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NEWS - EUROPE Vitol moves forward with a strategy of owning fuel stations, not refining oil The world’s largest independent oil trader and the company behind the recent acquisition of Petrol Ofisi, Turkeys largest fuel retailing operator, is starting to attract a great deal of interest from the world’s press. Our guest article this month comes from a March issue of The Financial Times. Vitol, the privately owned company that has grown under chief executive Ian Taylor into a 6m barrel a day oil trader, this month finalised its second largest acquisition by agreeing to pay €1.4bn for Petrol Ofisi, a Turkish company that owns more than 1,700 filling stations. Selling petrol, diesel and takeaway coffee to motorists may seem a prosaic business compared with some of Vitol’s more eye-catching deals, such as its move in 2015 to become one of the first trading houses to buy large volumes of oil from Iraqi Kurdistan. But the expansion of Vitol’s petrol station operations — it began buying such assets six years ago — is at the centre of a bet by the Netherlands-registered company that it can use its global network of ships, storage terminals and contacts to supply the Turkish facilities at lower costs than OMV, the Austrian oil producer and current owner of Petrol Ofisi.“This isn’t a new a strategy,” says Chris Bake, the Vitol executive who led the Turkish deal, which has attracted financial backing from the investment vehicle of veteran hedge fund manager George Soros. “We have always tried to find assets that complement the core trading business.” Vitol is not the only oil trader beefing up its presence in petrol retailing. Last year Trafigura announced plans to buy a 24 per cent stake in Essar Oil, the Indian oil producer, giving the Singapore-based company access to 2,700 filling stations in India. Trafigura has had a significant presence in these stations since the late 1990s, mainly through its subsidiary Puma Energy that has facilities across much of Africa. Glencore, the Swiss trader cum miner, this month made its first move into petrol retailing by unveiling plans to invest $200m in a Mexican joint venture. These forays by trading houses into filling stations have coincided with a retreat from the same area by some oil majors including Shell and ExxonMobil. While the facilities often still carry oil producers’ branding, many have been spun off to different owners, as these majors focus on production and refining. A professor at the University of Houston, says big trading houses were able to use their size to supply petrol stations at lower costs compared to oil producers. In the past this was not possible because fuel markets were not sufficiently developed, but things have changed. “Trading houses can supply retail outlets more efficiently due to their size and trading acumen, which gives them a higher return than the oil companies,” adds Mr Pirrong. Evidence of the lucrative opportunities comes from how in 2014 Vitol joined forces with the Abu Dhabi Investment Council, the Gulf sovereign wealth fund, to finalise the trading houses largest ever deal: the $2.6 billion purchase of Shell’s petrol stations in Australia. Three years earlier, Vitol and Helios Investment Partners, an investment firm, agreed to pay $1bn for Shell’s petrol stations in Africa. Vitol has also bought filling station assets in Europe under the Varo brand. In Turkey, Vitol aims to tap into two major trends: first, the country’s fast-growing population and, second, the advent of large refineries just outside the Mediterranean basin that are pumping out huge supplies of cheap petrol and diesel. Vitol plans to retain the Petrol Ofisi brand, which it says is the oldest petrol station name in the country, and the most trusted. Like Australia and much of Africa, Turkey is a “short” — trading house jargon for a country that is heavily dependent on imported refined fuels. It is this situation that presents Vitol with opportunities for high returns: it can use its trading muscle and relationships with oil producers to supply Petrol Ofisi.“Turkey is a significant importer,” says Mr Bake. “Logistically it’s in an interesting location.” Straddling Europe and Asia, Turkey can draw its fuel supplies from Russian oil producers to the north or from refiners in the Middle East and India to the south. The latter option means Vitol can source fuel from giant refineries owned by Saudi Aramco and India’s Reliance Industries. Mr Bake says Vitol, which has enjoyed a couple of years of bumper profits, has the appetite for more deals but acknowledges transactions such as Petrol Ofisi do not come along very often. “The chances to buy countrywide networks that are well run, that have a historical presence and are integral to the supply chain are few and far between,” he adds. “But we are in a fairly strong position at the moment. We have the ability to transact at this sort of level without stressing the balance sheet.” Read more at www.ft.com. Drip Stop Drip Catcher Clean Diesel Refuelling When refuelling with Diesel, the outside of the spout is covered with Diesel. It migrates down the nozzle body after stowage. To avoid this, all Elafl ex ZVA Slimline 2 nozzles are fi tted as standard with an integrated Diesel Drip Catcher. For further improved Diesel refuelling, specify optional Drip Stop magnet valve, incorporated in the spout. It stops the Diesel dripping, contributing to forecourt contaminated fl oors. ELAFLEX HIBY Tanktechnik GmbH & Co. KG Tel. +49 (40) 540 00 50 · Fax +49 (40) 540 05 67 info@elafl ex.de · www.elafl ex.de/en


europe-72
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