UK oil major BP is outsourcing operations for its regional and rural fuel depots and terminals to a range of third parties in an effort to beef up its competitiveness and allow it to focus on a $450 million expansion in the retail end of the market.
The restructuring involves four separate deals, with Lowes Petroleum, Great Southern Fuel Supplies, Toll Holdings and UGL Operations and Maintenance, with the new ventues set to go live in the second half of 2015. Most of the BP employees affected at the operations will transfer to the new ventures.
Andy Holmes, who heads up BP in Australasia, said the changes, which are being driven by a step-up in competition in fuels terminals and tank operations, were part of a “reinvention” of the company’s business that would restore its competitiveness and improve its ability to respond to customer demand.
“This will help to secure BP’s position, particularly given the rapidly changing downstream landscape in Australia and the challenging external environment,” Mr Holmes said in a statement released on Tuesday.
The local fuels distribution and supply sector is going through some major changes as new players such as Puma Energy enter the market. BP has slimmed down its refining business in Australia, with the decision to close its Brisbane refinery this year, and is adding new service stations. It is intending to add 60 new sites over the next three years, through building new petrol stations and acquisitions.
Shell Australia and Caltex have also restructured their businessses, with Shell last year selling its Geelong refinery, petrol stations and wholesale business to Vitol subsidiary Viva Energy.
In the deal with Lowes, a partnership between the two will operate BPs regional depot business, exclusively distributing BP’s fuels to business customers in regional Queensland, NSW and Victoria.
Great Southern, meanwhile, will run BP’s regional depot and logistics operations in Carnamah, Geraldton and Kewdale in Western Australia, while Toll will run BP’s logistics operations in Tasmania.
A new joint venture between BP and UGL, to be called Australian Terminal Operations Management, will manage operations and maintenance across BP’s whole terminal network in Australia. While BP will own the terminals, the 50:50 joint venture will take responsibility for running them. BP said it has similar joint ventures for terminals operations in New Zealand and Germany.
BP said it and UGL had committed to employing most of BP’s existing terminal operations staff on similar terms, while most of the employees at depos and drivers in Queensland, NSW and Victoria would be offered jobs with Lowes, also on similar terms.
BP’s upstream business, including its stake in the North West Shelf and Browse LNG ventures, and its upcoming exploration program off South Australia, isn’t affected by the restructuring.