World Bunkering > News > Winter 2009 > LUKOIL's strong foundations

Question: Can tell you us something about your company?

Marco Bats: LUKOIL Benelux B.V. is an active physical supplier of bunker fuels in the ARA region (Amsterdam-Rotterdam-Antwerp). We are supported by the logistic and financial strengths of our company LITASCO S.A. in Geneva, Switzerland. LUKOIL Benelux B.V. is part of the Russian oil major LUKOIL, which also has wide-ranging operations outside Russia.

Q: And you are now a significant player in the ARA market?

MB: Yes, that’s right. Our customer base ranges from well-known large and medium shipping lines to other physical suppliers to smaller niche companies from different sectors. We were established in 2001 and have expanded rapidly since then, and now have a 15% share of our home market in the ports of Rotterdam and Amsterdam.

Q: How has the global economic downturn affected your markets?

MB: There is no doubt that volumes have fallen throughout the global bunker market. We have seen the large container lines cutting capacity by consolidating services and withdrawing vessels. Of course container shipping is crucial to the ARA market. We estimate bunker demand has fallen by about 10-15%.

Q: How do you assess the prospects for recovery?

MB: Unfortunately, we don’t see a rapid recovery happening. We think it will be some time before things start to get back to normal. That is partly because we see that many owners still have financial difficulties. Of course we are hoping that the recovery will be quicker and stronger than looks likely right now. That would be to everybody’s benefit.

Q: But surely you must base your company’s strategy on the assumption that the recovery will take time?

MB: Yes, that is right. That means the challenge facing us is to maintain current market share and actively seek new opportunities in the global bunker market.

Q: What are these new opportunities?

MB: LUKOIL Benelux B.V. plans to establish a strong presence in the Belgian port of Antwerp in 2010. In addition to the ARA region, we are also active in the Baltic Sea, Black Sea and Mediterranean Sea. We are also considering going into the local bunker supply markets in a number of the European ports. In the past two years LUKOIL Benelux B.V. has also been supplying bunker fuels to a wide variety of shipping companies in the Russian northern ports of St. Petersburg, Kaliningrad, Vysotsk, Primorsk and Murmansk. While the economic crisis lasts, we will have to consolidate to some extent but nevertheless we are still looking at new opportunities coming our way. LUKOIL Benelux will also focus on the markets where the LUKOIL group has physical offices.

Q: How can you maintain market share in ARA?

MB: We plan to take full of advantage of the flexibility of supply we have through the back-up of our parent company LITASCO SA, which has its own storage facilities in Rotterdam. Being able to load from own storage gives LUKOIL Benelux B.V. an advantage over competitors who have to load at third party terminals. LUKOIL Benelux will continue work closely with its financial counterparts.

Q: How does this arrangement work?

MB: We buy from LITASCO, and sell on to shipowners, charterers and intermediates.

Q: And how does the physical supply work?

MB: Since 2005 LUKOIL Benelux B.V. and our partner Burando have been jointly operating Service Terminal Rotterdam (STR), where LUKOIL Benelux B.V. is storing and blending fuel oils now. Currently, new storage tanks are being constructed at STR, which will increase total storage capacity of the terminal a great deal. The new tanks are expected to become operational in the second half of 2011. Operating our own terminal gives us a competitive advantage in the market in view of the current shortage of storage in the ports of Rotterdam/Amsterdam, and opportunities to design and implement flexible delivery strategies. We are also operating a fleet of eight time-chartered barges ranging from about 380 dwt to 4,200 dwt to ensure quick and timely deliveries of our products to seagoing vessels or to other physical suppliers. These include several new double-hull barges with greater bunkering capabilities, which are provided by FTS Hofftrans, the barge operating company of our partner Burando. Should we require greater capacity, we have the option of hiring other barges for spot deliveries in the range from 500 tonnes up to 9,200 tonnes from alternative reliable transport companies in the ports of Rotterdam/ Amsterdam.

Q: Do you anticipate a problem meeting changing requirements for grades of fuel?

MB: No, the grades in ARA are still the same, although the specifications of some will be become more restrictive. For example, from 1 January 2010 there will be a 0.1% sulphur cap on fuel used in the Port of Rotterdam As far as LUKOIL Benelux is concerned, the more grades available, the more flexible we can be. We supply a wide range of grades, and receive bunker enquiries and provide quotations for the IFO 700, 600, 500, 380, 240, 180, 120, 80, 60, 40, 30 cst, MDO DMB and MGO. We can also make other products available upon request.

Q: Are there any quality issues in the ARA region?

MB: Well, not for LUKOIL Benelux at least. Providing quality product is always our aim. With new sulphur emission regulations coming up in 2010 we will, as always, take good care of the quality of the fuel we offer and supply. We will follow the new regulations regarding specifications closely and act accordingly.

Q: How would you sum up your approach?

MB: LUKOIL Benelux B.V. expects to continue to flexibly develop its bunkering activities despite the current financial crisis. We are closely monitoring the situation in the market and are ready to implement necessary changes to sustain the growth of our business. As an example, our Amsterdam office has recently successfully entered the fishing industry bunker market.

Q: And how do you put this into practice?

MB: Well, I can say to shipowners that our team of bunker traders and operators has all it takes to become and remain your reliable partner: experience, expertise and thorough knowledge of the bunker markets. They are friendly and available for your enquiries 24 hours per any day. LUKOIL Benelux B.V. will gladly look into your enquiries for the regions where we have been actively operating, as well as for any other regions in the world.