Despite challenging market conditions, the Group’s performance in 2016 was solid
Ian Taylor, Chairman and CEO of Vitol has stated that despite challenging market conditions, the Group’s performance in 2016 was solid. Currently, trading is in excess of 7 million barrels per day. Volumes continued to grow, both in crude and products. A lower average fuel price over the course of 2016 caused turnover to fall to $152 billion, despite the increase in volumes.
Though ample supply in many fuel markets generated a favorable market structure for much of the year, 2016 saw an end to the steep market contango that enhanced results in 2015. There was a 16% increase in crude and product volumes to 2,597 million barrels which was an average of over 7 million barrels per day. Crude continues to represent the largest part of business at 48% of the traded barrel portfolio. Driven by increasing demand in both established markets, notably the US and, to a lesser extent Australia, and a growing presence in key African markets, the largest growth in percentage terms came from fuel, up 44% and gasoil, up 26%.
New opportunities are being generated from the growth in supply of LPG, both associated and non-associated, from US shale. With prices doubling for a limited period towards the end of the year as policy restrictions to Chinese supply impacted the market, the coal market experienced a resurgence in 2016.
The asset portfolio saw some changes in 2016. Downstream portfolio continues to evolve. The acquisition of an equity stake in Oando’s downstream business, now rebranded OVH Energy was completed in July. Vitol received a retail presence in Nigeria by investing alongside Helios Investment Partners (Helios) and Oando Plc. Vivo Energy, a Shell licensee across 16 markets is at the heart of the portfolio of the African downstream company. The business has consolidated and grown from 1,300 service stations to over 1,700 since Vivo was created in 2011. Formerly Shell’s downstream business in Australia, Viva Energy continues to perform well and aviation was added to the portfolio of Viva’s businesses during 2016. A Real Estate Investment Trust (REIT) for 425 of its properties was created by Viva which started trading in August 2016, raising in excess of AUD900 million.
A downstream investment in North West Europe in which the company has invested with the Carlyle Group and Argos, Varo Energy, continued to grow its footprint and consolidate its businesses through 2016. Vitol has agreed to acquire OMV Petrol Ofisi, Turkey’s largest fuel and lubricants Distribution Company, from OMV, since year end. This would add an additional 1,700 service stations to the portfolio.
The launch of VALT was also seen during 2016, a market leader in the supply and distribution of asphalt and a joint venture between Vitol and Sargeant Marine. 2016 also saw the launch of VALT, a market leader in the supply and distribution of asphalt and a joint venture between Vitol and Sargeant Marine, with annual volumes of circa 1.3 million metric tons and one of the largest dedicated asphalt fleets in the world. PWKD28032017