News 95
Scania’s Safe & Fuel Efficient Driver CPC training module has been accredited by Drive & Survive; the driver training arm of the Institute of Advanced Motorists. The course is the only commercial vehicle manufacturer Driver CPC course to be awarded IAM-accredited status.
Designed to fulfil the needs of truck, bus and coach drivers, Scania’s driver training module is a practical course, covering both on-road instruction and classroom training. Key aspects include safe driving, urban driving, driving style and techniques, use of the engine and gearbox, and environmental considerations. As an additional benefit, all drivers attending the course receive 12-months complimentary Affiliate Membership to the IAM.
“From the very outset, Scania’s approach has been to go further than simply meet the demands of Driver CPC legislation – our overarching aim is to provide training which truly benefits both the driver and his or her employer,” says Scania’s driver training manager, Mark Agnew.
IAM Drive & Survive chief executive, Simon Best, says: “As a body dedicated to excellence, we are proud to align ourselves with those promoting the highest standards of roadcraft. Scania more than satisfied us that its Driver CPC course is capable of making a substantial contribution towards improving safety on our roads.”
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“I believe that everyone gets at least one great opportunity in their business life, and I hope that my partners and I have just taken ours,” Nick Goodwin of Standard Fuel Oils told Fuel Oil News editor, Jane Hughes. One of the newest entrants into fuel oil distribution, Standard Fuel Oils is based in Merseyside.
Twenty-eight year old Nick has oil in the blood. “My father, Mike Goodwin and Frank Hunter started Carlton Fuels. It was here that I chatted to customers, learnt about credit control and worked as a sales rep out on the road.” Together with Sab Hoctor, Nick ran Carlton’s Ellesmere Port depot until July 2006, when the company was acquired by GB Oils for 13.3 million euros.
Nick’s father bought Carlton’s Knowsley site back when GB Oils vacated it some 18 months later. Operating as the Goodwin Corporation, Mike and eldest son, Michael, offer bunkering facilities as part of the Keyfuels and UK Fuels networks, and supply gas oil and AdBlue. The company’s commercial garage now services Standard’s tankers.
Getting off the ground
Standard Fuel Oils has already found much work in the immediate area. “We’re also surrounded by agricultural land with a multitude of growers and farmers requiring gas oil. Liverpool’s docks are close by and there are several engineering companies in the Merseyside area,” added Nick. The company delivers south to Crewe, north to Preston and into North Wales. We also have an online presence with Fuel Tool, Which Oil Supplier and the FuelLine.
“Establishing a foothold in the domestic market will take a little longer,” says Nick. “Now our tankers are branded, our presence has been raised and we’re receiving more enquiries. We like the idea of delivering collectively to small groups.”
The company runs two second hand tankers, an 8 and a 6-wheeler, sourced through Trucklocator from dealers in Yorkshire and Surrey. “Maintaining these tankers is expensive but helped by our access to garage facilities. I’d love to buy a new tanker but at the moment, I’m happy with what we’ve got. We’ll look again in a year or so’s time.
Support
“Since going into business last October, we’ve had tremendous support. Initially, we had some doubts about the level of support we’d receive but we’re delighted to say this was unfounded. As a new entrant with no track record, it can be difficult to get credit so we were really pleased when so many suppliers showed faith in us. We would like to thank all our account managers at these suppliers, we’ve had such a lot of help over the past six months and it’s been most appreciated. We couldn’t have done this without them.”
An experienced team with oil in the blood
Standard Fuel Oils is managed by a small team with a great deal of experience. Alongside Nick and Michael are Sab Hoctor, Paul Musgrave and Des McNamara.
At just 22, Nick became national accounts manager for GB Oils, moving on acquisition to EMO Oil at Trafford Park, before spending five years at GB Oils’ Warrington headquarters.
Sab, son of Speed’s Terry Hoctor now resident in Spain, spent six years at Carlton before joining Cooke Fuels and Brogan Fuels. Better known as Diesel Des, Des has worked at Shell Direct, Carlton and Caldo Oils. “With over 20 years of experience, Des is ideal for a new start up such as Standard. Whilst we can make 40 or 50 telephone calls from the office, on the road you see the whites of peoples’ eyes and can build up relationships,” said Nick.
The newest member of the team is Paul, who joined County Oils in 2007 firstly in sales & marketing and latterly as business development manager.
“We’re four people with a lot of contacts in the industry,” explained Nick. “We’ve spread the word about our arrival through good old-fashioned driving around and knocking on doors. Our first order for 3000 litres of diesel came from a haulier who happens to be a neighbour.” Whilst Sab looks after general management, Paul and Des concentrate on sales. Nick’s focus is on supplies, regulations and financial matters. “In reality, everyone pitches in to do everything,” added Nick. The team is complemented by drivers Mick Davies and Greg Goodwin, Nick’s younger brother who is happy to help out on the road in the short term. “Greg’s long term future will be as part of the management team,” added Nick.
Cautious growth
Nick, who left GB Oils on 17th August last, has since then worked many a 15-hour day. “In the first couple of months, if we got two jobs a day we thought it was great. Customers who bought from us in our first six weeks continue to deal with us. We want to take things at a steady pace so even if we could fill more vehicles, we don’t want to grow too fast.”
Nick is still treading cautiously. “We draw out of Stanlow, buying only what we’ve sold. To minimise costs, the company designed its own website. “With a potential of a tanker drivers’ strike in the offing we’ve had additional people visit!”
A new challenge
Running his own company has always been at the back of Nick’s mind. “I had a great education at GB Oils where I ran a department of 12 people selling 600 million litres a year but I needed a new challenge. GB Oils’ Paul Vian and Paul Williams put a lot of trust and faith in me and I’ve got much to thank them for. Whilst I could easily have stayed, the opportunity to go it alone fell into place and I took up the challenge.
“We chose the name ‘Standard’ because it’s synonymous with oil,” said Nick. We’re a truly independent family business with a standard – offering a regular and loyal service. Service is most important in retaining customers – 9 out of 10 deliveries, are out today or next day.
“We’ve no grand design about the future; our aim is be a company that people can trust. In the first couple of years, we will sustain, make a profit, if we can, and look to diversify – we’ve just started selling lubes and will be offering fuel cards. We do want to grow and don’t want to be a seasonal business. But, at the moment, we’re happy with what we’ve got and we’ll think very carefully about opportunities before proceeding.
“I love the industry although there must be easier ways to make money…. That said, I love being in this business and I wouldn’t change it for the world. I just can’t see myself doing anything else.”
In the absence of any serious buyer interest, Coryton’s fate now looks sealed. DECC is, however, keeping in ‘close contact’ with PwC, as the refinery’s administrators look at further options for its future. 100 possible investors and purchasers
“We’ve had contact with over 100 possible investors and purchasers,” said Steven Pearson, joint administrator and partner with PwC.
“We’ve been unable to reach a deal to date. Prospective investors in the refinery faced a significant capital expenditure need, as well as a fragile market for refined oil products.”
“I would like to thank the management, the employees, contractors, customers and suppliers for their support and solidarity during the past four months. Any closure process is likely to take up to three months, during which time discussions regarding a possible sale will continue.”
For investors such as Gary Klesch and Igor Yusufov – both reputedly had an interest in Coryton – USA refineries with their cheaper feedstock, may be a much more attractive proposition. Earlier this month, refining margins in the US were reportedly averaging $18.32 per barrel against $6.45 in Europe.Calls for a level playing field
Petroplus bought Coryton in 2007 for $1.4 billion; the facility produced around 10% of the UK fuels products.
Saddened by the fact that the refinery looks “destined to cease refining operations shortly”, UKPIA said: “Our thoughts are with the staff and contractors, many of whom have been employed at the site for several years, if not decades.”
Speaking at the Platts Annual European Oil Storage Conference held in Amsterdam earlier this month, UKPIA’s director general, Chris Hunt said: “If the governments of Member States are sincere in wanting a robust European refining industry that continues to deliver quality employment, energy supply resilience and feedstocks for chemical, bitumen and other key industries, they must be proactive in developing policy that creates a level playing field for this vital energy sector against its global competitors.”https://fuelondev.wpengine.com/2012/06/possible-buyer-for-coryton-says-unite/
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The UK’s sensitivity to oil and gas price shocks could be reduced by using low-carbon forms of electricity generation, claims energy secretary, Edward Davey.
By 2050, the negative impact that global price spikes have on the UK could be reduced by more than 50%, as a result of climate change policies says an Oxford Economics report which was commissioned by the government.
“Every step the UK takes towards building a low-carbon economy reduces our dependency on fossil fuels, and on volatile global energy prices,” added Davey. “Only last year, the impact of the Arab Spring on wholesale gas prices, pushed up UK household bills by 20%.
“The more we can shift to alternative fuels, and use energy efficiently, the more we can ensure that our economy does not become hostage to far-flung events and to the volatility of market forces.”
The government report shows that energy prices have been steadily increasing over the past decade and are becoming more and more volatile. However, once the UK fully changes to a low-carbon economy, mitigating against the volatility of fossil fuel prices – predicted to be around 2050 – many of the negative impacts of energy price volatility will be halved, it says. www.oxfordeconomics.com
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Enabling the solar industry and householders to plan with confidence, DECC has introduced a range of changes to the Feed-in Tariffs (FITs) scheme.
“UK solar continues to be an attractive proposition for many consumers considering microgeneration technologies,” said energy minister Greg Barker at last week’s announcement.
From August 1st, the tariff for a small domestic solar installation will be 16p per kilowatt hour, down from 21p, and will be set to decrease on a three month basis thereafter, with pauses if the market slows down. All tariffs will continue to be index-linked in line with the retail price index (RPI), and the export tariff will be increased from 3.2p to 4.5p. The new tariffs should give a return on investment of around 6% for most typical, well-sited installations.Government recognition
Alan Aldridge, chairman of the Solar Trade Association, commented: “This should reassure consumers and solar companies alike that the government recognises and stands behind a major role for the solar industry.”
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The Department for Transport and the Technology Strategy Board Industry have invested £9.5m to support the low carbon demonstration trial. Truck operators are being invited to bid for some of this funding, as part of a competition.
Transport minister, Mike Penning said: “These trials will show us how low-carbon technologies perform day-to-day in the real world, providing vital data to build operator confidence in these green trucks and allowing us to make policy choices based on hard evidence.”
Companies wishing to take advantage of the funding can bid for up to £750,000 by 20th June. To qualify, vehicles must deliver carbon savings of at least 15% compared with the equivalent conventional vehicle.
Trials will run for two years and any data collected will be used by the government to form policy on low-carbon road freight.www.dft.gov.uk
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Brake is working in association with energy supplement, Quick Energy, to encourage fleet operators to run a Wake Up For Work day in June.
A national insurance broker is warning fleet operators to protect their vehicles and take extra precautions as the theft of catalytic converters from vehicles increases.
According to latest figures, the practice, which involves removing the converter from the exhaust pipe to sell on to scrap metal dealers, has doubled from 1100 incidents to 2300 over a five-month period as the value of platinum, palladium and rhodium, from which the converters are made, increases.
Bluefin Insurance says that, not only can the cost of replacing the catalytic converter be high, but the damage caused to the vehicle can also be extensive. Businesses with fleets of trucks are particularly vulnerable because thieves can hit multiple vehicles in a single location.
“Prices for scrap metal have been on a general upward path since late 2008 which, along with the global economic recession, has revived criminal interest,” says the company. “It may only take a few seconds for the thief to remove the converter, but it can cause major disruptions to a business if several vehicles are targeted, costing a small fortune to repair, and halting operations for several days.
“Corporate fleets should take precautions to protect their vehicles, such as storing them in a locked building or yard where possible. Installing security lighting and cameras will also act as a deterrent to thieves.” Bluefin also suggests engraving the vehicle’s licence plate number on to the converter to make it traceable.
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The world’s largest oil trader, Vitol has teamed up with Marcel Van Poecke, co-founder of Petroplus, to buy the Cressier refinery in Switzerland.
Petroplus administrator, Wenger-Plattner reported last week that Varo Holding SA – the joint venture between Vitol and Van Poecke’s AtlasInvest – had agreed to buy the Cressier plant and will complete the transaction by the end of June. The move is seen as part of the Vitol’s drive to expand into physical assets.
The 68,000 barrel per day plant will resume activities after the handover is completed, added the administrator, dismissing the suggestion that the plant will be converted to storage.
A quality, niche refinery, storage assets and wholesale marketing opportunities
Vitol’s chief executive, Ian Taylor, said that the transaction provides the company with access to a “quality, niche refinery and a supply chain of storage assets and wholesale marketing opportunities.” He predicted that it would become a valuable source of growth for the Vitol Group.
Varo’s main rival for the Cressier plant was strongly rumoured to have been former Russian energy minister, Igor Yusufov, via his investment arm, Fund Energy.
Coryton
Marcel Van Poecke, who founded Petroplus in 1993, and oversaw its operations for 13 years, has also been involved in offering a temporary lifeline at Coryton. Fuel Oil News contacted PwC, administrators for Coryton yesterday and can report that there is no further comment at this time. Bids closed on 2nd April. Gary Klesch is rumoured to be among those interested.
Yesterday a crude oil tanker was heading for Coryton. Does this mark the end of the three month rescue deal or the start of a new one?
Antwerp
Swiss-based trader Gunvor has completed the acquisition of Petroplus’ Antwerp plant in Belgium which will restart in the next few days after a four-month outage
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Mark Gruendemann of Johnston Oils was the lucky winner of the Mabanaft prize draw held at FPS EXPO, and is now the proud owner of a state-of-the-art Blackberry smartphone, simply by responding to a survey.
Mabanaft ran the survey to gain a deeper appreciation of what fuel buyers want from their wholesaler, and to discover what aspects of their relationship with Mabanaft they particularly value.
Initial results indicate that Mabanaft achieves consistently high scores for continuity of supply, pricing, customer service, efficiency of loading times and advice and expertise.
The survey will now be extended to give more customers the opportunity to take part. They will be invited by email to complete an online feedback questionnaire, and their details will also be entered into a second prize draw.
With a network of independently operated fuel terminals throughout England, Scotland, Wales and Northern Ireland, Mabanaft is one of the UK’s largest independent wholesalers and has been supplying the market for more than 40 years.www.mabanaft.com
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The UK’s largest used cooking oil biodiesel plant was opened on Merseyside last week by renewable energy and recycling specialist, Agri. Transport minister, Norman Baker, was a special guest at the launch.
The multi-million pound processing plant in Bootle will be solely dedicated to producing biodiesel from used cooking oil, and will complement Agri’s existing national used cooking oil collection business.
Norman Baker told guests: “The investment made by Agri, and projects like this, can help the UK meet its ambitious carbon reduction targets while creating green jobs to rebuild the economy.“Biodiesel produced from used cooking oil can be one of the most sustainable biofuels”
“Sustainable biofuels have an important role to play in our efforts to tackle climate change, particularly where there is no viable alternative fuel identified. Biodiesel produced from used cooking oil can be one of the most sustainable biofuels.”
Agri’s purpose-built plant features technology that enables it to produce 16 million litres of EN14214 biodiesel per year.
Plant manager, Eddie O’Reilly, said: “By using ISO 14064 methods, we can measure the carbon footprint of our biodiesel to show at least 90% less greenhouse gas emissions when compared to regular mineral diesel. This makes it the most sustainable type of biodiesel in the world.” www.agrienergy.co.uk
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Despite the unpredictable spring weather, we’re coming up to agricultural and county show season when thousands of visitors flock to their local show grounds to learn more about country life.
The threat of a tanker drivers’ strike was lifted last week when drivers narrowly voted to accept a new pay and conditions offer.
Unite, which represents 2000 drivers, said 51% of their members had voted to accept the new proposals. Turnout was 69%.
“This narrow vote in favour lifts the threat of strike action, but leaves the companies with no room for complacency,” said Diana Holland, Unite assistant general secretary.
According to Unite, a strike could have hit 90% of the UK’s fuel forecourts, and stocks would have begun to run dry within 48 hours of any action.
The Road Haulage Association is reported to have said “common sense has prevailed”, but added that they were “not out of the woods yet”.
Yesterday, Unite called for the grounding of all Super Puma helicopters which serve oil and gas rigs in the North Sea. The move followed the ditching of a Bond Aviation helicopter off the coast of Aberdeen last week. Having completed an investigation into the cause of the ditching, Bond Aviation announced that its full fleet of helicopters would be returning to service over the next 24 hours.
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Speakers at OFTEC’s spring conference debated oil’s future role in home energy provision.
“In the face of the government’s agenda to move rural communities to air and ground source heat pumps and biomass, we’ll consider the threats and meet them,” said OFTEC chairman Barry Gregory.
“With over 60,000 oil boilers sold annually in the UK to more than one million domestic and 250,000 commercial oil users, we will not roll over,” he added. “We’re reasserting oil in the marketplace. To this end, we’re working with members and oil distributors to promote the use of high efficiency boilers and bio liquids.”
Francis Bean of the Energy Saving Trust spoke of ongoing heat pumps trials which have so far shown that the technology is not competing adequately with incumbent heating systems. Jeremy Hawksley remarked: “Although favoured by government, there’s still a long way to go on heat pumps.”
Francis stressed that greater acceptance of heat pumps was dependent on many factors, not least better installer skills, greater knowledge and more independent testing to raise consumer confidence. “As consumers wait to be convinced, there’s a chance for oil to hold on to its market share,” added Jeremy. www.oftec.org
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Keyfuels has embarked on a nationwide tour to showcase its range of services to key figures in the fuel and oil industries.
The company’s Forecourt & Fuels Roadshows enable retailers, fleet managers, and distributors to meet with the Keyfuels’ team, and discuss how fuelcard and fuel management solutions could help save them money, and increase forecourt business.
Brian McKee, general manager of sites and supply, commented: “The Forecourt & Fuels Roadshows are a great opportunity for us to get in front of key industry decision makers to discuss the right solutions for the profitability of their businesses. The first show in Falkirk was a huge success.” www.keyfuels.co.ukForecourt & Fuels Roadshows eventsToday (16th May) – Stanhill Court Hotel, Gatwick5th September – Exeter Rugby Club, Devon15th November – Cedar Court Hotel, Wakefield.
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GB Oils has overtaken BP as UK market leader in terms of the number of forecourt sites, whilst Harvest Energy added 53 sites to its forecourt list.
According to figures released by Experian Catalist last week, following its acquisitions of Pace and Total, GB now has 1199 forecourts – including 476 Total, 305 Gulf, 135 Pace, 95 UK, 73 Power and 23 Scottish Fuels, plus 92 other brands. BP now has 1175 forecourt sites.
Site closures slow slightly
Experian Catalist also reported that the UK forecourt network has shrunk by less than 90 sites in the past year. There are now 8677 open forecourts, compared to 8765 this time last year, showing that the rate of site closures has slowed slightly, as site numbers fell by 119 the previous year.
Esso, Jet and Shell took the greatest hit on site numbers during the past 12 months, losing 32, 48 and 37 respectively. After GB Oils, Harvest Energy made the biggest inroads with the addition of 53 sites. Murco added 25 forecourts.
Volume share
____________
Tesco = 15.5%
BP = 14.9%
GB Oils = 6.4%
_____________
Experian Catalist figures show that Tesco has grown its volume share leadership to 15.5% with only 492 petrol stations. BP’s volume share is 14.9%, while GB Oils is in eighth place in volume terms with 6.4% market share. The average fuel volume on dealer sites is 2.28mlpa, while hypermarkets are selling an average of 11.2mlpa, and company-owned sites 4.77mlpa. www.catalist.com
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Change management consultancy, Reliable Manufacturing, is holding its next master class on 19th June at the Thistle Hotel, Middlesbrough.
The one-day event is designed to equip leaders in distribution and manufacturing with the operations excellence and reliability principles to improve business performance.
The master class, jointly led by Andrew Fraser, managing director of Reliable Manufacturing, and principal consultant, Ron Moore, will explore the strategies and practices that underpin some of the world’s best distribution and manufacturing companies. Through case studies, attendees will learn how top-class operations achieve maximum production capacity, and will have the opportunity to benchmark their own company’s capabilities against best-in-class.
The event will also show how market leaders achieve low cost performance through the relentless pursuit of defect elimination, asset productivity and workforce engagement.
The fee for a delegate to attend the event is £695 +VAT. For more details and to book online, visit www.reliable-manufacturing.com
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Interest in MabaLIVE – Mabanaft’s free online price information and fuel ordering service – has been “impressive” according to the company, with “extremely positive” feedback.
After just 12 months, users of the service – launched at last year’s FPS EXPO – have reported that, even in today’s volatile market conditions, it makes the process of purchasing fuel quick and easy.Favourable comments
“Regular updates and current prices help our business to make the right purchase at the right time,” says Bryan Inkson of Gleaner. “With prices changing all the time, it is useful to have a constant monitor on what is happening,” adds Robin Exley of Rix Spalding.
Collision-avoidance technologies should be made mandatory for all UK trucks and buses by 2015, according to a new report published by the Institution of Mechanical Engineers (IME).
HGVs make up 5% of the traffic on Britain’s roads, yet cause 20% of all fatal accidents involving cyclists. Making collision avoidance technologies mandatory for all large vehicles to prevent driver ‘blind-spots’, could make the roads safer for millions of cyclists, says the IME.
Philippa Oldham, head of transport at the IME, said: “The alarming rise in cyclist deaths on British roads needs to be addressed urgently. Cyclist deaths have risen by 7% in the past year. A number of these deaths could be prevented if technology to prevent driver ‘blind spots’ were made mandatory for all large vehicles. New intelligent transport technologies have the potential to save thousands of lives.”
The IME report also looks at several other “intelligent transport systems” which could make travel safer and more efficient. These include a lane guide system which uses lasers or infrared sensors to monitor the vehicle’s lane and alerts the driver if he/she unintentionally begins to wander out of lane; pedestrian protection through sensors in the front bumper area; and a vibrating steering wheel which notifies drivers of possible collisions, lane departures or drowsiness.
The full report can be downloaded from:
http://www.imeche.org/Libraries/Knowledge/
IMechE_Intelligent_Transport_Intelligent_Society.sflb.ashx
When Alastair Campbell suggested the transport industry should communicate more effectively on the essential nature of logistics, Suckling Transport’s Peter Larner rose to the challenge.
Speaking in February at a Motor Transport Directors’ lunch in Birmingham, Tony Blair’s former spokesman said key messages, placed on the side of trailers, could emphasise the vital role of logistics.
Less than two months later, that proposal has been put into practise by Peter Larner, one of the logistics industry’s most innovative directors.
Visitors to this week’s FPS Expo, can see Suckling Transport’s new tank trailer on the Lakeland Tankers stand. This tanker is the first to carry a new Love Logistics livery developed in association with the Freight Transport Association.
The first two trailers, which were built by Lakeland, bear the message
I’m delivering fuel to your local filling station …
… to save you collecting it from the refinery
Logistics – essential for everyday life
These tankers will operate on Suckling Transport’s contract with Shell at Avonmouth terminal.
Following Larner’s initiative, Abbey Logistics’ managing director, Steve Granite has also pledged to follow suit, saying: “It is important that the industry acts as a group on this one.”
Concerned that the merger of Total Butler and GB Oils would remove a key competitor to GB Oils; the Office of Fair Trading (OFT) referred the acquisition to the Competition Commission just before Easter.
In England and Wales, GB Oils has 100 depots whilst Total Butler has 40. Both supply a similar range of oil products to domestic, commercial and agricultural customers.
Of particular concern to the OFT is the supply to customers who require deliveries across multiple sites, but whose volumes are too small for them to be viably served by the major oil companies or by oil traders.
“Although there are a large number of oil distributors operating in theUK, three of them stand out in terms of the scale of their networks: the two merging parties and Watson Fuels,” said Amelia Fletcher, OFT chief economist and decision maker in this case.
“A significant number of multiple site, non-bulk customers, who need suppliers with access to such infrastructure, were concerned at the prospect of a merger of GB Oils and Total Butler. We consider that the Competition Commission should look in detail at the impact of the merger on these customers, as well as whether the merger may result in higher prices for customers buying oil products in specific local areas where the parties overlap.”
The Competition Commission is expected to report on the case by 18th September 2012.
Fuel Oil News launches new webinar service with Kan’to’s real time tank gauging
From May, the EU will be introducing changes that will affect the majority of live websites.
The UK had 18 refineries, it now has 8. Fuel Oil News recently put a series of questions about the state of the country’s refining industry to Chris Hunt, director general of the United Kingdom Petroleum Industry Association (UKPIA)
“The reduction in the number of UK refineries is very much progress driven and, reaction to changing market demand,” said Chris. “Refinery capacity has increased due to technological advances. Yes, the UK has fewer plants but the ones remaining are more efficient.“Plus, an inevitable consequence of the UK and EU drive for energy efficiency is demand destruction. With more efficient engines, demand for refinery products such as petrol continues to decrease but, until the recent recession this has been offset to a large degree by increased consumer mileage.“On the other hand, being more efficient in our oil consumption is a good way to achieve our carbon reduction without sacrificing our mobility. It also helps conserve supplies of this finite resource.”
In with the new As most majors have retreated from downstream, new players have entered the refining arena. “We welcome these newcomers, they’ve brought a fresh dynamic to UKPIA,” said Chris. “Whilst they don’t have the deep pockets of the integrated oil majors, their flat command and control structure offers a different business model.Q: So what do investors like Petrochina, Essar and Valero have to gain in our mature industry?
“A very handy toehold in Europe,” says Chris. “In Stanlow and Pembroke, Essar and Valero respectively, have acquired good assets relative to European standards. At Grangemouth, Petrochina and INEOS are using the site to develop an impressive chemicals portfolio.”
A large refinery reputedly contributes £60 million to the local economy. “Closed in 2009, Petroplus’ Teesside refinery was an ex-ICI plant, very simple in refinery complexity terms but closely integrated with petrochemical activities. The loss of that critical mass, and the associated high value jobs at these plants, has had a big impact on an area of the UK which can ill afford such a hit.”
Q: So will the UK ever see a new refinery?
“It would be difficult to see a case for building a new refinery – capacity wise we just don’t need it. But, under the right conditions and, with the right incentives, investment could be made at the remaining facilities.”
Q: What are the right conditions?
“They will be when the vital contribution of the UK’s oil industry to our energy security is fully recognised. It also requires a level playing field where UK refineries are not disadvantaged against European or global competitors.
Q: Will there ever be a level playing field?
“There could be,” said Chris. “It could be achieved if the UK and EU recognise that we can’t go it alone on some aspects of environmental policy. We may be world leaders in climate change policy but we must also consider the cost to our manufacturers.”
Coming soon – a refining strategy for the UK and a stock holding agency
In his introduction to UKPIA’s report on Fuelling the UK’s future: the role of our refining and downstream oil industry published in November 2011, Brian Worrall, then UKPIA president, said: “Given the right policy environment, the UK refining and downstream oil sector can continue to play a pivotal role.
KPIA and its members look forward to continuing to work with government and policy makers to achieve this goal.
Q: So, how receptive is the UK government to the oil refining industry?
“Very receptive,” reports Chris. “We’re finally moving forward on a proper refinery strategy for the UK which will be published in the third quarter of this year. We started lobbying in spring 2011 so this is quite a step forward.
“We also have a green light to progress an independent industry-funded agency to manage the UK’s compulsory oil stock holding. Administered by a board via obligated companies, the agency is expected to be functioning by 2014.”
Q: Does UKPIA now believe the government will apply policies that do not place the UK at a commercial disadvantage?
“We certainly hope so,” said Chris. “We expect that the refinery strategy exercise will lead the government to this conclusion. The problems at Coryton really galvanised the government into action – it provided clear evidence that refineries can and do shut; although in the case of Coryton, we very much hope a buyer will be found.
“For years, UKPIA has been saying that refineries could shut but, it took the demise of Petroplus to move refining up the political agenda. It reminds me of Spike Milligan’s epitaph – I told you I was ill.”
More challenges in the pipeline
Marine fuel – “Imminent changes in the specification of marine fuels will have a big impact. Under MARPOL proposals, the 2020 specification will see sulphur levels move closer to that of diesel. The effect on both the refining process and bunkering will be colossal. A substantial price increase may see ship owners chose the cheaper option of onboard scrubbing of exhaust gases to remove sulphur.
“Even by 2035, the International Energy Agency expects 80% of EU transport fuel demand to still be met from oil derivatives with most demand met by ordinary fuels particularly for the aviation and marine sectors,” added Chris.
Biofuels – UKPIA’s communications director, Nick Vandervell, who was also present at the interview, told FON: “Most biofuels currently used are first generation with complex sustainability issues in some cases. Second generation biofuels from biomass or advanced biofuels from algae for example, may have potential in the future.
“We see a more diverse fuel mix for transport including electric vehicles,” added Nick. “Technology favours hybrids unless there’s a breakthrough in battery technology in the short term.”
Q: Will we achieve 10% biofuels by 2020?
“Biofuels bring many issues, such as approval by vehicle manufacturers, storage and use and sustainability” replied Chris. “It’s likely that only by incentive – make the price the same or even cheaper – that people will switch to higher blend biodiesel.“
Kerosene – “Relative to the grand scheme of things, heating kerosene is a tiny market,” says Chris. “It’s very much a commercial issue. Distributors are not willing to invest in storage – an expensive asset for such a seasonal product. Demand patterns are difficult to predict, supplies can be problematic particularly in times of severe weather when supplies can be drawn down rapidly. Co-operative buying could be a way forward or maybe we need to switch to gas oil….?
The future
Q: Does UKPIA expect further UK refinery closures?
“No, we don’t expect more closures. As the reality of future supply problems has started to bite, UKPIA doesn’t believe that Europe will give up on refining.
“Total retaining the Lindsey refinery for the foreseeable future was welcome news as this plant has had the most recent major investment to increase diesel output.”
Q: Will the UK become just a storage facility?
“I can only contemplate the UK relying on more imported product if we lose the existing refinery structure. And, I cannot conceive that a government of any colour would allow this to happen.
“Some say that the UK could be supplied by imports, but that wouldn’t last forever. Being reliant on supply at the end of a long chain is problematic. Plus, bringing in finished product comes with shipping, jetty and pilot issues.
“The government, the industry and the country needs to ask the question – would we be happy being at the end of a supply chain from challenged areas of the world?
Q: What is the prospect for a ‘healthy, robust oil refining industry’ in the UK?
“We’ve got to be optimistic; we absolutely believe that a healthy, robust oil refining industry is achievable.”