Vitol 2017 volumes and review

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Vitol 2017 volumes and review

Highlights:

  • Turnover $181 billion (2016: $152bn)
  • Crude oil and products volumes down slightly at 349m mt (2016: 351m mt)
  • Trading over 7 million barrels per day
  • 6,491 ship journeys (2016: 6,089)
  • Continued expansion of mid and downstream portfolio in Africa, Europe and Eurasia
  • Investment in strategic US assets, including through acquisition of Noble Americas

Statement from Ian Taylor, Chairman, Vitol:

Vitol continues to perform solidly.  Overall volumes held steady at just over 7 million barrels per day and turnover rose to $181 billion on the back of an increase in the average oil price over the course of the year.  Challenging market conditions required a constant focus on careful risk and margin management, though strong demand growth was supportive of volumes and the performance of our investment portfolio.

We continue to focus on the careful development of the business and the prudent management of capital and risks.

Core trading business

2017 was a challenging year, notwithstanding robust demand growth of 1.6 million barrels a day.  Across the year, the pattern of demand and supply surprised the market, causing prices to dip in H1 2017, before rallying in the latter part of the year.

Our crude and product trading volumes (excluding LNG and LPG) fell slightly to 349 million mt (2016: 351m mt), maintaining an average of over 7 million barrels a day.   At 178 million mt, crude continues to represent the largest part of our business and volumes increased modestly year on year to 3.6 million barrels a day.  After exceptional growth in 2016, gasoline volumes fell back to just above longer term averages, that is 34 million mt (2016: 44m mt), though we anticipate that the acquisition of Noble Americas will result in increased volumes in the coming years

LPG volumes also fell slightly to 14.3 million mt, after very strong growth in 2016.  Nonetheless, we continue to see LPG as a longer term growth opportunity, with US supply growth satisfying the need for cleaner fuel and power solutions in developing economies.

In LNG, where we have long had a presence, the market is evolving as anticipated and our volumes grew commensurately to 7.4 million mt.

Asset portfolio

We continue to evaluate the asset portfolio in line with our strategy of investing in assets which complement the core trading business and, during 2017, added to our mid and downstream networks.

In June, we acquired Petrol Ofisi, the market leading distributor of fuel products in Turkey, from OMV.  The business has a 23% market share and adds 1,700 service stations to our network, bringing the total of service stations in our portfolio to over 5,000. In October, we appointed a new CEO and are investing in the company’s infrastructure and brand to capture a greater portion of this growing market.

Later in the year we agreed to acquire Noble Americas Corporation from the Noble Group.  The acquisition, which closed in January 2018, included some attractive assets which have been successfully integrated into Vitol’s North American business.   In addition, we are working with Harvest Pipeline Company on the development of an export terminal to facilitate the growing export of US crude.

Our African retail businesses continue to develop.  To enable the next phase of Vivo Energy’s growth, in December 2017 we entered into an agreement with Engen Holdings which will add nine new countries and 300 service stations to Vivo’s network, taking the total number of Vivo service stations to over 2,100, from the 1,300 stations Vivo had at its inception in 2012. When combined with OVH Energy, the Nigerian downstream business created in 2016, we are now invested in circa 2,500 service stations in Africa.

On the E&P side, our primary focus continues to be the development of the Sankofa and Gye Nyame oil and gas fields, offshore Ghana, with our partners GNPC, ENI and the World Bank.  First oil was achieved in May of last year, and oil production is rising to the anticipated 45,000 barrels a day, with gas to be delivered locally later this year.

In Europe, we acquired an 85,000 barrels per day condensate splitter from Koch Supply and Trading.  Located at the heart of Rotterdam’s oil and petrochemical industry, the splitter enhances Vitol’s regional offering.

More recently, our portfolio company Varo announced its intention to float on Euronext Amsterdam.  Since its creation in 2012, Varo has grown to an integrated fuel supply company in North West Europe with a refining capacity of 165,000 barrels per day, 144 distribution outlets, 232 retail outlets and 12 river bunker stations.  Vitol will continue to work closely with Varo on the sourcing of products and crude and intends to remain a shareholder.

In the longer term, we anticipate that renewables will have a growing impact on energy markets, most notably the power sector.  Vitol, through its power plant subsidiary VPI Immingham, has partnered with Low Carbon to invest in the UK’s largest battery storage portfolio and we are also considering opportunities in other geographies.

Governance

We recently announced the appointment of long standing Executive Committee member and CEO EMEA Russell Hardy to the role of Group CEO.  I have moved to the role of Chairman and continue to be closely involved in the business and a member of the Executive Committee.

We continue to review the wider management of our business in terms of HSE and other responsibilities with the intention of enhancing performance wherever possible.  We are committed to engaging with stakeholders and are active participants in the relevant multi-stakeholder dialogues.

Finally, I wish to thank our customers, partners and other stakeholders for their ongoing support and my colleagues across the Vitol Group for their hard work and professionalism.

 

 

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