Vitol Plans Diversification

Here is an interesting piece of information from Reuters on Vitol. Apparently the company will expand into natural gas, carbon emissions, ethanol and coal to operate across the changing landscape of the global energy mix

In an interview with Reuters on Tuesday, March 24, the company's chief executive Ian Taylor told Reuters, "All these parts of the energy market are linked and if you are going to be a good global energy trader then that is what you are going to have to do."

Additionally, the company plans to bid for Iraq's oil and gas fields as a member of a consortium, and is also looking at upstream opportunities in West Africa.

"These are world class fields...hopefully the situation in Iraq will improve and the international oil companies will be able to get in to help develop these oilfields," Taylor said.

Vitol intends to bid with other firms for a role to develop Iraq's reserves.

Pension funds and other institutional investors moved into commodities over the past five years and contributed to oil's bull run, which was not particularly healthy for oil markets, Taylor said.

"In some ways from a Vitol perspective, overall the oil and the energy markets are moving back to a stronger focus on the fundamentals of supply and demand ... in the longer term this is quite healthy,"
Taylor said.

Vitol’s David Fransen Discusses Oil Prices and the State of Global Commodity Trading

In an interview with Le Temps, David Fransen, managing director of Vitol SA, discussed the volatility of recent oil markets. He explained that supply and demand fundamentals determine the price of crude and that high prices adversely affect Vitol’s working capital.

In a candid interview, Fransen provided his thoughts and set the scene for the global oil market. “We are not producers looking to sell our oil at the highest price. What we sell, we have bought. A high oil price affects us because we need more working capital to finance the same trading operations. So when the price of a barrel was at $147 we had three times as much tied up in working capital, when compared to prices today.

Focusing on the economic crisis and the potential risk for traders Fransen added, “Naturally, it’s a risk, and no one can be sure some banks won't have liquidity problems. Fortunately, this collapse in banking activity has come at a time when the price of oil is low, so it has less of an effect on our activity because we need less financing and, most importantly, we enjoy excellent relationships with our banks, who value our business.”

Talking about the quantities of oil on tankers anchored at sea and whether the oil is used for speculative purposes Fransen said, “In a contango market, buyers are willing to pay more for oil delivered in a few months time than today, ” and notes, “if the market structure changes, then this oil may come to the prompt market.”

Fransen says OPEC has reduced their supplies by more than 3 million barrels per day and this has tightened the market, causing traders to release stored oil, reinforcing the point that market demand and producers supply are the real drivers of the price of oil.

Discussing the rumor that a large investment fund could be involved in the lower price of the U.S. market compared to the European market Fransen said, “No, until recently the U.S. crude market was at a discount to Europe because there was just too much oil in the U.S. The storage centre at Cushing, Oklahoma was full so the market created no incentive to import European barrels.

http://www.vitol.com/

Vitol jv update: re-commencement of production at Galoc field

GPC is pleased to confirm that production from the Galoc Field was resumed at approximately 21:30 hours Manila time this evening 25th February 2009. During the shutdown extensive work was undertaken on both re-instating the FPSO Contractor’s Mooring and Riser System (M&RS) and implementation of enhancements to ensure improved future performance and station-keeping. These enhancements include installation of a secondary mooring arrangement connected to the FPSO stern, referred to as the Hold Back Mooring System (HBMS), and substantial modifications to the primary M&RS which included the redesign of critical attachments, installation of additional buoyancy to facilitate lay-down following disconnection and revision of the associated procedures. These enhancements are the product of considerable collaborative design effort between the field Operator (GPC) and the FPSO Contractor (Rubicon Offshore International), who is responsible for the provision and operation of the FPSO and associated M&RS. This collaborative effort is ongoing with evaluation of other potential enhancements to the system. GPC is confident that the re-instatement and enhancements implemented to date will increase the station-keeping capability of the FPSO and enable safe and reliable disconnection in the event of adverse weather. Additional Notes: General InformationThe Galoc field is located in Service Contract SC14-C (Galoc Sub Block) in 290m of water approximately 65km north west of Palawan in the Republic of the Philippines. The development involved the construction of two subsea completed horizontal production wells, with extended reservoir contacts, tied back to a Floating Production Storage and Offloading (“FPSO”) facility via a short seabed pipeline and mid water riser system. Most likely oil reserves as estimated at time of commitment to the development in 2006, is approximately 10 million barrels. The reserves estimate and requirement for additional wells and facility capacity will be reassessed following an analysis of results from initial field production performance. Further information on GPC and the Galoc Field can be obtained from:GPC’s website: www.galoc.comvia email: enquiry@galoc.com or by contacting: Jax MarianoTel: +63 918 9109581

Vitol joint venture update on progress with remedial work in the Philippines

GPC (Galoc Production Company) is pleased to report progress towards re-commencement of production from the Galoc Field, offshore the Philippines; the diver re-instatement of the mooring and riser system has been completed and the umbilical plus subsea equipment integrity testing successfully concluded. Installation of the mooring system enhancement, specifically the additional mooring lines to be connected to the FPSO stern, is progressing with the first system installed and hook-up to the FPSO ongoing. Once completed, change out of the riser sections will be undertaken. At this time weather remains favourable and completion of the re-instatement activities and re-commencement of production is anticipated next week.For further information please visit www.galoc.com

Vitol to divest VHFL stake, strengthen focus on Fujairah Refinery

Vitol Group ("Vitol") announces today that it has divested its 10% stake in Vopak Horizon Fujairah Limited (VHFL), a 1.5 million cubic metre oil storage facility in Fujairah, United Arab Emirates.The stake has been acquired by VHFL's existing shareholders, which include Vopak, Horizon, the Government of Fujairah and IPG.The sale of its stake in VHFL will enable Vitol to strengthen its focus on its key strategic asset in the region, the Fujairah Refinery Company Limited (FRCL), which operates an 82,000 barrel per day refinery and a 461,000 cubic metre tank farm. FRCL has major development plans in place, which include a 564,000 cubic metre expansion of the tank farm, refurbishment of existing refining units and the installation of more processing units. The transaction also allows Vitol to exit VHFL having achieved an attractive return on its original investment.Ian Taylor, President and CEO of Vitol, commented: "Vitol has benefited significantly from its involvement in VHFL and we wish them continued business success. The sale will now allow us to focus fully on the expansion and development of the Fujairah Refinery Company and continue our work with the Government to promote the role of Fujairah in the regional and international energy markets."

Vitol Joint Venture starts production in the Philippines

Vitol today confirmed that the Galoc Field located offshore Palawan Island in the Republic of Philippines has commenced production. Output is expected to average around 17,000 bpd for the rest of 2008, once production stabilizes following flow testing. Galoc’s estimated oil reserves are approximately 10 million barrels. Assessment of the potential for further development will be undertaken over the coming months.Vitol has a 40% interest in the Galoc Service Contract through its ownership of the Galoc Production Company. Further information on Galoc can be found on www.galoc.comFor further information on Vitol, visit www.vitol.com

Vitol to Build Malaysian Storage Terminal

The Vitol Group is pleased to announce the signing of an agreement with Seaport World Wide Sdn Bhd under which Vitol will lease land to construct an oil terminal in Tanjung Bin, Malaysia.The terminal will be used for blending and storage of crude oil, petroleum and petrochemical products and will have initial capacity of 750,000 cubic metres. The project will include the construction of numerous jetties and other marine facilities, enabling the terminal to handle all tanker sizes up to the larger VLCC’s. The investment for the first phase will be at least 1 billion Malaysian Ringgit (USD 300 million.The strategic location of Tanjung Bin in relation to navigational routes, shipping anchorages and the regional pricing centre will make this an exciting addition to Vitol's portfolio of terminals.Vitol’s current portfolio includes storage assets in Latvia, The Netherlands, Russia, Argentina and Fujairah, together with projects nearing completion in Nigeria and the United States. For further information on Vitol, visit www.vitol.com

Vitol to start bunkering operations in the Middle East

Vitol has recently entered the bunkering business for the first time in the Middle East. The business will use Vitol's long term fuel oil storage and blending operations based at Fujairah in the Arabian Gulf. The company has already taken delivery of one supply vessel and further specially modified bunker supply vessels will be arriving over the coming months. The bunker supply in Fujairah is being coordinated by Chris Young, formerly with BP.