Market & Supply 63

News

Keeping an eye on fuel stocks

Cameron Forecourt’s TLS electronic gauges and environmental monitoring systems can keep a round-the-clock eye on fuel stocks “With around 3,000 incidents involving oil and fuel spills reported each year by the Environment Agency, the message is clear,” says Cameron Forecourt’s sales and marketing director, Martyn Gent. “Regular, planned maintenance is a far better policy than ad hoc repairs that amount to a forced purchase. Major incidents cost the owners of faulty or leaking installations an average of £30,000 each in fines and clean up costs. Fuel supplies need to be both safe and secure and operators need a clearly defined plan for regular maintenance, security and contingency in case of emergency,” adds Martyn. Cameron’s TLS range is capable of accurately detecting fuel stock depletion. Any unexplained reduction in stock deviations triggers an alarm. By linking to advanced fuel management systems, emergency messages can be sent instantly via SMS to enable immediate action. The company recommends regular inspections and maintenance – at least annually – to ensure that equipment is maintained in serviceable condition with tanks, pipework and dispense pumps all checked for leaks or potential problems. Cameron also offers comprehensive environmental surveys to assess and minimise risk, check legal compliance and offer the optimum most cost-effective solutions for any necessary remedial work. More than 30 engineers operate nationwide to provide contract and emergency service to customers with all types of fuelling installation. Cameron aims to have an engineer on site within 8 working hours for repairs and sooner for sites that are out of action or have possible environmental issues. www.cameron-forecourt.co.uk

News

Fuel treatment for bulk storage

Bulk storage tanks can now be equipped with an innovative fuel quality treatment process thanks to a distribution agreement secured by Oil Tank Supplies (OTS). Based on E3 PLUS nanotechnology, the process is used to re-energise stored fuel by passing it through a recirculation system attached to the storage tank. Traditional fuel treatment packs supplied by OTS are designed to maintain fuel quality, post-delivery. This is achieved by re-circulating the fuel through two stages of filtration to remove particulates and water held in suspension. “The significance of this new technology is that we can provide a process which not only inhibits any degradation in quality, it actually reverses degradation, bringing the fuel passed through the system back to freshly refined spec, and restoring its calorific value,” explains sales director, Steve Gain. “The key benefit of incorporating the E3 PLUS Fuel Performance Unit is that it will eliminate the build-up of sludge deposits. By removing sludge from tanks we negate the customers need for expensive manned entry tank cleaning and the associated health and safety and other downtime issues.” An in-line device, it houses an insulated chamber specifically designed to reflect and intensify E3 PLUS emissions, altering and stabilising the fuel instantaneously as it passes through. This solution not only helps to prevent post-delivery contamination it also refreshes the product during storage.

News

Tanker driver scoops top award

Barnaby (kneeling on left) with Wincanton’s Driver of the Year category winners Fuel tanker driver Barnaby Moverley has been crowned Wincanton’s Driver of the Year. Now in its eighth year, the competition saw 28 of Wincanton’s best LGV and FLT drivers go head to head in a test of their manoeuvring skills and driving competency with events such as blind man’s bluff and ten tilt bowling. After a day of tough competition, Barnaby, a driver on one of Wincanton’s fuel contracts with 16 years service, was awarded the prestigious LGV Driver of the Year accolade. Chief executive, Eric Born commented: ”The competition is a fantastic opportunity to showcase the skills and professionalism of our drivers, who play an integral role in delivering excellent service to our customers whilst maintaining the upmost levels of safety.”

News

Tune into Road Safety Week

With just under a month to go until Road Safety Week, employers are being encouraged to get involved.

News

Grangemouth shut down

Ed Davey Following the announcement that Grangemouth is to remain shut down, energy secretary Edward Davey said: “Grangemouth is an important part of the Scottish economy, with industry, jobs and people’s livelihoods at stake. I have worked hard with both sides to urge them to continue talking and find a way that secures a long-term future for Grangemouth. “Motorists should be assured that the Grangemouth shut down will not affect Scotland’s petrol and diesel supplies. We have been working closely with the fuel industry and Scottish Government to ensure robust contingency measures are in place.”

News

Grangemouth strike averted

In a statement issued today (Wednesday 16th October 2013), energy secretary, Edward Davey said: “I am pleased that Unite have called off this weekend’s strike. I would urge both parties to continue to talk with the help of ACAS in order to reach a fair, sustainable resolution of their differences and ensure the long term future of the Grangemouth complex” “We have been working closely with the fuel industry and Scottish Government to put robust alternative fuel supply routes in place in case the refinery is forced to close.”  

News

HFO consultation – two days left!

The Health and Safety Executive has published a consultative document – CD 262 – on draft regulations to implement article 30 of council directive 2012/18/EU, known as the Seveso III directive. This Directive concerns the control of major accident hazards involving dangerous substances. Article 30 amends the Seveso II directive (council directive 96/82/EC), in relation to the requirements for Heavy Fuel Oil (HFO). The document addresses proposals to amend the Control of Major Accident Hazards Regulations 1999 (COMAH) for HFO and associated amendment to relevant planning requirements. CD 262 can be accessed at www.hse.gov.uk/consult/condocs/cd262.htm. The questions within it can be completed online, by email or in writing and closes this Friday (18 October 2013).

News

August update

January 2014 could bring higher European jet fuel prices. In recent months there has been a considerable degree of confusion regarding the EU’s Generalised Scheme of Preferences (GSP) and the impact it may have on oil prices within the EU. The GSP allows import tariff exemptions on goods from developing countries, thereby encouraging trade with poorer countries. It may come as a surprise that, at present, countries eligible to benefit from the scheme include Russia and most of the Persian Gulf (including Saudi Arabia).  However, the World Bank has now reclassified these nations as upper-middle income economies which will mean that, from 1st January 2014, all standard import tariffs will apply.  To compound matters further, Libya, a key supplier of jet fuel into the Med, is considered to be on the verge of a World Bank upgrade, so may soon be subject to the same import tariffs. Information coming out of Brussels on how this relates to oil imports has not exactly been clear: initial reports were that, as of the start of next year, all crude oil and refined product imports from the newly upgraded nations would be liable for duty at 4.7%.  This was swiftly followed by the news that all oil products would in fact remain exempt, before the latest update confirmed that jet fuel (kerosene) will be liable for duty whereas crude oil and low sulphur gasoil/diesel (less than 0.2% sulphur) imports will remain exempt. “If the planned changes do go ahead, a large amount of imported European kerosene will see price increases of 4.7%” What would be the implications of a 4.7% import tariff on kerosene jet fuel?  At present, the EU as a whole imports roughly one million tonnes of jet fuel per month from the Persian Gulf and North Africa, with imports nudging two million tonnes in peak (holiday) periods.  A source from a state run Persian Gulf oil refinery explained, “We are concerned these changes from the EU will cut demand for jet fuel from the Middle East region [which] will hurt our own refining margins at a time when we are expanding our capacity, in part to meet European demand.” At the same time, questions are being asked of the extent to which refineries in India (which will remain a GSP beneficiary) could step up to any increase in demand.  We could well end up in a situation where refined jet fuel from the Middle East regularly travels to Europe via an intermediary in the Far East, thus still qualifying for import tariff relief under the GSP – hardly the intended effect of the scheme and certainly not a supply-chain likely to bring down prices.  Another likely consequence is that, if jet fuel in Europe does end up being sold at a premium to that of the rest of the world, airlines will look wherever possible to refuel outside of the EU to reduce costs. In recent weeks there have been increasing noises coming out of the EU to suggest that the import tariff on jet fuel could be avoided altogether if the Gulf Cooperation Council States (Saudi Arabia, Kuwait, Bahrain, Qatar, UAE and Oman) reconsider engaging in bilateral trade negotiations with the EU, which have been on hold since 2007.  So depending on your opinion of the EU, this whole episode could be considered either as strong-arm tactics to boost trade with the Middle East (“come back to the table on the trade bilaterals or we will block your fuel imports”), or an EU oversight and failure to consider the actual implications of the GSP. If the planned changes do go ahead, a large amount of imported European kerosene will see price increases of 4.7% and for distributors that should be a worry. Not only is the legislation set to be applied in the midst of the heating oil season (Jan 2014), but for an industry already under pressure to prove its consumer value versus other methods of heating, a jump of circa 2.5ppl will not be welcome. “We could well end up in a situation where refined jet fuel from the Middle East regularly travels to Europe via an intermediary in the Far East”

Insight

Marine bunkering – fuel for a vital activity

 If international trade is deemed to be the lifeblood of economic activity, then its principal means of transportation, by sea, is a critical enabler; at the latest count, shipping conveyed approximately 90% of world trade by volume Worldwide the marine bunker market consumes approximately 200 million mt/year, which represents about 5% of overall oil demand. The EU is estimated to comprise around 25% of total international bunker use. By far the largest bunkering port in the world is Singapore, which supplies around 36million mt/year; total US bunkering activity amounts to circa 25 million mt/year, with China at about 10 million mt. Within the EU, the Netherlands, with Rotterdam and Amsterdam, accounts for around 15 million mt/year, followed by Spain (especially Algeciras and Ceuta) at 9 million mt and Belgium (Antwerp) at 7 million mt/year. UK international bunker supply is just over 2 million mt. (with a further 1.2 million mt supplied to vessels which remain within UK coastal waters). As a rough and ready rule of thumb, vessels up to about 6,000 DWT use marine diesel/gas oil for propulsion, while vessels above that size use a grade of fuel oil in their main engines and marine diesel/gas oil in auxiliary power units. Typically, fuel oil accounts for between 80% and 90% of total marine fuel supplied on a worldwide basis, with relatively minor variations by country according to the type and pattern of trade. A well-established feature of the supply chain is the role of the bunker trader, who acts as a reseller from a physical supply source(s) and/or, in certain instances, has direct access to their own physical products in storage. Active in this area are well known names such as Argos Bunkering, Aegean Bunkering, Bominflot (now owned by Mabanaft), Chemoil, Cockett Marine, Maritime Bunkering, Mersey Bunkering, OW Bunkers and World Fuel Services, etc. These companies maintain and service substantial portfolios of shipping customers.   The marine fuels supply chain

Interview

An interview with Raphael Hüttman, managing director, Mabanaft

Mabanaft – committed to adapting to the prevailing market In July 2012 Raphael Hüttmann stepped into the role of managing director of Mabanaft Limited. A long-standing employee of the group holding company Marquard & Bahls AG, a member of the board and a former financial director of Mabanaft Limited, Hüttmann brought with him a thorough knowledge of the UK business and of the industry as a whole. The appointment formed part of a management restructure aimed at supporting the ongoing development of the Group’s business interests in the UK. In an exceptionally challenging market, Mabanaft began to implement a change management programme designed to transition its operating model to more closely reflect the current and projected market environment in order to ensure a long-term and sustainable future for Mabanaft in the UK. In this interview he talks frankly about what has been achieved over the past year and why swift action and careful planning will ultimately pay dividends.What have the past 11 months been like? Exciting, challenging and more recently, rewarding. It’s a challenging market place and we, as a team, have had to decide on the best way to take the business forward. Change is not always easy; however it’s very rewarding to see that it pays dividends.Please tell us about some of the changes We appointed a new finance director and a new head of supply and operations. The combined management team brings together a great deal of expertise, together we took the opportunity to review the business and the marketplace. This led to the decision to step away from certain activities and focus on what is core to Mabanaft in the UK.What are the benefits of being part of the Marquard & Bahls group? Marquard & Bahls is a very strong group; we’ve shown substantial growth in profits in the last 10 years which is set to continue. We benefit in a number of ways such as financial strength and support as well as inter-group product purchasing at competitive rates. However the most important benefit is the breadth of industry expertise that we have access to whenever we need it.How do you view the current environment? The international supply market has been backwardated for the majority of the last 12 months; if you hold stock and you hedge, you risk losing money every month which makes it very challenging as we must continue to maintain sufficient levels of inventory for onward distribution to our customers. There is a great deal of volatility and uncertainty in the market. We must endeavour to balance this uncertainty and create a product for our customers that is not only attractive in terms of price but is also secure in terms of physical availability. In the UK market there has been a period of unprecedented change – we have seen consolidation of large parts of the customer base, refiners have increased their market share, and economic recession – all of which has led to changes in profile and demand. The underlying trend is a continued reduction in consumer demand and very intense competition. It is a challenging time for the industry.What has Mabanaft done in response to market conditions? We looked at the locations we were in, the kind of deals we were offering and the risk reward of these and decided to make changes. There are really good parts to our business; such as Grays, Belfast, Grangemouth – all of these are doing really well, but there were two locations, Cardiff and Immingham, that were not working for us. These changes – and the fact that some people in the industry are aware that our results last year were disappointing – have resulted in rumours. Honestly, there is no change in the service or in the product that we deliver; there has simply been uncertainty as a result of rumour. In these volatile times and with such a challenging market one shouldn’t be afraid of making the right decisions. Admitting that something doesn’t work and stepping away from it strengthens your business – that is what we have done.Has your strategy been successful, have you achieved what you set out to do? We are moving in the right direction and I believe that there is a great deal of potential in our organisation. While part of a very big group, in the UK we are a fairly small company – one of our strengths is the ability to make quick decisions. Here we have all of our expertise together in one room which facilitates interaction between supply, marketing, operations and finance – it’s something we can take full advantage of. In terms of financials, our result this year compared to same period last year is substantially better. We are seeing that change pays off and that is rewarding.Have you got more changes planned for the future?  I don’t foresee anything at the moment but it’s important to understand that in a market that will constantly change, we as a company have to change as well. If you stop changing or do not adapt to market forces, I believe that is the beginning of the end. We have to remain flexible – that’s our strength as an organisation.What are Mabanaft’s plans for the future?  In locations we are committed to we are looking at opportunities to grow our position. We are currently negotiating investment into terminal infrastructure in the UK that will allow us to sell additised product, something customers have been asking for and that we have not previously been able to offer at all of our locations. We are also looking to invest in new IT systems to allow us to offer electronic invoicing and online administration. This will increase efficiencies within our organisation which will in turn allow us to offer more benefits to customers. In terms of commitment to the UK – we have been in the UK for more than 60 years and we’ve had very good times and more difficult ones. As a group we feel that the UK market place is an important part of our business and we remain committed to adapting to the prevailing market.You sound very positive … Yes I am – there’s more work to do and the environment remains tough – there’s nothing we can do about that – but there’s a lot we can do to cope with it.www.mabanaft.co.uk

News

Valero extends Wincanton contract

Valero has extended and expanded its partnership with Wincanton. The partnership, which has spanned almost 20 years, will now continue for at least another five years. Wincanton has also been awarded a new, five year contract to take over the scheduling and planning of its deliveries, including taking and managing customer orders. Under the new terms Wincanton will operate out of Valero’s network of UK terminals, transporting more than two billion litres of fuel a year for the business. The logistics provider will operate a 24/7 service on behalf of Valero, taking up to 600 customer orders a day before scheduling and planning delivery to more than 1,000 UK locations. Commenting on the announcement, Wincanton’s CEO, Eric Born, commented: “We are delighted to be expanding our relationship with Valero and are looking forward to finding further opportunities to develop new and innovative ways of adding value to our partnership. “Today’s announcement confirms Wincanton’s position as a market leader in the sector, with a proven capability to deliver value added services that are usually out of scope within a traditional fuels distribution model.”

News

FPS – pricing and delivery guidelines

The Federation of Petroleum Suppliers (FPS) has produced a Code of Practice and Customer Charter in a bid to raise standards within the oil distribution industry. Since the 2011 Office of Fair Trading (OFT) investigation, the FPS and its members have worked closely with the OFT, Citizens Advice Bureau, Consumer Focus, Advisory Committee on Releases to the Environment and Department of Energy and Climate Change to form the new documents. Launched earlier this month, the Code of Practice is designed to ensure all members adhere to high standards and contribute towards the professionalism of the industry. Together with the Customer Charter, the new code should ensure that the best service is offered by FPS members and that customers are fully supported when ordering heating oil. Chief executive, Mark Askew, said: “The Code of Practice has taken time to implement but we have ensured that we have consulted with consumer groups so the consumer has their say as well as ensuring DECC and the OFT are happy with the proposed Code. “The FPS will act as guardians of standards for the oil distribution industry and through this Code of Practice we will set those standards and show we take them seriously. Having a Code of Practice in place for FPS members will give the public reassurance that they are dealing with companies who are adhering to best practice. “Every FPS member should offer clear pricing and delivery guidance to customers at the time of ordering, and the new charter explains all this. As well as providing information on the different ways to place an order, members should advise on matters such as the right to cancel and what to do when something goes wrong. We are doing everything we can to ensure the customer experience is a positive one.”

News

Royal seal of approval for Fort Vale

The vice lord lieutenant of Lancashire presents Edward Fort OBE with the Queen’s Award for Enterprise:International Trade Fort Vale recently celebrated its fourth Queen’s Award for Enterprise: International Trade. Vice lord lieutenant of Lancashire, Colonel Alan Jolly, visited the company’s headquarters in Burnley to present the trophy on behalf of the Queen, to company founder and chairman, Edward Fort OBE. Edward Fort said: “I am extremely proud of our company and what we have all achieved together. Such an endorsement means that customers can be confident that they are dealing with the best in our field.” The company has just released a new video on YouTube, showcasing the company’s latest developments. In an interview Ian Wilson, the company’s managing director, explains the company’s philosophy on continual improvement and innovation. “We are a team of engineers and innovators and firmly believe that adapting to constant change is the only way to move the business forward. Our customers are demanding shorter and shorter lead times and it is only by having our own dedicated foundry that we can control the quality of components and the rate of supply to achieve these demands. “We have recently constructed a 1,000 m2 research and development unit together with a test facility which will enable Fort Vale to continue to improve and develop its product range and keep the business in its current position in the market.”

News

Essar’s literary genius

Andrew Bentley of Chester Performs with Ian Cotton of Essar Energy Stanlow-based Essar Oil UK is sponsoring The 2013 Essar Chester Literature Festival. The autumn festival, which is produced by city arts organisation, Chester Performs, will run from 13-27th October. Ian Cotton, Essar’s head of communications and community, said: “We are delighted to be sponsoring the festival for another year. The event has become an integral part of the city’s cultural calendar and this year, there really is something for everybody.” Festival manager, Paul Lavin, added: “We’re pleased to have Essar on board. We’ve developed a great relationship with the company, and through their continued support, we can ensure the festival continues to grow.” Among the authors starring at the festival are broadcaster, Clive James, comedian, Tim Vine, war correspondent, Kate Adie and actor, Sir Derek Jacobi. Other big names on the bill include BBC Radio 5 Live’s, Richard Bacon, Beatles historian, Mark Lewisohn and TV personality, Kate Humble.www.chesterliteraturefestival.co.uk

News

Whitegate to avoid closure?

Greg Garland, chief executive of Phillips 66, has revealed that a number potential buyers have expressed interest in acquiring Ireland’s only refinery, possibly saving it from closure. “We do have people interested in Whitegate,” he said of the Cork-based plant which employs 200 staff. The refinery, which has operated in east Cork for nearly 55 years and supplies approximately a third of the country’s oil, requires extensive modernisation and closure looked likely if it was not sold. Michael Martin, Fianna Fail leader earlier this summer, commented: “The threat to its future has serious implications for Ireland’s energy supply and consequently for our economy.” Phillips 66 is pulling out of Ireland completely, selling its wholesale marketing business and a storage terminal in Bantry Bay.

News

The shipping news

World Fuel Services barge Cap Mejean, bunkering the Seven Seas Voyager Like many other industries, shipping was a casualty of the economic downturn in 2008. Liz Boardman looks at how the distributors supplying the marine market were affected, how the industry has bounced back and concerns over new legislationA downturn in volume “The shipping industry was booming before the summer of 2008, but freight rates like the price of oil crashed,” explains Nikki Jessop the Rix Group’s director, Maritime Bunkering. “Following this, ship owners and operators resorted to slow steaming and bunkering at locations offshore on passage at lower levels to keep their costs under control. Marine fuel volumes and margins are down significantly and credit risk management is more important than ever.” Peter Hunt, who handles Falmouth marine sales for World Fuel Services, agrees. “We saw a peak in terms of volumes in 2007/8. Total UK bunkerage in 2007 was between 2.5-3 million tonnes; now it’s down to approximately 2.2 million tonnes.” World Fuel Services is one of the biggest suppliers of bunkers to the UK market. Its UK-based subsidiaries (Henty Oil, Falmouth Petroleum and Tramp Oil) supply over 750,000 metric tons of bunkers each year in UK ports (HSFO, LSFO and LSMGO). The company has storage and blending facilities at Immingham, Falmouth, Liverpool and Holyhead and a resident barge at Dover.Recovery “As with most UK industries, the marine fuel industry has not escaped the downturn unscathed,” says GB Oils’ marine national sales manager, Gary Byers. “However we have experienced an increase in demand for marine fuel oil throughout the UK due to factors such as increased brand awareness and establishment of close, trusting relationships between the company, international traders, ship owners and the UK and international government bodies.” Since it was formed some years ago, GB Oils’ marine division has become a key player in the industry and is continuing to grow. The company’s marine team is a trusted supplier to some of the UK’s main marine companies including the Royal National Lifeboat Institution and Ministry of Defence. The company is the only bunkering supplier able to distribute nationwide and is one of just a handful of companies permitted to supply fuel on the Thames. Another specialist service provided by GB Oils is the transportation of IFO grades from Eastham to every port in the UK, Northern and Southern Ireland, allowing the company to not only maintain business, but to continue to grow. The Rix group currently owns three coastal tankers plus three estuarial barges, all suitable to load from the major oil companies. The marine department charters three/four of the tankers for bunkering activities ECUK, whilst the other two are on charter to third parties. “The Humber, like most ports saw a significant reduction in bunker volumes by early 2009,” explains Nikki. During 2008 Maritime Bunkering operated two coastal tankers plus two estuarial barges. As a result of pressure from the major oil companies over age and vetting, the Rix group had already entered into a phase of new builds to maintain its market position. “We (Rix/Maritime Bunkering) have managed to keep our heads above water during challenging economic times through a conservative approach to the creditworthiness of our clients, securing product availability from our business partners and also investing a substantial amount of capital into our barge fleet, providing a good service.” In order to ensure that it maintains its barge fleet, Rix’s marine department also offers a barge hire service to other local suppliers, maintaining continuity to the area with regular barges.”Marine legislation From 1st January 2015, legislation will come in to force, further reducing the content of sulphur in marine fuel from 1% to 0.1%. “The use of low-sulphur fuels is a hot topic within the industry,” says Gary Byers. “The ECA regulations are designed to limit the harmful impact sulphur can have on the environment, but there is some debate on how effective this will be and the potential impact it could have on the marine industry. “Long-term, the regulations will have clear environmental benefits, however in the short-term, the treatment process required to convert fuel so that it contains 0.1% sulphur results in large scale carbon emissions, the impact of which negates the benefits of using a low-sulphur fuel. “There is concern that the ECA Directive may lead to increased bunkering costs, which could push cargo towards non-ECA zones, and also that there may be a rise in the use of alternative transport, including land, causing more congestion and emissions from those modes of transport, therefore counteracting the planned benefits of marine vessels using low sulphur fuels.” Nikki Jessop echoes these concerns; “It’s not known if sufficient 0.1% fuel oil will be readily available or if some ships will switch over to 0.1% MGO further increasing demand for MGO.” Melanie Noel, WP Group’s fuel sales manager agrees: “Legislation changes will only see more marine customers switching to gas oil 10ppm which will open the market up to more competition. It will also see increasing issues with fuel specification as FAME is present in most gas oil 10ppm and this causes microbial growth between fuel and water interface. This will in turn accelerate degradation in fuel quality causing efficiency problems.” WP Group purchases gas oil 10ppm direct from Esso’s Fawley refinery. Melanie explains: “Our fuel supplier, Esso, has taken the decision to produce gas oil with no added bio content by meeting its RTFO obligations elsewhere.  As a result, WP Group can guarantee to supply gas oil containing less than 1% biofuel.” On the positive side, Peter Hunt believes that the new legislation could be a good opportunity for Falmouth. “World Fuel Services expects Falmouth volumes to benefit from the reduction in maximum sulphur content for bunkers used in the European and USA/Canada ECAs when it comes into force. Ships approaching the European ECA from the Atlantic will not always be able to secure ‘ECA-compliant’ bunkers before entering; Falmouth’s location (just outside the western border of the ECA) makes it the last opportunity for ships to secure compliant fuel before entering the ECA.On the horizon “While there are areas of uncertainty, the marine industry continues to be a strong business sector with opportunities for expansion. Marine fuel suppliers such as GB Oils have a key role to play in supporting the industry and for us, the focus remains on helping our customers to comply with legislation and working hard to ensure their needs are met,” says Gary. —— HSFO – High Sulphur Fuel Oil LSFO – Low Sulphur Fuel Oil LSMGO – Low Sulphur Marine Gas Oil IFO – Intermediate Fuel Oil ECUK – East Coast UK ECA – Emission Control Area MGO – Marine Gas Oil FAME – Fatty Acid Methyl Ether

Insight

What is the outlook for UK refining?

Since the closure of BP’s Belfast plant in 1982, the UK refinery network has undergone continuous shrinkage, from 18 facilities with a total distillation capacity of 132 million tonnes (mt) to 7 plants with a capacity of 77 million mt. The network that remains has an above average level of complexity, with catalytic reforming capacity of 13.6 million mt and cracking/other conversion capacity of 31.4 million mt. Against a background of continuing change in the downstream sector, DECC has conducted a number of assessments. These have included studies with the Downstream Oil Industry Forum, a Deloitte LLP assessment on resilience to some hypothetical ‘stress test’ scenarios and an assessment of the UK’s refined product supply market, by Purvin and Gertz. Developing a strategic policy framework DECC and UKPIA then prepared the scope of a study to develop a strategic policy framework for the UK refining sector. The resulting report, compiled and published in May by Purvin & Gertz, sought to do the following.

News

Seeing it through at CDS

CDS managing director, Bill Lea (l) with product director, Paul Willis at the company’s Salford office Started in 1973 by a group of construction industry professionals and academics including Bill Lea, a building engineering graduate from the University of Liverpool, CDS Computer Design Systems celebrated its 40th birthday in January. Buying a mini computer, CDS set about producing software for architects and quantity surveyors. However, in 1974 a local fuel distributor’s request for a system to capture orders and produce delivery tickets was to introduce CDS to another software market. When Shell issued a specification for software to assist its 35 UK distributors, armed with the aforementioned experience, CDS put in its proposal. With the addition of programmer Dan Townsend – still on the team today – CDS competed alongside big names for what was a very substantial project; the contract to design a pilot scheme was won in 1975. Run with Pilot Fuels and Fuel Services Garstang, the pilot scheme was successful and rolled out to all Shell’s distributors by the late 70s. Bill explained: “We put everything together here – hardware and software – packed it up and put it in a van. I would then meet the van at the distributor’s office, install the equipment and ensure all was working before Shell started training. I got to see a lot of the UK.” By the end of the decade, CDS had 15 staff and contracts with Esso and BP followed.Creating, maintaining and developing the CODAS product Having garnered much information about the industry, CDS created its own CODAS product, putting in the first system for an independent distributor in 1982. “Although people knew of us, when we needed to get really serious about marketing, Rob Bowran, formerly with Shell, joined us. His marketing expertise and commercial nous really drove our marketing activity.” How CODAS looks and is developed is the responsibility of product director, Paul Willis who joined in September 1979. “In the 80s, every single system was different, indeed tailor made, with all maintenance done on site,” said Paul. “Now there’s a seamless system that works for everyone from just two to hundreds of users. Everything can be done in house whether it’s installing a complete system, loading a licence or providing monthly updates. “Substantial investment has created a product that stands out. With everyone used to systems like Windows, we follow leading standards to create intuitive systems that people of all ages and abilities can quickly get to grips with. We don’t reinvent wheels – we like to use existing pieces of software under licence where we can. We also pay attention to what’s below the surface so that in five year’s time, the distributor has a system that’s current. “We’re a team of technology-loving people who always want to learn about the next bright thing,” added Paul. CDS now has 36 staff, a quarter of who have 25 years service. The company’s graduate recruitment programme has seen six graduates join in recent years.Providing an aspirational business information system A modular system, CODAS enables distributors to enter orders, arrange delivery, send confirmation, update the sales ledger, generate invoices, produce statements and collect and process cash. It can also take care of RDCO and other legislative matters. Plus offer computer telephone integration and schedule and route vehicles. “We’re not the cheapest but we do set out to be the best,” said Bill. “CODAS is a great product with the scope to embrace everything today’s distributor – from the largest operator to the two-man business where dad still does the coal deliveries – needs. There’s nothing cheap about it and nothing that says you’re only a fuel distributor so this is good enough for you – our standards are aspirational.” When it comes to improving efficiency, more and more distributors are realising the value of technology. Making use of the fact that the exact location and amount of fuel on each of 10 tankers was known in real time, one distributor regularly rescheduled orders to ensure all customers were satisfied in the depths of last winter. Delighted by the efficiency improvements, the distributor told CDS that ‘everytime we buy something from you, we make money out of it.’ Paul is baffled by those who spend hundreds of thousands on trucks, but operate without technology. “I wonder if they know just how much margin is being made at any given time and exactly where it came from?” Today over 400 depots use CODAS. With a high level of dependence on the information generated, it is sometimes hard to get people to turn it off. “The level of stability we maintain for our customers is vital so upgrades are done in the evening and we’re always there to help at month end,” said Bill. “We’re committed to the fuel distribution industry, we won’t let our customers down and we’re honest about what can be achieved. We make mistakes like anyone else; sometimes a fault may not get attended to immediately but we can always be relied on to do everything it takes to see things through.”

News

Designed for the industry by the industry

The Petroleum Driver Passport is an excellent example of what government says is industry itself taking responsibility for setting and monitoring standards says Brian Worrall Fuel Oil News spoke to Brian Worrall of the Downstream Oil Distribution Forum (DODF) which has been instrumental in driving forwards the new Petroleum Driver Passport (PDP) initiative The DODF works with BP, GB Oils, Greenergy and Murco, logistics companies – DHL, Hoyer, Norbert Dentressangle, Suckling, Suttons, Turners and Wincanton, the Unite and URTU unions, several trade associations including UKPIA, FPS, the Downstream Fuel Association and the Tank Storage Association plus government and regulatory bodies and Sector Skills Councils.What was the background to the Petroleum Driver Passport initiative? In 2011, the ACAS agreement between Unite and the major hauliers agreed that they would put together an industry body, the DODF, to act as a forum for health and safety issues within the industry. The PDP was born from the industry group that was put together, with all parties agreeing that the petroleum tanker driver sector needed a consistent level of training to a high standard across the whole industry. The DODF created the training standard that underpins the PDP and ensures no duplication with existing ADR training. Whilst there is a lot of good training practice in the industry already, there is no mechanism to ensure that the training standard is specified and adhered to, and this is what the PDP does.In addition to DODF, who was instrumental in setting up PDP? DECC was the government department that ACAS requested take the lead in re-establishing the DODF, which had existed some six years prior. DECC enlisted the help of the two Sector Skills Councils in the industry, Skills for Logistics (haulage) and Cogent (downstream petroleum) to make this happen. The DODF has subsequently appointed Scottish Qualifications Authority (SQA) to manage the scheme. SQA already manage the ADR programme in the UK.Is the industry receptive to another level of training? For most operators in the industry, who already operate to a high standard, this standard will not necessarily require any more than they currently do, though it would help to identify any gaps against the defined training standard. Operators who do not have these standards already in place will need to do so, and they will be able to turn to training providers as well as their own resources to make this happen. We have devised the PDP to fit in with existing industry training. The PDP is on a 5-year renewal cycle, aligned to the driver’s ADR renewal date, and the annual refresher element is aligned to JAUPT and driver CPC; training which has to happen anyway. Importantly for such a hands-on role, the PDP has both classroom and practical elements. This initiative is the result of wide industry consultation and the detail of the scheme has been put together with representatives right across the sector, from industry associations through haulage and distributor companies to unions and to tanker drivers. We have taken into account comments we have received as we have developed the scheme and so we are confident that we have pitched PDP for the industry.How much will it cost an operator? The costs are still being finalised – some of the cost is annual, some is incurred at the 5-year renewal point. To give some indication, the scheme costs will be in the region of £25 per driver per year. In addition to this, there may be training provider and/or assessor costs depending on how companies train and assess. For those who already train to the PDP standard, many of these costs will already be in the businessWhat are the key benefits of PDP? The PDP sets a benchmark training standard to which everyone in the industry will train. As it has a practical as well as a classroom element, and a 5-year renewal cycle with an annual refresher element, it works well with existing industry training. It has been designed for the industry by the industry. It gives terminal operators, in exercising their duty of care, confidence that they are allowing rack access only to drivers who are fully trained. Drivers can have a confidence that they are fully trained to do what is an important and complex job and hauliers and distributors can point to an externally verified standard to which they are training their drivers. As far as government is concerned, this is an excellent example of what ministers refer to as a “better regulation” where industry itself takes responsibility for setting and monitoring standards. It will give the whole petroleum tanker driver sector a confidence that training is taking place to an externally verified standard and the PDP will help maintain standards across all operators into the future.

News

In pole position

In front of the WP Racing Fuels and Lubricants truck – Darren Borras (l) and WP Group managing director, David Fairchild With the motor racing season in full swing, FON looks at some of the key participants from within the fuel oil distribution industry The WP Group has unveiled a new look for its motorsport division – WP Racing. New branding now encompasses the entire motorsport, automobile, corporate and circuit/venue aspect of racing in both the UK and across Europe. “Combining quality of product with the highest level of trackside expertise and onsite fuel testing, WP Racing is rapidly becoming the name to be associated with this season and beyond,” said commercial director, Darren Borras. Driven by the purchase of the already well-established Atol Fuel, the racing division began in 2008. “Brand exposure is a key benefit of our involvement with the sport.  As the brand develops at a rapid pace, this area presents almost limitless opportunities,” added marketing coordinator, Harriet Phillips.Racing partnerships The company is the official fuel and lubricant partner to some well-known European championships including British Formula 3, British GT and the Renault Clio Cup. WP Group also partners race experience centres and high profile circuits including Donington Park Racing. A recent partnership agreement at Thruxton Motorsport Centre now sees the brands of WP Group and its operating divisions – WP Racing, Mobil Service Centre and WP Heating – displayed on the main grandstand, karting tracks and driving experience cars.On track with deliveries Located just ten miles from Silverstone, Nolan Oils provides fuel and lubricants to many of the UK’s major motor sport companies including Formula 1 and British Super Bike teams. “With our depot central for many teams, over time we’ve probably served most,” said owner and motor sport fan, Mark Nolan. “For 13 years, we supplied Mercedes GP at Brackley until they changed to air source heat pumps. We’ve also supplied the Silverstone circuit directly and many of the contractors based there throughout the racing season. “We count many ex-racers among our customers; Jackie Stewart is probably our most regular domestic customer; although the other week we helped Red Bull team principal Christian Horner out when he’d been let down by his usual supplier. Current ones include Tim Harvey, British GT championship competitor and FI driver Mark Webber, who we saved from a cold house last year.” Motor sport is an area Mark would like to develop: “These companies use large volumes of oil and lubricants and are very loyal customers. We talk most weeks and, with the volumes they use, we keep a keen eye on price. We never let them down – one missed delivery can mean thousands of pounds in disruption to production.”More entertaining in the FAST lane Wishing to enter new markets, Shropshire-based Fuel Additive Science Technologies (FAST) is sponsoring Rob Austin, a driver in the British Touring Cars Championship. Televised on ITV4, the 2013 season commenced at the end of March. In the line up, Rob’s car is one of only two with rear wheel drive and FAST’s cleverly placed and eye-catching logo ensures good exposure. Chairman Bob Hall explained the thinking behind this sponsorship: “For us, it was a threefold decision. We wanted to continue to elevate our existing brand image, access new markets including professional garages and have the opportunity to entertain our customers.”

News

Growing business loses weight

Four and a half stone lighter – the newly slimmed down Trevor and Andrew Keeping busy Eighteen months on from making its first deliveries of kerosene, the company has a real stronghold in the Wellington area of Somerset, is “very, very busy” and has grown considerably in size. “We now have approximately 2,000 regular customers in the domestic, agricultural and commercial sectors,” said Trevor. “Although we operate within a 25 mile radius, encompassing west and south Somerset and east and north Devon, we are now trying to fine-tune it a little for ease and convenience. We have a good, loyal domestic base and pride ourselves on offering a good service.” “We’re pretty much always on call and regularly have customers wandering in to the yard on Sundays wanting fuel. Our business cards say talk to us at any time but people assume this means we’re on site 24-7.” Although Trevor and co-owner, Andrew Hewitt are happy to turn their hands to pretty much anything, they have found their own niche areas within the business. “I’m a bit more hands on and prefer being out on the road, making deliveries whilst Andrew’s happier in the depot doing the more administrative tasks,” explained Trevor.Family affair It’s a real family affair for Trevor and Andrew. Trevor’s wife, Daryl, does the accounts whilst Andrew’s father, Keith, who is retired, is in charge of marketing and regularly pounds the streets, handing out leaflets. Although Trevor’s children are too young to join the business, his 12 year old son is already showing signs of having inherited his father’s entrepreneurial skills. “He’s a real wheeler dealer and has a good grip on cash flow,” Trevor joked. “Having children has had a positive effect on the business – it’s amazing how many sales we’ve had through word of mouth from scouts and cubs and various kids groups.” In addition to family members, Monument also employs one full-time and one part-time (casual) driver and has a relief driver for when they need a little extra help.Equipment expansion With three tankers on the books, Monument is looking to further expand the fleet. “We already have 18, 14 and 7 ½ tonne tankers but are on the lookout for another second hand 14 tonne tanker, so if anyone has one that they’d like to sell, please get in touch!!” The company recently invested in an Alpeco loading arm for its gas oil. “It’s marvellous – it’s made a huge difference to operations.” Although Trevor describes Monument as “an analogue rather than a digital business”, the company is looking to install some Cloud based software and expects to have Fuelsoft up and running by July 2013. The company also has a website and a Twitter account, “although we don’t tweet as much as we should,” added Trevor.Reaping the rewards Setting up a company has also had another, rather unexpected effect. “We’ve lost four and a half stone between us,” beamed Trevor. “We’re working non-stop and eating much better than when we were working for other companies. Regular hotel trips and company meals meant that we piled on the pounds over the years.” Liz asked Trevor what advice he had for anyone wanting to set up a fuel distribution business: “Don’t do it,” he laughed. “No seriously, be brutal with your overheads to keep them under control and be realistic with your cash flow predictions – it’s the heartbeat of the business. It’s also important to find a supplier that you can work with and luckily we have that with Inver Energy who has been very supportive. We’re working harder than we’ve ever done but we’re enjoying it! It’s like a very expensive business course – if we pass, we get to stay in business.”

Opinion

Will the Petroleum Driver Passport (PDP) enhance driver skills or is it an unnecessary addition to the ADR qualification?

Mick Smith, Suckling Transport “Raising standards throughout the industry can only be a good thing, and by adding PDP to the ADR qualification, the driver will demonstrate their knowledge and skill by taking an assessment. The PDP is supported by the PDP training standard which all tanker operators will be able to use as a basis for driver training/development. The passport will be valid in line with ADR for a 5-year period with each driver subject to an annual refresher day and a written/practical assessment before it is issued.” Spokesperson, Wincanton “We will continue to support any initiative that seeks to improve skills and promote a more widespread adoption of professional standards across our industry. The PDP is a positive step in bringing the wider industry up to the same high standards of health & safety and training already provided by Wincanton and a number of other employers in our sector.” Chris Dalton, Lateu Logistics “I don’t believe anyone can be critical of any incentive that makes working safer for the employee or the general public at large. I would, however, add that the passport scheme has been driven by unions and larger companies who have in-house training schemes, derived in the first place by major oil companies when they operated fleets directly. Both parties have a vested interest in controlling the market! “We must consider the smaller operators and local fuel distributors who don’t operate formal schemes. Some parties would argue that they operate unsafely, but these companies have not had a say in the PDP scheme. I’m sure the scheme will heighten the level of driver skill and awareness across the five identified sectors, which is a positive step, but beware the underlying intentions of interested parties.” Anonymous “It’s absolutely unnecessary and is purely political following the last union driven strike! This is the result of pure union politics and the outcome is simply reflecting what’s already done with petroleum delivery drivers other than the production of the new passport.” Richard Green, DHL Supply Chain “The PDP is designed to link with and enhance the ADR qualification, as well as to contribute to the requirement for Driver CPC hours. The passport is an industry training standard aimed at maintaining and raising the standards within the whole industry. Share your opinion with liz@fueloilnews.co.uk.