Puma set to pounce on fuel

MATT CHAMBERS
MAY 28, 2014
THE AUSTRALIAN
PUMA Energy, an aggressive new entrant into the fuel sector, says it expects more closures in Australia’s rapidly shrinking oil refinery sector, turning the ­nation into Asia’s biggest fuel import market and underpinning up to $250 million of planned infrastructure spending.
Puma chief executive Pierre Elardari said recent closure announcements at three east coast refineries in Sydney and Brisbane, and the expectation of more to come, were creating big opportunities for the Swiss company and its compatriot and major shareholder, the trading giant Trafigura.
“We import our (refined fuel) products, so we are quite skilled in building logistics and connecting with the international markets,” Mr Elardari told The Australian yesterday at the opening of a $70m fuel import terminal at Mackay.
The terminal and storage tanks have been built to service the diesel needs of the Bowen Basin coking coal industry. “That is what has been ­attractive to us about Australia: the market is changing with the closure of the refineries and there is growth in the mining sector,’’ he said.
Under its trading agreement with Trafigura, Puma plans to use large, long-range oil tankers not previously used in Australia for refined fuel products to bring in fuel sourced at a cheaper prices from around the world.
Puma — a privately held company whose other big shareholder is Angolan national oil company Sonangol — has moved swiftly since it made a decision to move into the Australian market three years ago.
Last year it made $900m of ­acquisitions of independent retailers, including Ausfuel, which had service stations in Western Australia, Northern Territory and South Australia. It also acquired Queensland’s Neumann, which has given it the Gull, Matilda, Choice and Peak fuel brands, which Puma has started rebranding with its own red, green and white logo.
Puma Australia general manager Ray Taylor said he had plans to spend another $200m to $250m expanding import and distribution infrastructure here and expanding and upgrading service stations.
“Refineries are shutting,” Mr Taylor said, adding this would make Australia by far the Asian region’s biggest fuel product import market.
“That creates the need for infrastructure investment like the terminal we are building here in Mackay. Ships are coming in from further afield to regional ports as well as the capital cities, so we see a real need for infrastructure investment.”
Expansions and new terminals are being looked at in Perth, Brisbane, Townsville and, to round out Puma’s east coast coal coverage, Newcastle.
Trafigura and Puma are not the only ones jumping at the chance to profit from the changing fuel supply scene in a still growing Australian market.
Dutch trader Vitol spent $3 billion buying Shell’s retail and marketing unit, including the Geelong refinery, earlier this year.
While Vitol has the refinery, like Puma its strength is in trading and accessing cheaper imports.
Mr Taylor said he did not believe the refinery closures, which continued last month when BP declared it would close its Bulwer Island refinery in Brisbane, had ended.
He said lack of scale, maintenance needs of refineries built in the 1950s and 1960s and the cost of doing business here meant the future was bleak.
“We think there will be more closures,” Mr Taylor said.
“I don’t see the dynamics improving for Australian refineries — there is more global capacity coming on in the Middle East and the US is becoming a net exporter — all of that spells further closures.”
For all the similarities between Puma/Trafigura and Vitol, buying Shell’s Geelong refinery was not something that tempted Puma.
“The future of Geelong is still in question,” Mr Taylor said.
“Vitol believe they can bring a set of skills and competence to it that Shell couldn’t — time will tell.”
Trafigura is not just an oil trader: its metals, iron ore and coal trading businesses have operated in Australia for more than a decade.
Mr Taylor said there was the chance to bring offtake from mines into future fuel negotiations. “There are opportunities to look at things like that, to be a bit more creative and innovative in the way that we put deals and structures together with customers,” he said.