put FAME in its gas oil supplies for the foreseeable future. As usual, we will be communicating directly with all of our customers further on this matter.”
Caroline Lumbard, UK trading director, Greenergy
“Most of our customers are telling us they want to continue to buy gas oil without biodiesel, so we’re planning to keep our gas oil FAME-free. It is not our intention to blend FAME into our gas oil at any location for the foreseeable future.”
Neil Robertson, sales director, Prax Petroleum
“We have no immediate plans to include FAME in our gas oil. Market forces will ultimately be the deciding factor and I suspect technical reservations of having FAME in gas oil will outweigh the potential cost benefit.”
Simon Davis, head of sales and logistics, Harvest Energy
“As things currently stand Harvest Energy’s position is that we shall continue to supply FAME-free gas oil from 15th April 2013, and
shall be in a position to guarantee this.”
Spokesperson, Mabanaft
“It is understood that Mabanaft does not intend to put FAME into gas oil and the company is working to keep it FAME-free.”
Robert Taylor, Butler Fuels
“Yes, an online service can offer benefits in that customers can place orders and email us with any queries, whenever it suits them.
However, we do believe that even though many customers may choose to order online, there’ll always be a large number who’ll continue to prefer to use the phone.”
Helen Needham, Hingley & Callow
“Huge benefits I would say – given the amount of abuse we’re currently taking from those customers foolish enough not to have remembered to check their fuel tank. Oh to be at the end of a computer rather than a phone line!
“On a serious note, while an online sales channel would undoubtedly have cost saving benefits, we would be concerned that we’d lose the personal touch we’re able to offer as a family business. We like to nurture the customer relationship and hope that some customers still appreciate the banter!”
Chris Bingham, Craggs Energy
“It’s a small number of people buying online presently but – it’s growing significantly. We’ve a band of customers who only buy online. If you don’t have the facility, you can’t blame customers for buying online somewhere else.
“I understand the rationale behind wanting to protect prices from competitors, but customers want to buy online which is leading to the growing presence of third party sites.
These sites are not owned by oil companies, they’ve no interest in the industry, no investments made and no personal risk. If we’re not careful, in the medium term – between one and 5 years – current distributors will be excluded from this sales channel, becoming simply hauliers in a world that’s all about who can ship fuel for the lowest price.”
Richard Burton, Barton Petroleum
“There are definitely benefits for those distributors choosing to offer an online sales channel. It’s my view that you can’t afford not to have an online route to market. Increasingly there are customers who will only transact online, and this group of customers will inevitably grow.”
Grant Lockie, Johnston Oils
“Whilst a high percentage of our orders are through traditional channels such as the phone or our sales team, we offer online ordering as well to facilitate an increasing demand.”
Jo Ritzema, WCF Fuels
“An online sales channel offers additional choice for consumers in how they buy their oil, in particular for those who wish to make their purchase outside of normal working hours.”
The CBL team headed up by Chris Pomfret
Having spent several years as a sustainability consultant in the States, CBL’s Chris Pomfret found himself unexpectedly back in an Oxfordshire village of oil users, caring for his disabled mother
Surprised to see three tankers from three different suppliers delivering oil at the same time, Chris was inspired to draw the village community closer together and Community Buying unLimited (CBL) was born.
“Something magical happens when people join together. There’s a sense of community and inclusion,” explained Chris. “I wanted to create something unique.” Although initially difficult to get the scheme going, persistence paid off.Forming local partnerships
Collaborating with housing associations, parish councils, community groups and Rural Community Councils (RCC), the scheme was able to get off the ground. Currently CBL works with 22 of the 37 RCCs across the country.
Oxfordshire RCC was highly instrumental in getting others involved. Chief executive, Linda Watson explains: “We’d been thinking that if small local groups syndicated into something bigger, they’d increase buying power. By chance that’s when Chris came to see me. His village oil buying scheme had spread across North Oxfordshire. Borrowing his business model, we started the scheme in November 2010, using our long track record and extensive reach into communities to promote it.
“We agreed it would be appropriate for us to build the scheme around local community coordinators, who get membership free of charge. In Oxon we now have 40 coordinators covering 86 communities.
“Within three months colleague RCCs were asking questions – six months later we’d developed a franchise offer, now taken up by 21 other counties. In Oxfordshire alone we have over 1000 members, who pay £24 per annum.
“From day one, we’ve been convinced that this scheme not only helps members save money, but also reduces the carbon footprint of deliveries. As an organisation that cares about environmental sustainability, we’d prefer not to be running an oil scheme – but for off-gas rural communities, oil heating is a fact of life.”Changing buying and supplying behaviour
Currently there are over 9000 households and businesses buying oil through CBL. Feedback from satisfied customers has been extremely encouraging.
“We avoid submitting orders in December and spread buying across 11 months, especially over the summer. This January alone, we placed orders totalling over 1.9 million litres.”
“On the distributor side, perceptions have changed,” says Chris. Fuel Supply Solutions consultant, Keith Guppy, is working with Chris to help him better understand the distributor market and build a new buying model.
“Viewed by some as the Antichrist, many thought Chris was simply driving down prices and forcing them to lose contact with individual customers,” said Keith. “Not so, CBL actually wants to make a fairer market which is ultimately more sustainable. It’s developing better relationships with suppliers and encouraging people to change the way they buy heating oil. CBL believes suppliers can make more money by delivering smarter,” said Keith.
“As changes are implemented, bulk orders through CBL will result in distributors actually saving 1.5% on each individual card payment,” added Chris. “Keith wouldn’t be working with us if he didn’t see benefits for the industry. He’s helping set up an electronic purse so that customers can pay CBL by Paypal and spread payments across the year.”
CBL now places orders with more than 40 fuel suppliers. Kevin Day, business development manager at Barton Petroleum commented:
“Since our initial meeting in February 2010, I feel Chris now has a far better appreciation of the operational issues and difficulties faced by fuel distributors. Our dialogue has led to a realisation that cooperation and a willingness to work together is more productive for both parties. We’re always looking at ways to improve service and to help customers cope with higher energy costs. The industry does need to do more to help alleviate fuel poverty and we’re happy to be a supplier to CBL.”
Another supplier told us: “We’ve done some business with CBL this winter. They provide very comprehensive information, customers ring promptly with payment, and there’s a reasonable delivery window.”Gaining oil buying intelligence to help those in fuel poverty
CBL is behind an initiative to expand the use of smart meters. “It’s a major problem when people don’t know what’s in their tank, so making a tank smarter makes sense,” said Chris.
A mini version of the industrial sized smart meters used extensively in Africa and India has been created incorporating an electronic dipstick which sends users an update every two days.
Currently a group of 50 householders are piloting the scheme. “Early results show huge potential as people better understand the big green thing at the end of their garden,” said Chris.
Deeply concerned about fuel poverty, Cottsway Housing Association in West Oxfordshire is also involved. The Association has purchased a number of CBL’s smart meters for its most vulnerable tenants. In return CBL has developed a community oil fund that purchases oil on behalf of Cottsway’s tenants. The smart meters inform CBL of oil used, with tenants able to pay for oil as used. “Cottsway has shown real vision – we believe this is the first pay as you go oil system of its kind – and a solution to an issue that the heating oil industry has never been able to solve for itself,” said Chris.
Barton Petroleum is also supporting the use of smart meters. Kevin explains: “We’re constantly looking at ways to keep distribution costs to a minimum and recognise the pressure from government to help our customers reduce CO2 emissions. We’re hoping to work closely with CBL to promote this smart meter. Customers will be able to see how much fuel they’re using and it’ll help reduce emergency deliveries.”
CBL members are also benefiting from the government’s ECO (Energy Company Obligation) initiative. CBL has direct access to a fund to facilitate the installation of energy efficiency measures into off-grid homes – including free boiler replacements for the oldest most energy inefficient boilers. “A massive development for us and one on which we’d like to work even more closely with suppliers to help them help their customers,” said Chris.
Now in its fourth winter, CBL continues to buy communal oil, rock salt and even iPads. Mains gas and electricity are on the horizon, but it is in the immediate future that Chris believes those working with CBL can increase profits, reduce fuel poverty and lower their carbon footprint.
Share your thoughts on community buying with liz@fueloilnews.co.uk
When the price of crude oil rises, reports of oil theft increase. Alex Porter spoke to distributors about the situation in their area
A recent article on the Fuel Oil News website reported that police in Leicestershire had found that fuel to the value of £16,000 had been stolen in the region over a period of 60 days. In Wales, statistics revealed the equivalent of a theft a day by the end of 2011.
The impact on business
Neil Kovac, sales manager at Leicestershire-based Brobot Petroleum said: “Whereas buyers would have previously purchased larger tanks in order to buy more fuel at once, buyers are becoming more wary of purchasing and storing large amounts.
“This is especially true for the agricultural community in and around the Leicestershire region. More and more farmers are spreading their deliveries out. This obviously impacts upon our delivery costs and for the farmer, makes them more vulnerable to running out of fuel.”
Duncan Lambert, general manager of Rix Petroleum, agreed that, as well as a lack of funds, rising levels of theft are partly responsible for smaller volume orders.
“A big problem is that each time our 30-foot tanker parks outside a property to make a delivery, we advertise that a new batch of oil has just been delivered. But what can we do? Alarms, locks and fancy gauges are available; however, if the thief wants it, they’ll get it!”
“In response to this developing trend,
GB Oils made a strategic decision to establish a range of oil monitoring and security products and bunded oil storage tanks to help keep our customers protected,” explained Sara Richardson, GB Oils.
Grossly exaggerated?
Not all distributors believe that instances of oil theft are as widespread as suggested.
“Whilst there has been an increase in isolated thefts of oil, I think that, due to publicity around theft, some customers automatically believe that because the smaller quantity they’ve purchased hasn’t lasted as long as their usual larger purchase, their oil must’ve been stolen!” said Mark Nolan, owner of Nolan Fuel Oils.
Stevenage Oils has been working with Hertfordshire police to distribute leaflets making consumers aware of thieves, but owner John Cooper described reports of oil theft as “grossly exaggerated.”
“People hear about a theft, and then assume the same has happened to them when they’ve actually just run out. Oil does get stolen, and plenty of products have been sold to try and combat that – but there’s no point having a very secure lock when the tank itself is plastic!”
“We’ve not seen any evidence that the threat of theft is eroding confidence in oil heating, but it would be wrong to be complacent,” advised Malcolm Farrow, OFTEC marketing and communications manager. As an industry we must do everything we can to help customers secure their oil tank.”
Share your thoughts on oil theft – prevalence and prevention liz@fueloilnews.co.uk
https://blog.boilerjuice.com/3-ways-to-prevent-heating-oil-theft-in-your-area/
Neil Ryding, Bob Hall and Julia Mansfield
With a strong research background in both a major oil company and a couple of large chemical concerns, Bob Hall founded Fuel Additive Science Technologies (FAST) in July 2005
Having the original intention of developing technically superior off the shelf automotive products offering 90% technology and 10% marketing (rather then the other way round); with a small marketing budget and the need to buy shelf space in key outlets, the concept was proving difficult.
However, that autumn, Bob was approached by Mark Haselden, then with CPL Petroleum, about the development of a premium heating oil with added fragrance. Also expressing interest in premium kerosene were James Spencer, then at Bayfords, which went on to launch the new product at nine depots over 7 working days, and Neil Donald, then owner of Southern Counties.
Up to this point, being a diesel and a gasoline man, Bob had never looked at kerosene. Research found much useful evidence in the bigger heating markets of France, Germany, the north east USA and Scandinavia which led to FAST’s premium product for pressure jet boilers. Then as problems with AGAs proliferated, the timing was perfect to develop a product for this market too.
Whilst the chemistry was relatively straightforward, finding a company to produce bottles in the desired quantities was a challenge. A Norwich-based company now produces 200, 100 and 50ml bottles for which FAST owns the tooling.Staff additions
Although by 2008 FAST had found its niche, it was still very much a cottage industry with a staff of two consisting of Bob and his partner,, SallyAnn as company secretary. Bob did all the formulations, bottling and labeling, even going out in a van to make sales.
Enter Charles Southan. Despite a background in selling women’s underwear, Charles proved to be a first class relationship builder; Bob credits him with being largely instrumental in growing the business across the UK. Charles’ arrival coincided with the need to desulphurise fuel which put huge demands on refineries, resulting in more kerosene being imported with inherent quality issues.
In October 2009, Charles was joined by Tim Carlon. Both recruits had come via the Golden Ball in Ironbridge, a popular watering hole of Bob’s. Sales to agricultural and marine markets are covered by Jane Murdock. By April 2010, FAST had 8 employees and when managing director Neil Ryding arrived that July, Bob took up the position of chairman. Working with Shropshire County Council, FAST now offers work placements to young people, some of whom are now in full time positions. In December 2011, chemist Julia Mansfield joined the team.The right product at the right time
Again in 2011, FAST developed the right product at the right time when the gas oil standard changed and off-road diesel saw a massive reduction in sulphur. With off road vehicles calibrated on white diesel, an additive was needed to bring red diesel up to the DERV specification.
FAST’s number one product is still its kerosene additive, now used by over 90% of the fuel distributor market. Its gas oil additive is in second place, followed by Diesel Supreme, a premium additive used by hauliers. Power Restorer, a service tool for agricultural/diesel servicing workshops, which cleans out deposits in the injectors, comes next. Recent cold winters have seen sales of anti-waxing products rise considerably whilst poor housekeeping exposure led to a peak in anti-bug sales in 2011.
To test the performance of its additives, there are two boilers and an AGA which also keeps FAST’s Shropshire premises warm and is the focus for a Friday feed up when staff take turns to cook lunch. Agricultural additives have been independently tested by a Lincolnshire-based agricultural machinery dealership.
When a customer has fuel problems, FAST offers a special customer service taking in samples for test and providing an answer.What’s next for FAST?
This month Julia, who produced a fuel quality report last year, will be joined in the laboratory by a new recruit whilst significant investment is being made in the laboratory itself. “The fuel quality report was a real milestone; we went to fuel producers, shook the tree and got factual information rather than the usual fuel hearsay. The perception is that nothing changes in fuel, but believe me it does,” said Julia.
The next generation of heating oil additive with a patent pending is FASTFlame, which provides improved boiler efficiency even on new equipment.
FAST recently expanded into Ireland where Jeff Murrells is in charge. “Whilst this market has huge potential, economic woes have made all fuels price sensitive and premiums, whilst beneficial, can put people off,” said Neil. FAST has also received supply enquiries from Europe.
Attendance at regional shows has led to ‘a massive increase’ in recognition of its own Exocet brand. Getting together with a number of agricultural equipment suppliers and fuel distributors to help educate customers about how to store and look after fuel has paid dividends.
“We’ve come a long way but we’re still a small company with multi-skilled staff willing to turn their hand to anything. I always tell people that if they come to work here they leave their ego at the door,” said Bob.
Lee Burgess (l) and Ian Appleton
With cost cutting top of many a distributor’s business agenda, Fuel Oil News asks are there any opportunities available to increase profit?
Speaking to Euro Oils directors, Lee Burgess and Ian Appleton, the answer is an emphatic “yes”. Just four years ago, the pair acquired this Midlands-based lubricants blender and manufacturer. Having grown the business by 400%, Euro Oils customers are sharing in the company’s success.Our lubricant, your brand
Private label branding in the UK has grown substantially as major oil and lubricant brands have retrenched.
Euro Oils is different from other lubricants manufacturers, in that it produces lubricants solely for its customers. Working with Euro Oils allows your company to build its own brand equity with a quality UK manufactured product bearing your name. Not having its own brand, Euro Oils will never be in competition with yours. Euro Oils acts as your silent partner – never divulging its suppliers nor its customers.
“We launched our own brand of engine oil after becoming disheartened with the service and margins offered by our existing suppliers. As a small wholesaler/distributor we weren’t taken seriously by many of the other companies that we approached. Euro Oils came across as far more on the ball, and I was confident that they could deliver what I wanted.” Professional and profitable
Benchmarking itself against the global leaders in lubricants, recent investment has vastly improved the image, quality and presentation of packaging. “When our customer’s brand packs a punch on the shelf, it’s definitely in everyone’s interests,” said Ian. “Professional packaging that really stands out certainly helps increase sales.”
Considerable investment in the company’s capacity, capability and people has seen new laboratory testing equipment, a state of the art label printer, new filling lines plus more graduate recruitment and staff training. “For the first time in over 7 years of wholesaling other brand engine oils we can finally see profits in small pack engine oil. Previously our oil brands had acted as a door opener and we would be reliant on pushing wiper blades, car mats and seat covers to try and earn some profit. Sales are going very strong; the independent motor factor shops and a couple of larger distributors have been very receptive to our branding and packaging.”
“We’ve added more to our offering,” said Lee. “Having reduced the complexity around the sale of lubricants, there are now less barriers to entry for smaller players. Synthetic oils have risen in prominence and there’s been a move away from barrels to the production of smaller pack sizes and multiple packs. Large or small – all customers can build a brand with a strong image in the automotive and agricultural markets, and make a good profit.”
With threats of negative interest, rather than leave £30,000 in the bank doing nothing, one Euro Oil customer spends the money on lubricants; in six weeks he can make a £10,000 profit.
With the minimum order being just a pallet, entering the own brand lubricants market may be easier than you think. Taking a flexible approach, Euro Oils encourages customers to regard its blending plant as their own. “Simply tell us what you want,” said Lee.“A partnership with Euro Oils was very much part of our company strategy. We felt that developing our own brand products for our retail network would give us a competitive edge. On a more personal level I have known Lee for many years and knew that I could rely on him to deliver a package that would effectively suit our business needs.”
Having upgraded its facilities for the benefit of customers, Euro Oils has upgraded itself with a brand new logo designed to reflect the company’s growing customer base in the Middle East. Check out the new logo and brand new website at www.euro-oils.com.
Could this silent non-competing partner give your business a competitive edge? To find out more, please call Lee on 01527 502252.
Glynn Mitchell says it’s the easiest system he has ever used
Crown Oil recently selected Emco Wheaton to be its electronic pump metering supplier after the Bury-based distributor had an excellent introduction to the company’s latest Data Plus 2 equipment
With eight new tankers being added to Crown’s fleet over the coming months, Emco’s electronic pump metering will soon be at the heart of many of its deliveries.
Glynn Mitchell (pictured here), who joined Crown from Samuel Cooke last year, is one of the lucky drivers to have been given one of the brand new DAF CF tankers. “In my time as a tanker driver, this is definitely the easiest system I’ve ever used. Its speed, coupled with ease of use, makes my job very efficient.”
Also impressed with the equipment’s simplicity and quality is Crown Oil fleet engineer, David Goodall, who has been with the company for 10 years. “Implementation has been so easy. The driver of our first new truck took to it straight away without the need for any further training.
“Plus the back-up given by Emco Wheaton’s sales and service team has been excellent. Based on this experience, we decided to fit further trucks with Data Plus 2.”
Asked about what he looks for when sourcing a new tanker, David said: “Price is the main criteria, along with proximity. Located in Lancashire, Crown’s only an hour away from south Yorkshire. We’ve used both RTN and Tasca for 10 years, and both are always asked to quote for each new tanker we source.
“We’ve standardised our fleet so that trucks are identical. They all work in exactly the same way which really helps drivers who use a variety of vehicles.
“We started using Emco products awhile ago and were blown away by a system that’s methodical and essentially both driver and mechanic friendly. It’s a fabulous system that guides drivers through the whole process, especially useful for drivers working from remote depots.
Jonathan Wiltshire, Emco Wheaton’s territory sales manager, added: “We were very pleased to hear that Crown’s drivers have found the simplicity of the Data Plus 2’s litre counter to be such a huge benefit. The equipment is extremely intuitive; it guides each decision the driver has to make, facilitating faster and more efficient deliveries.”The benefits of Data Plus 2
The system comprises a lightweight aluminium pneumatically actuated manifold assembly with gas extractor, an electronic litre counter/control unit, meter, pump, printer and product transfer system.
A newcomer to the UK, the Valero Energy Corporation entered the UK market last summer following its acquisition of Chevron assets including the Pembroke refinery, pipelines, terminals, an aviation fuels business and a network of over 900 Texaco-branded service stations in the UK, Plus around 230 in Ireland. This Fortune 500 company has headquarters at San Antonio in Texas with total assets (at the end of 2011) put at $42 billion.
Market opportunities
Keen to know what attracted Valero to the UK market, Fuel Oil News editor Jane Hughes recently met with Eric Fisher, president – Europe and Mike Lewis, director – product supply, at the company’s UK headquarters in London’s Canary Wharf.
“Valero has had a keen interest in acquiring an asset in the UK or ARA (Amsterdam Rotterdam Antwerp) markets for some time,” said Eric. “Having a North Atlantic position enables us to do commercial trades here and to gain a much better insight into the European market.
“The Chevron acquisition has given us an excellent entry into the UK – it was a good opportunity that came with good people and good logistics. With this European foothold, Valero has the ability to ship excess gasoline back to the north east US, where many refineries have closed. And, on the flip side, we can bring diesel back to the UK and ARA region.”
Now firmly focused on profitably growing its inland volume, Valero has already made significant investment to move more barrels into the Midlands market and to offer its customers quality products at a competitive price.
The company has an interest in four pipelines and owns five terminals – Avonmouth, Cardiff, Kingsbury, Manchester and Plymouth, and is part owner of a terminal in Dublin. The Mainline pipeline which connects the Pembroke refinery with the Midlands and Manchester is also under Valero ownership.
To further strengthen its supply position in the Midlands and north west of England, Valero will be reopening the Manchester Fuels terminal this spring. “This terminal is very conveniently placed; former and prospective customers are very enthusiastic about its reopening,” said Mike. “I am pleased to say that Valero has been very well received in the UK market place and our work force is proud of what we’ve achieved to date. We’ve had some excellent feedback.”
An experienced refiner
“The refining market is volatile, seasonal and cyclical but we’ve got the experience in this business,” said Eric. (Valero is now the world’s largest independent refiner with 15 refineries producing 2.8 million barrels of oil per day.) “Western Europe is a challenging market to operate in, and it’s very competitive. That said, we’ve been here 14 months now and we’ve found nothing here that we had not already anticipated.
“Valero is very pleased with its UK acquisition. There are still more opportunities to reduce costs, to be more effective and to ensure we continue operating safely – we work to improve on these things every single day,” Mike added.
Valero’s refined product customers include its network of Texaco sites, branded wholesalers, jet fuel handlers and supermarkets.
Kerosene is a sizeable market for Valero. From allocated crude stocks, the company currently sells 83% as kerosene and 17% as jet fuel but acknowledges that kerosene demand is ‘steadily decreasing.’ Ireland is one of Valero’s biggest kerosene customers.
Asked if they thought the UK’s kerosene market would be quickly eroded by the UK government’s renewables drive, Mike replied: “Not yet, such transitions take a lot of time. The good thing about kerosene is that it’s a dual purpose fuel. In an area that’s short on fuel, we could easily switch more kerosene sales to jet fuel.”
Introducing E10 and the possibility of a Valero brand
The challenges of introducing E10 into the UK market were also discussed. “E10 is difficult as the rules are far from clear,” said Mike. “By early January, it will be possible to put up to 10% ethanol in petrol but will that be introduced on the forecourt? The industry is waiting for some guidance as to when, where and what. We look to the government for direction and to communicate with consumers.”
FON also asked about the possibility of a Valero brand being introduced to UK forecourts. “We’re evaluating our options with respect to re branding. Texaco is a strong brand with a long history in the UK so this is clearly something we have to consider very carefully,” said Eric.
So have there been any regrets about entering the UK market? “Valero is a positive story for the UK, the company is well-capitalised and we’re still excited about being here. Make no mistake the UK market is very different, but it’s been a great transition and we’ve got a great team here. We’re here, we’ve identified the assets and we’re continuing to invest.”
Developing a sense of community
A recognised community leader, Valero likes to give back to the communities in which it works. Eric explained: “Well established in all the countries in which Valero operates, we’ve got volunteer schemes, charitable giving and governorships going in the UK and Ireland. To date employees have volunteered 785 hours to local projects.”
Valero was formed as a pipeline company in Texas in 1980. The company acquired a shutdown refinery site at Corpus Christi, now one of the newest refineries in North America. In the mid 90s, Valero chose to sell its pipeline business to grow the refining side. Valero is now the world’s largest independent refiner with 15 refineries producing 2.8 million barrels of oil per day. With 21,000 employees, Valero operates in the US, Canada and the Caribbean and also owns 10 corn ethanol plants in the Mid West, a biodiesel plant in Louisiana and 6800 branded retail sites.
Out on the road – Pete, Lindsey and Guy at Old Trafford
A few months after the Conoco Phillips demerger to create a business dedicated solely to its downstream operations, Phillips 66 took to the road in a uniquely branded bus to do what it does best – talking, and building customer relationships
Over 200 dealers and distributors turned up to the Phillips 66 roadshow at exciting locations across the country, to take a seat in the specially designed double-decker bus, talk to members of the team, and learn more about the company after its introduction to the UK market earlier this year.
It was a whirlwind journey around the UK, designed to allow as many customers to attend as possible. The dual-branded Phillips 66 and JET bus visited eight iconic venues, including the Falkirk Wheel, Bristol Planetarium, Twickenham and the Imperial War Museum. Fuel Oil News joined in the fun at the last event at Old Trafford football stadium, for a chat about the benefits of the recent reorganisation, and a peek into the Phillips 66 future.A seamless split
“Looking back at the demerger, it has appeared seamless – but there has been a lot of work from those behind the scenes in the organisation,” said Pete George, managing director, UK and Ireland marketing.
Lindsey Grant, manager, national sales, added: “The roadshow has been about showing that although operations are under a new name, we still have the same culture, mind-set and strengths. The name has changed, but we haven’t changed who we are.
“Our objectives from the outset were to introduce customers to our team and highlight our new customer-centric structure and approach. It was also just as important for us to get feedback from customers and find out more about their needs directly from them. We feel that we have achieved this and more.”
Phillips 66 was introduced in the UK in May this year, when the downstream business split from the ConocoPhillips name to create two independently operated companies. As a result, Phillips 66 focuses on downstream refining, marketing operations and trading in the UK, while also continuing to market its fuel brand as JET. The move also included a company restructure, involving the creation of a separate national sales team, led by Lindsey, to look after UK-wide brands, such as GB Oils and Watson Petroleum. Independents with a regional base are now looked after by Guy Pulham, manager, regional sales, and a team of regional managers.Distributor benefits
“We have introduced a number of changes during the reorganisation to further support our distributors. For example, regional account co-ordinators have been introduced to be on hand for customers when a member of the sales team is on the road or unavailable,” said Guy. “A new online system has also been installed at Bramhall, Immingham and Kingsbury which calculates the daily amount of fuel a distributor has lifted. If needed, they can request to lift additional product, meaning no wasted journeys.
“The service we provide for each customer depends on the type and level of support they require,” added Lindsey. “Whereas national customers need a UK outlook, regional customers now have a contact within their local area to match the needs of their business. Matching technology and different planning strategies are also tailored for each customer.
“The reorganisation addresses the way the industry is heading, and means Phillips 66 is at the forefront for the benefit of our customers,” said Lindsey.
Busy ensuring that the split and restructure was as smooth as possible for customers, the company has been less vocal than usual. The roadshow presented the perfect opportunity to show customers that it’s business as usual and shout about the benefits of the structural changes.
“We’ve seen a lot of people and it’s been a lot of fun,” Lindsey continued. “Our biggest strength is our service focus and the relationships we have with our customers, so the bus acted as the ideal mobile venue for us to talk informally to people in a friendly and relaxed atmosphere.”Culture of success
The company recognises its culture as one of its core strengths, emphasised by the name change to Phillips 66 – which has been one of the leading fuel brand names in the United States for decades.
“The Phillips 66 culture is very family oriented,” explained Pete George. “Our values of safety, honour and commitment are a perfect fit with the UK business.
“We like to think we have a different approach. We listen to our customers and they have almost unlimited access to us – most have got my mobile number. We’ve got a very responsive and energetic team who don’t have to answer calls at 10pm, but they want to. You can’t buy that culture, you have to create it.”
Pete was planning to retire later this year, but accepted his new position as part of the reorganisation and has no regrets about continuing.
“It didn’t take a lot to persuade me to stay on after the restructure. I love the unique culture of the company, which was shown at its best throughout the roadshow. It’s a breath of fresh air in a corporate world.”An earlier interview with Pete George was published on page 6 of the September 2012 issue of Fuel Oil News.
Jeremy Hawksley (director general, OFTEC), Martyn Bridges (new OFTEC chairman), Nick Hawkins, DESO Engineering (new OFTEC vice chairman) and Barry Gregory, Riello (outgoing OFTEC chairman)
This was just one of the many questions asked at OFTEC’s AGM last month when the long term future of the oil heating industry was under debate.
In the first quarter of 2013 oil boiler sales increased by 22% compared to last year.
Sales at the end of 2012 also showed an improvement on the previous year. Commenting on the news, OFTEC director general, Jeremy Hawksley said: “Most boiler sales are distress purchases and the healthy results are due partly to the cold weather the UK has experienced this winter. However, it also underlines the public’s continued enthusiasm for oil heating and the fact that upgrading to a modern oil condensing boiler will bring an immediate saving in heating costs. This is by far the simplest and most cost-effective change that existing oil heating users can make”.
OFTEC is promoting the benefits of oil heating to rural households with Oilsave leaflets and flyers. The flyer offers homeowners a booklet about energy efficiency which is available FREE from OFTEC.
http://www.oilsave.org.uk/
Visitors to FPS EXPO 2013 admire WCF Fuels’ latest tanker. Built by RTN Lakeland, it features WCF Fuels’ new logo
Visitor numbers at this year’s FPS EXPO, where 98 exhibitors displayed the latest advances in oil distribution technology, were up 7% on last year.
“There was a real buzz about the place this year and that showed in the level of enquiries we received, as well as the general atmosphere we experienced,” reported Kiran Shaw, operations manager at IFC Inflow.
“It is our most important show of the year, we really enjoy attending and catching up with both customers and suppliers, old and new.
“FPS EXPO is a very focused show, targeted specifically to our customer base” said an Emco Wheaton spokesperson. “It offers an opportunity to showcase our latest developments to a large audience.”
New FPS president Mark Nolan addressed an audience of industry professionals at the awards dinner where John Bussell of Moorland Fuels took the coveted Driver of the Year award, sponsored by OAMPS Petrochemical. The runners up were Bob Cook of GB Oils and Mark Summerfield of Heltor.
Planning has already begun for the 34th FPS EXPO which will again be held in Harrogate on 9 & 10 April 2014. Many of this year’s exhibitors will be returning and 41% of the stand space has already been sold.www.fpsshow.co.uk
The UK produced less oil in the fourth quarter of 2012; the closure of Coryton in July 2012 was a key factor says a recently published report.
Last month the Department of Energy and Climate Change published its Energy Trends and Quarterly Energy Prices covering new data for Q4 2012 and provisional annual data for 2012.
Key findings
• The UK’s total energy production was 10½% lower than in 2011
• Imports in 2012 were at a record high, with exports at their lowest level since 1989
• Oil production was 14½% lower than in 2011 – the lowest annual production volume since the current reporting system began
• Production of petroleum products was down 8½%, with the closure of Coryton in July 2012 a key factor
• Compare to Q4 2011, the cost of heating oil increased by 2.7%
• Based on a fixed consumption level of 3,300 kWh, the average electricity bill in 2012 increased by £26, compared to 2011
• Based on a fixed consumption level of 18,000 kWh, the average 2012 domestic gas bill rose by £81, compared to 2011
Oil quarterly tables ET 3.1 – 3.7 are available on the DECC section of the gov.uk website at:
www.gov.uk/government/organisations/department-of-energy-climate-change/series/oil-statistics
Energy Trends and the Quarterly Energy Prices bulletins, published quarterly, are available in hard copy from DECC on subscription, price £40 per annum and on the DECC section of the gov.uk website at
www.gov.uk/government/organisations/department-of-energy-climate-change/about/statistics