Leading independent fuel supplier Prax Petroleum is expanding its coverage of Wales and the South West of England with the opening of a terminal in Cardiff to add to its Dagenham and Immingham sites.
Prax sales and marketing director Neil Robertson said the supplier was being welcomed into the Welsh market, which currently has a fairly limited number of supplier choices.
“We are offering competitive prices and attractive credit terms,” he said. “We are talking to Welsh operators and they will see benefits from switching to us.”
Prax plans to move 120m litres of fuel – mostly diesel - in 2015 through its 35m litre storage facility in Cardiff Docks, which will be supplied by sea from refineries in North West Europe and the Baltics. Volumes are then expected to rise to 200m litres a year, 10% of Prax’s current throughput.
Robertson expects the UK government to maintain the percentage of biodiesel blended into road transport diesel fuel at 4.75% for 2015, but long term this could rise to as much as 10%. But whether the actual biodiesel content reaches this target will depend on the relative price of green fuel and credits that suppliers can buy if they fail to reach the required biodiesel blend.
“If suppliers don’t meet the government obligation because they can’t buy in biodiesel at the right price they have to buy credits from those who overblend,” he explained. “At the moment road fuel can be up to 7% biodiesel so if we blend to this level we can sell 2.25% back into the market. It all depends on the value of the credits and the cost of biodiesel.”
Biodiesel comes from a variety of sources including rape seed, tallow (produced by rendering animal carcases left over from meat production) and used cooking oil. Cooking oil attracts double credits because it is deemed to be carbon neutral.
Robertson also believes that US exports of low cost shale oil and gas produced by fracking could throw a “lifeline” to the UK’s small, old refineries, which are closing one by one as a result of competition from large, modern refineries in Russia and Eastern Europe.
“The US is now the largest oil producer in the world and may end its ban on exports soon,” said Robertson. “Cheap crude from the US might be a lifeline for refineries on the west coast of the UK. Fracking could change the whole market and break the Middle East’s hold on the oil industry.”
Diesel prices have collapsed 7.5ppl since June on the back of falling oil prices, immediately benefiting the operators who buy fuel on the spot market where prices are linked to the Platts index.
Around 60% of Prax’s volumes go to other fuel suppliers with the rest going direct to large fleet operators. Robertson said Prax was considering launching its own fuel card, though he admitted it was already a crowded market.
