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An agreement to extend the deal on record production cuts until the end of July which was reached at a virtual meeting of OPEC+ on 4 June, saw oil prices climb to their highest level in 3 months.
In addition to the extension, it was announced that Saudi Arabia will be reversing nearly all the discounts on its crude, with some of the increases resulting in the sharpest jumps in over 20 years.
Michael Burns, energy partner at law firm Ashurst, commented; “The extension of cuts has seen prices rise. Hopefully this provides a platform for companies that a few weeks ago were looking extremely challenged to build from. However, the fall in demand from coronavirus remains a real issue for markets and companies to wrestle with.”
The days running up to the meeting saw prices rise to almost $40/bbl as expectations grew for an extension of the OPEC+ production cut, with OPEC and Russia reportedly moving closer to an agreement for the July and August period then dropping back as doubts began to emerge over the next step.
Russia and Saudi Arabia’s relations were in the spotlight once again during the virtual meeting, brought forward from the 9 June, with Moscow indicating a desire to ease constraints on cuts, while the Kingdom showed its preference for measures to remain the same throughout July. The outcome was a victory for both however, who put their price war behind them to jointly persuade Nigeria, Iraq and others to fulfil their promises to cut production.
It was in April during the first wave of the COVID-19 pandemic, that OPEC+ agreed to cut output by a record 9.7 million barrels per day, equivalent to around 10% of global output. This decision was made in order to lift prices that had dropped dramatically due to near-worldwide lockdown measures. The resultant reduction in output not only from OPEC+ members (predominantly Saudi Arabia and Russia) but also from the USA and Canada, helped to lift oil prices back around $35 per barrel.
With several countries easing lockdown measures creating fears of a second wave of the virus, the decision to extend production cuts for one month, whilst falling short of market hopes, will help to underpin the oil market’s recovery and could see prices rise to as much as $50 a barrel.
The cartel will meet in the second half of the month to review the oil market once again with the next full ministerial OPEC+ meeting scheduled for 30 November.
In planning prior to the Coronavirus lockdown, North Yorkshire-based independent fuel oil supplier, Kettlewell Fuels has now completed a management buyout (MBO) by its senior leadership team.
Managed by Janet and Trevor Kettlewell since 1996, the MBO means the husband and wife team takes ownership of the business outright from the Kettlewell family, which also owns other family businesses.
Continuing as a Phillips 66 authorised JET distributor, it is business as usual for customers of the company which delivers domestic heating oil, agricultural gas oil and commercial DERV to homes, farms and businesses across North Yorkshire. Janet Kettlewell retains responsibility for the operational and customer service side of the business and the same experienced and friendly, local customer service team will continue to help customers make the right fuel choices for their needs.
Trevor Kettlewell will carry on managing the fleet and delivery logistics supported by the highly trained Kettlewell Fuels drivers who ensure customers receive a swift, reliable delivery service in a safe and timely manner.
Expanding the team and premises
Strengthening the company’s management team, Janet and Trevor are delighted to be joined on the board of directors by John Skinner. John was previously finance director and company secretary for 15 years at one of Yorkshire’s leading estate agents, having experience also in the healthcare, packaging and banking sectors.
The MBO also provides the opportunity for the business to move to larger premises which will still be within the Melmerby area. Commenting on the MBO, Janet Kettlewell said; “It’s another step forward in Kettlewell Fuels’ 33-year history.
“Kettlewell Fuels is more than just a business to us. Taking sole control means we will be in a position to focus our energies on offering our customers a service that suits their changing needs whilst ensuring they continue to receive the outstanding level of service that has enabled us to grow the business. Our relationship with the other Kettlewell companies, Kettlewell Commercials and M Kettlewell (Melmerby), will continue and we’re really looking forward to exciting times ahead.”
Advisory assistance was provided by law firm Schofield Sweeney and accountants Saffery Champness, with completion taking place at a safe social distance in line with government guidance.
Martin Holden, who advised on behalf of Saffery Champness, said; “Janet and Trevor have some exciting plans for the future direction of the business and this MBO provides a strong foundation for growth.
“We are delighted to have been able to offer the support they needed to achieve their ambition and look forward to watching the business flourish under their continued leadership.”
David Strachan, who led the Schofield Sweeney team, added; “My colleague Lucy Holroyd and I were also delighted to advise on this significant development for Kettlewell Fuels, and we wish the company every success in future”.
BP has announced plans to cut 10,000 jobs worldwide following the global slump in demand for oil. Having paused redundancies during the peak of the pandemic the CEO of the oil giant told staff at the start of this week that the company is responding to the economic fallout of the Covid-19 pandemic.
Chief executive Bernard Looney laid the blame squarely at the door of the drop in oil prices and the global collapse in demand for oil owing to the coronavirus pandemic as he told staff; “You are already aware that, beyond the clear human tragedy, there has been widespread economic fallout, along with consequences for our industry and our company.
“The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make – I am talking millions of dollars, every day. And as a result, our net debt rose by $6bn in the first quarter.”
An industry reducing costs
The job losses represent about 15% of the oil group’s 70,000 staff worldwide with the jobs due to go by the end of the year. The London-headquartered group has not said how many jobs will be lost in the UK but it is thought the figure could be close to 2,000. BP employs around 15,000 people in the UK with the firm’s office-based workers expected to bear the brunt of the redundancies which will not affect any of its retail staff.
The changes are expected to significantly impact its senior ranks, cutting the number of group leaders by a third with the company saying it will make the senior structure flatter. The CEO emphasised that BP must reinvent itself and emerge from the crisis a “leaner, faster-moving and lower carbon company”.
Looney, who took over as chief executive of 111-year-old BP in February, said: “We will now begin a process that will see close to 10,000 people leaving BP – most by the end of this year. The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritising safe and reliable operations.”
The Brent crude oil price started the year at about $64 (£50) a barrel but plunged as low as $19 in April as the pandemic took hold. It has since recovered to about $35 a barrel but the drop has taken its toll on the industry.
Professor David Elmes, energy expert from Warwick Business School, said; “The job losses at BP are symptomatic of the wider challenges facing the industry.
“Coronavirus has reduced oil demand and the price per barrel has plummeted, but that has happened in a wider context of short-term and long-term decline.”
“All firms in the sector will all be looking at how they can cut costs, shift their activities to the lowest cost field, trim investment, and thinking hard about what dividend they can pay.”
The latest addition to the Crown Oil tanker fleet is ready to deliver HVO across the UK.
The 8-wheeler DAF tanker joined Crown Oil’s fleet last week, and with the registration number BIO HVO, it is no secret as to what it will be carrying across the country.
A spokesperson for Bury based Crown Oil, said; “We’re excited to announce a brand new edition to our fleet! Our green tanker is ready to deliver our green diesel across the UK.”
Speedy Fuels and Lubricants, a member of the Crown Group established in 2012 to serve the London region, also added a 6-wheeler DAF tanker to its own fleet in March this year. The company, which has gone from strength to strength and now deliver to customers nationwide also uses its new tanker to transport HVO.
Find out more about Crown Oil’s journey into low carbon fuels in the next issue of Fuel Oil News out in July.
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Last week, in another significant industry step towards contributing to the UK Government’s Net zero objectives, Phillips 66, Uniper and VPI Immingham announced a memorandum of understanding to co-develop Humber Zero.
A multi-million pound carbon capture and hydrogen project on the South Humber Bank, Humber Zero will decarbonise eight million tonnes per annum of CO2 emissions, with the potential to target 30 million tonnes of CO2 emissions from the wider Humber cluster to the west of Immingham
Recent changes to Government advice on the use of face covers mean it is now recommended that individuals cover their faces when out in public to help stop the spread of COVID-19.
In a generous response, Northern-based Craggs Energy has sprung into action and produced over 1,200 face covers which have been distributed free to customers and communities across Yorkshire and the North West.
Chris Bingham, CEO at Craggs Energy said; “As keyworkers, we have adapted the way we work and our number one priority is the safety and wellbeing of our colleagues, their families and our whole community. We are determined to help as best we can and give something back.
“We already produce our own water removal device called a TankSponge Eco and we decided to engage this resource to start making the face covers. All of the face covers we have produced are free of charge and we are looking to supply two per customer with an instructional leaflet on how best to use.”
Lee Roe, Ribble FM director & station manager who manages the Ribble FM’s COVID-19 support programme said; “Craggs Energy has donated 50 face covers to our COVID-19 support programme which are designed to be used when out and about. They conform to government specifications for shielding masks and are designed to be worn when shopping etc. These are totally free and available to those who require this protection the most.
“There are so many people who just don’t get looked after these days but with the generosity of local companies like Craggs Energy and the exposure from Ribble FM together we are looking to change that.”
The initial response has been overwhelming and almost all Craggs Energy customers have jumped at the chance for the free face covers which are available to all domestic, commercial and agricultural customers.
Craggs Energy is also working with local initiatives like the Ribble FM Support Programme and the Overgate Hospice to provide bulk donations to local communities in the North West and throughout Yorkshire.
The dramatic fall in oil prices in April 2020 will go down in history, and whilst it was bad news for the industry, it provided welcome financial relief to households fuelled by heating oil. As the first wave of
The UK government has marked a key step on the road to an independent UK international trade policy, by announcing the UK’s new MFN tariff regime, the UK Global Tariff (UKGT) on 19 May.
The leading representative body for the UK’s offshore oil and gas industry, OGUK, has called for the transition to net-zero greenhouse gas emissions to be at the heart of its recovery plan after a stark warning that up to 30,000 industry jobs could be lost.
UKIFDA has submitted its views on the Government’s consultation on the introduction of E10 petrol at filling stations across the UK which closed on 3 May and called for views from industry on the best way to introduce E10 petrol as the standard grade of petrol at forecourts from 2021.
“We have expressed our full support for the Government’s proposals to replace the 95 E5 Premium grade petrol with E10 petrol, and think a direct replacement is the right way to ensure successful implementation and take-up by consumers,” says Guy Pulham, UKIFDA chief executive.
“The introduction of E10 petrol would drastically reduce emissions from petrol vehicles – according to the Government, it could lead to a CO2 saving of 750,000 tonnes, which is equivalent in emissions reductions to taking up to 350,000 cars off the road every year.
“We agree that increasing the bioethanol percentage from up to 5% in current E5 petrol to up to 10% in E10 petrol can only be a good thing. The E10 blend is already in use in other countries across Europe including France, Germany, Belgium and Finland, and its introduction in the UK is very welcome – where the majority of petrol cars could use E10 petrol from its introduction.”
Since 2011, all modern petrol cars have been designed to use E10 effectively, and most petrol cars since 2000 have also been certified to use the proposed blend. However, there is still a small number of older and classic cars not able to use E10, which is why the Government is proposing the ongoing availability of E5 petrol.
As a fifth-generation family business that has been operating in East Yorkshire for more than 140 years, J.R. Rix & Sons has always believed in supporting the local community.
That’s why during the coronavirus outbreak, the company has gone out of its way to provide help and resources to local businesses and organisations hit by the pandemic, and those fighting to contain it.
In one such move, J.R. Rix & Sons donated £10,000 to entrepreneur Alex Youden who designed a face mask and respirator that protects frontline medical staff against COVID-19.
Alex makes the masks on this 3D printer and the donation enabled him to buy raw materials. J.R. Rix & Sons also provided furloughed volunteers to help distribute the PPE.
The family business has also dug deep within its own stores to donate products to help protect people and to carry on with daily life.
Rix-owned businesses Rix Petroleum, Victory Leisure Homes and Jordans Cars donated spare PPE to frontline workers at Hull City Council, and the business gave a number of used laptops to underprivileged children at a primary school, enabling them to continue their education at home.
Victory Leisure Homes, the group’s holiday home and lodge manufacturing business, is also making an isolation unit for a local care home, so elderly residents can receive visits from family members.
Rory Clarke, managing director of J.R. Rix & Sons, said everyone had to pull together during the crisis and the company was delighted to do what it could.
He said: “We’ve said from the start of the outbreak that it is the duty of everyone who can help to do so.
“As a fifth-generation family company with deep ties to our local community, we’ve tried to do that in as many was as we can.”
FTA, the business organisation representing the logistics sector, has learned this month that the long-awaited LGD Driver Apprenticeship Standard for Cat C+E licences, is to be published this summer.
As Mags Simpson, policy manager at FTA, explains, the standard cannot come quickly enough for an industry which has been plagued with skills shortages in recent years; “The news that the C+E apprenticeship standard has finally been approved for roll out is great news for our sector,” she says.
“It is testament to the hard work of the Apprenticeships Trailblazer group, co-chaired by Jim French and Gary Austin, which we have been in constant contact with. This new standard will give operators from across logistics the opportunity to draw down from the Apprenticeship Levy fund and start to develop the logistics stars of tomorrow – an opportunity previously denied to the industry due to the lack of appropriate standards against which to train staff.
“To date, the logistics sector has paid over £410 million into the Apprenticeship Levy pot, but only 10% of these funds have so far been drawn down, due, to a large extent, to the fact that no appropriate standard was available for businesses to utilise. Now that the sector has an apprenticeship standard relevant to its recruitment needs, we will be able to train candidates towards achieving a full LGV licence, and this in turn will ensure that those individuals will not be prohibited in the type of work they go on to do across the industry.”
In further good news for the sector, Ms Simpson has reasserted FTA’s commitment to ensuring that further apprenticeship standards are developed and accepted for other employment opportunities.
“We continue to work with the Trailblazer group to ensure that the sector will have access to the skilled workforce it needs moving forwards. Our next priority is to gain accreditation for the Urban Delivery standard, as well as progressing the Transport and Warehouse Supervisor L3 apprenticeship, which is already under way. We all know how much variety and enjoyment can be gained from a role in logistics and we look forward as an industry to welcoming the skilled workforce of tomorrow once these standards are approved.”
With many companies reconfiguring production lines, or starting up new ones, to increase the supply of hand sanitiser in response to the current pandemic, companies are being urged to consider the incendiary risk.
Industry groups like the Solvents Industry Association are concerned with reports of inappropriate packaging of solvents and an incident of a static discharge igniting vapours present on an operator’s hand after the application of hand sanitiser.
Mike O’Brien, managing director of Newson Gale, considers the approaches that can be taken in terms of managing the risk of solvents (including alcohols) being ignited by uncontrolled discharges of electrostatic sparks in a recently released guidance note.
The importance of grounding people
Managers of facilities where operators have exposure to potentially flammable or combustible atmospheres need to ensure the operators are grounded. This is because people isolated from a ground source (e.g. flooring capable of dissipating static charge to earth) can accumulate large electrical potentials beyond 20,000 volts without even realising it until they discharge a spark.
In addition, if operators are regularly applying hand sanitisers, either inside or outside a designated hazardous area, it is important to ensure that they do not have the potential to accumulate electrostatic charge on their bodies.
Ignition of vapours emanating from the hand can occur if the person approaches or touches a grounded object such as a door handle or stair railing, resulting in a static spark discharge with enough energy to ignite the vapour.
The most effective means of grounding personnel is safety footwear that meets the required static dissipative criteria and testing all footwear prior to entry into the facility is recommended. Easy to use footwear testers can be installed at designated entry points to hazardous areas in the facility.
Such testers utilise a simple plate on which an individual stands, with their safety shoes on, and presses a button with their index finger. If the resistance threshold of the shoes is below the required level, the test will indicate a positive output with a green LED indicator which
provides the operator with a “GOOD-TO-GO” message to enter the hazardous area.
If the shoes fail the test the indicator will stay red and the tester’s buzzer alarm will activate. At this point the operator should not enter the hazardous area and should report the failed shoe test.
Containers used in production and transportation
In relation to the use of containers, they should, ideally, be of an all metal construction so that when they are grounded, electrostatic charge cannot accumulate on the surface of the container. If the supply or use of fully metal IBCs is not possible, then the metal cages that contain the plastic container should be grounded. Splash filling should be avoided as this increases the rate of charge generation.
If electrostatic charge is permitted to accumulate the voltage of the IBC will rise very rapidly and result in this energy being discharged in the form of an electrostatic spark onto a grounded object like an operator. If the spark energy is sufficiently high, it will ignite the surrounding vapours with little effort.
It is not possible to cover every potential process involving the use of solvents. A more comprehensive summary can be viewed on the European Solvents Industry Group website.
https://www.esig.org/solvents-and-static-electricity/
Industries across the world are experiencing a coronavirus paralysis. Even the oil industry, which for many has been able to continue in relatively normal terms
Organiser of UKIFDA EXPO 2020, the UK and Ireland Fuel Distributors Association (UKIFDA) has taken the decision to cancel the 2020 exhibition due to take place on 18 & 19 August at the Exhibition Centre Liverpool.
Guy Pulham CEO of UKIFDA says; “Following the publication of the Government’s Plan To Rebuild Strategy, UKIFDA has been working with Exhibition Centre Liverpool (ECL) on ways in which the 2020 EXPO could be safely organised and hosted. As you know, we have worked hard to try and keep the 2020 event in the calendar as a positive marker of lives returning to some sort of normality.
“In the end, and with great reluctance, we have concluded that it is just not possible to safely run the event that our members, exhibitors and delegates would want – namely a large-scale, high quality event where business gets done. The lack of clarity in the government plan from July onwards (unavoidable given that future stages depends on how the early stages progress) means that we do not know if
Becoming the fourth oil major to commit to ‘net zero’, Total has announced its target of net zero emissions in Europe by 2050. The company has also committed to becoming carbon-neutral across its worldwide operations by 2050 or sooner and confirmed its target of a renewable generation gross capacity of 25GW in 2025.
Patrick Pouyanné, chairman of Total’s board, declared; “Energy markets are changing, driven by climate change, technology and societal expectations. Total is committed to helping solve the dual challenge of providing more energy with fewer emissions. The Board believes that Total’s global roadmap, strategy and actions set out a path that is consistent with goals of the Paris agreement.
Emphasising the role the company has to play in the future energy transition, Patrick continued; “Only by remaining a world-class investment can we most effectively play our part in advancing a low carbon future. This is the reason why our people are already in action across Total, seeking opportunities to reduce our emissions, improve our products and develop new low-carbon businesses.”
This ambition is supported by the strategy to develop Total as a broad-energy company, with oil and gas, low-carbon electricity, and carbon-neutrality solutions as integrated parts of its business.
Total says the new climate strategy is already in action as the firm has already achieved a 6% reduction of its average indirect carbon intensity since 2015.
Active support of the energy transition
Regarding the commitment to become a net-zero energy business in Europe, Patrick commented; “As the EU has set the target to achieve net zero emissions by 2050 and thereby lead the way for other regions to become carbon neutral over time, Total takes that commitment to become neutral for all its businesses in Europe. Total wants to be an exemplary European corporate Citizen and offers its active support for the EU to achieve net zero emissions by 2050. Total will work together with other businesses to enable decarbonization of energy use.”
Total confirms its target of a renewable generation gross capacity of 25 GW in 2025 and will continue to expand its business to become a leading international player in renewable energies. Total currently allocates more than 10% of its Capex to low carbon electricity, the highest level among the oil majors. To actively contribute to the energy transition, Total will further increase its allocation of Capex in favour of low carbon electricity to 20% by 2030 or sooner.