FPS Expo seminar tackles UK supply chain

Fps Expo 2019 Seminar Session 800 Wide

Eleven Team oil-trading-shipping-and-supply, Shipping and Supply, Oil Trading...

The FPS Expo 2019 was of particular importance, taking place in the event’s 40th anniversary year.  This was also the year in which that the Federation of Petroleum Suppliers voted to rebrand and change its name to The UK and Ireland Fuel Distributors Association (UKIFDA), with a new strapline ‘representing the best in liquid fuels’

One of the key seminars at the event focused on the UK supply chain and the implications of image issues, lack of investment, decarbonization and Brexit.

Jane Raphael, editor of Fuel Oil News was there and reports on the seminar:

The importance of a robust UK supply chain

With the importance of a robust uk supply chain vital for those supplying fuel, the FPS Expo seminar on this topic attracted a good-sized audience.

On the panel were James Spencer, Portland Fuel, Peter Davidson, Tank Storage Association and Stephen Marcos Jones, UKPIA.

Whilst the UK’s six refineries and 300 terminals are supported by an excellent network supplied by rail, road, pipeline and coastal vessels, they have HSE scrutiny and a plethora of legislation to contend with.

A high cost, low margin business fuel distribution relies on substantial product throughput for its survival; the industry still generates £36 billion per annum accounting for 5% of government’s total tax receipts. 

Like many other heavy industries, fuel production and its distribution make a vital contribution to several local economies with its inland terminals well-positioned to serve local markets.

More and more dependent on imports, the UK is increasingly short on indigenous diesel and kerosene.

The fact that a third of the UK’s fuel reserves are held outside the UK and tied into EU rules is a concern to James Spencer who asked - what happens if we need to move this storage to the UK – will we actually get planning permission?

“There will need to be a transition from traditional fossil fuels to newer grades and there will be a fragmentation of the supply chain but there will also be opportunities,” said James who views the present pathway as King Canutesque.

“To some degree the industry has a PR crisis – there are still long-term careers to be had and it remains an exciting place to work.  I’ve been in this industry for 25 years and this is the most exciting time ever – there are big opportunities - the majors are reinventing themselves as energy companies and even smaller guys are taking advantage too.

Ageing assets

With recent years being difficult for those needing to make financial decisions, investments have been postponed as private equity groups have held back.

“Our ageing assets need investment to allow us to expand,” said Peter who sees ‘unintended consequences’ if the industry is not properly consulted by government.

Should import terminals lose hydrocarbons, the need to import and store other products for chemical and agricultural purposes will remain - but at what point will viability be in question?

“2050 is not that far away - we can produce and store different liquid fuels for diesel, kerosene and petrol but if this is to be achieved, we must plan for lots more tanks now.

“We need to shake-up our image and think of ourselves as a downstream energy provider switching the current infrastructure to low carbon alternatives,” says Peter who regards Brexit as a huge distraction from far more important matters.

Feeling the government is going down the electrification route too fast, Stephen is adamant that the industry needs ‘a seat at the government’s decarbonisation table’.

“Having demonstrated over many years that our sector copes with constant change, we are far more innovative than many others.  Calling for more support from government and the need for an EU deal, Stephen said:

“If we leave without a deal, we fall out of the REACH system which could create supply chain disruption and administrative burdens.”