Vitol Group report for 2011
Wednesday, 22 February 2012 | 00:00
Total traded volumes for the Vitol Group in 2011 were 457 million metric tonnes (mts), compared with 399 million mts in 2010, on a like for like basis.
These numbers include all trading activity including natural gas, chemicals and carbon credits. Carbon made up 71 million mts of the total in 2011. In addition around 276 terawatt hours (TWh) of power were traded, compared with 206 TWh in 2010.
Revenues for 2011 were $297 billion, higher than in 2010 and bolstered by higher volumes and significantly higher average oil prices of $111.26 a barrel versus $79.50 a barrel in 2010 (basis dated Brent), an increase of $32/barrel.
Physical energy trading remains at the core of Vitol's business. Vitol continues to be a major participant in global shipping markets, chartering around 5,500 voyages in 2011, delivering crude oil and products to our customers around the world. Crude oil trading remains the largest part of the trading portfolio, with 135 million mt's of crude traded in 2011, supported by substantive volumes from all petroleum product businesses, as well as power, natural gas, carbon and coal.
While physical global energy trading remains at the heart of Vitol, we continue to look at a variety of new investment opportunities in the midstream and downstream energy sectors, which can deliver growth and synergy with our core trading business. In this respect, a number of investments were made in 2011 which enhanced our global reach, linking trading with our customers.
On December 1st, we launched a new African downstream company, Vivo Energy, owned 40% by Vitol, 40% by Helios Investment Partners and 20% by Shell. When the transaction completes this year, this company will operate in at least 14 countries in Africa, marketing fuels and lubricants under the Shell brand. Vivo Energy has exciting prospects in a continent with increasing demand driven by fast growing populations and developing economies.
Vitol Aviation is rapidly expanding its sales and marketing footprint, including entering the direct airline sales market at London Heathrow in October 2011, the first new market entrant since 1987.
In VTTI, our 50% terminal joint venture with MISC Berhad of Malaysia, further growth was delivered by the completion of phase 3 of the ETT Rotterdam terminal. At the end of the first quarter of 2012, phase 1 of the new terminal at Tanjung Bin, Johor, Malaysia, will be completed, with an initial capacity of 841,000 cubic metres. In the USA, Vitol announced plans to build a crude oil terminal and loading facilities in Midland, Texas, with initial capacity of around 1 million barrels.
Vitol has also published its carbon emissions from directly owned operations. In 2010, the most recent reporting period, the Group's total emissions of CO2 equivalent mt's, on an equity basis, were 411,991, as compared with 271,425 in 2009. The main increase came from our coal mining operations in Canada.
In our upstream businesses, Vitol divested certain mature, producing assets while continuing to invest in its substantial acreage positions in the CIS and West Africa. Vitol sold its 68.2% interest in the Galoc Production Company in the Philippines and Arawak sold four blocks in Kazakhstan.
Ian Taylor, President and Chief Executive of the Vitol Group, commenting on 2011 performance, said:
'2011 was a year in which the world experienced some significant, unpredicted events, causing major price increases in energy markets as well as changes in energy policy and trade flows. These included the Arab Spring uprisings, beginning in Tunisia and spreading across North Africa and the Middle East as well as the Fukushima nuclear disaster on March 11th. Political uncertainty combined with a major loss of crude supply from Libya, contributed to Brent crude oil prices rising from $94/bbl and ending the year $14/bbl higher. Average Brent crude prices of $111.26/ bbl for the year were the highest ever. Conversely gas prices in the US declined from $4.65 per million BTU to below $3 by year end, driven by the material changes in US gas supply. The environment for shipping and refining remained weak due to global oversupply and short term prospects remain difficult in both sectors.
Despite challenging trading conditions in 2011, Vitol delivered a strong performance in the core trading activities. We believe that this continues to reflect the well-established and diversified platform that we continue to build. Physical trading remains the focus of our activities, helping to meet the energy needs of all our customers around the world. Results were enhanced by a couple of disposals in our E and P business.
Economic uncertainty makes it challenging to predict demand and supply for oil in 2012, the key determinants of price. Should global oil demand growth remain positive, driven by the economies in Asia, the Middle East and South America, and OPEC and non OPEC deliver the expected additional supply, then we would expect oil prices to remain around current levels for the balance of 2012. Geopolitical risk, especially in the Middle East, creates potential material risk to the upside. The continuing divergence between oil and regional gas prices remains the most noteworthy recent characteristic in global energy markets. Reduced year on year energy consumption in Europe, with Europe's oil consumption now at the level last seen in 1990 and a marginal annual increase in US consumption of only 0.16% as compared with growing demand in the developing economies, has profound implications for trade and for long term refining prospects. The transformation of North America's production of oil and gas as a result of technology and investment has created the potential for gas exports, with significant impacts on future global energy flows.
Strong relationships and excellent support from our financial partners were reflected in the oversubscribed capital raisings from our Singapore and Geneva companies, despite difficult financial market conditions. Our financial base remains strong and this provides us with the platform to pursue the multiple growth opportunities that the market currently offers. We are fortunate to have a high quality team of people in all of our 29 offices around the world and their significant efforts are reflected in our 2011 performance'