UKPIA Statsreview2013

Statistical Review 2013
Statistical Review
www.ukpia.com
2013
UKPIA Statistical Review 2013

About UKPIA
UKPIA represents the non-commercial interests of and speaks for nine companies involved in the UK downstream
industry, whose activities cover refining, storage and distribution, and marketing of petroleum products.
Our members are:
Overview
Section
Overview
Introduction and
Overview
Introduction and overview of UK refining.
Economic
Contribution
The refining and marketing sector is a major

contributor to the UKs economy.
Refineries
Road Transport
Fuels
Biofuels
Centrefold
There are seven operational crude oil refineries in

the UK, which supply the equivalent of 85% of the
UKs oil product demand.
Petrol and diesel supply the vast majority of road
transport energy requirements.
The introduction of biofuels is the biggest change
to road fuels in decades.
Page No
Introduction and Overview
Contents
12
16
22
25
Oil the driving force behind modern life.
28
Other Products
Petrol Prices
Diesel Prices
Filling Station Stats

and Crime Data
Air Quality
10
Greenhouse
Gases
Emissions of carbon dioxide from road transport

pre km driven have fallen and the oil industry expects
them to continue to fall.
42
11
Process Safety
The Process Safety Performance Indicators for the

Refining and Petrochemical Industries is one of the key
objectives of UKPIAs commitment to process safety.
44
12
Occupational
Health and Safety
A wide variety of fuels are produced,

and the jet fuel market is expanding.
Pre-tax petrol prices in the UK are consistently
amongst the lowest in Europe.
Pre-tax diesel prices in the UK are consistently
amongst the lowest in Europe.
The number of filling stations in the UK is declining;
there are now around 8,608. Service station crime
costs the industry around 26m a year
UK air quality is improving; in part this is due to
higher quality fuels and improved vehicle technology.
The refining and marketing sector is one

of the safest industries in the UK.
30
32
34
38
47
All data is updated as far as possible. Where data is not available the most recent statistics have been used.
Introduction from the Energy Minister
I welcome the publication of UKPIAs eleventh Annual Statistical Review of the UK oil market, which is a good example of
the long running and constructive relationship between government, UKPIA and its member companies.
The downstream oil industry in the UK continues to face difficult challenges. In particular, the imbalance in product supply
and demand, along with tough global competition, is taking its toll on the sustainability of the UK sector.
This government is committed to supporting the downstream oil industry, and to this end is working with UKPIA and other
stakeholders to review the refining sector and to consider the impact of the regulatory framework on competiveness. The
review will consider what role the UK oil refining sector should have in the transition to 2050 and in maintaining UK energy
resilience. Significantly, we are engaged at EU level on the future of European refining through our participation in the EU
Refining Forum and await the outputs of the Refining Fitness Checks with interest.
We have also made progress, with industrys support, in reviewing our oil stockholding arrangements. In support of this
we recently published a consultation on the Future Management of the Compulsory Stocking Obligation in the UK, which
considered whether the present obligation for stock-holding is the most efficient model or if an alternative system, such as
a centralised stocking entity would be more appropriate. We intend to publish a Government Response with proposed way
forward by the end of the year.
Without a doubt, sound, factual evidence has underpinned many areas of policy development and accurate statistics are
critical in understanding both the production of our oil products and how trade contributes to our energy security. This
Government greatly appreciates the work that UKPIA and its members do.
Michael Fallon
Energy Minister
June 2013
background in the EU and the UK
stocking agency with compulsory
The recently published independent
UKPIA and the industry remain,
sponsored by UKPIA to inform
with government to help find the
that adds enormous costs.
report from IHS Purvin & Gertz,
DECCs review of the Refining Sector

in the UK, highlights the problem.
Long-term net refining margins are
projected to average around $2.6 per

barrel. However, this masks the huge
potential cash impact of additional
I am delighted to be writing the
Presidents introduction to the UKPIA

Statistical Review 2013.
Before touching upon some of the
challenges that face our industry, it
is worth pointing out the value of the

information in the Review. As usual,
it gives an interesting insight into
some of the facts and figures about

the UKs energy use particularly in
transport, but also the many areas

where our member companies
continue to play a crucial role in

supplying other feedstocks and
products that support everyday life.

As in previous years, I am pleased
to acknowledge the work of the
DECC (Department of Energy and

Climate Change) statistics group,
UKPIAs Secretariat and our member

companies for bringing all this data
together.
Although 2012 saw a brief respite
for oil refiners as a result of positive

refining margins during part of the
year, the underlying conditions in
the UK, and indeed those in the rest

of the EU, remain weak. Refineries
continue to operate under enormous

pressures through a combination
of a tough commercial climate with
low margins, reduced demand for oil

products, competition from overseas
refineries, structural imbalances in
supply/demand and a legislative
capital and operating expenditure in
the period 2013-2030 of 11.4 billion,
which is required just to meet UK and

EU legislative measures. Most of this
expenditure would not be recoverable

from consumers. Furthermore the
cost impacts of the Fuels Quality
Directive and the Energy Efficiency

Directive are not yet fully defined
and were not included in the reports

analysis.
The report concluded that no industry

would bear such a mandatory
investment burden for no return,
and a consequence could be the
closure of more UK refineries and

greater reliance upon imports for
key products such as diesel and jet

fuel. The UKs import dependency
in respect of these products is
already at a high risk level based on

the International Energy Agencys
MOSES methodology.
I also welcome the Energy Ministers
introduction to this years Review. His

department is closely engaged in the
membership for obligated companies.
as ever, willing to work closely
best solutions to our future energy
challenges. We very much welcome
the detailed and valuable report from

IHS Purvin & Gertz to help to inform
DECCs review of oil refining and
resilience of the downstream sector.
However, time is not on our side. We

look forward to an early response
from Government to the study and

also their support for an urgent
analysis of EU legislative impacts

in 2013 through the legislative
Fitness Checks being undertaken

at the EU level via the Refining
Forum established by the European

Commission.
In addition to this important work on

the refining regulatory environment,
UKPIA continues to actively share
best practice and lessons relating to

Process Safety, and the sector level
performance indicators included
within this review are one of the many

tools that we use to encourage this
activity. We are also working closely

with the Downstream Oil Distribution
Forum to implement the Petroleum
Driver Passport scheme which
aims to set a minimum standard of

competency for petroleum tanker
drivers, promoting safety at both our
terminals and at the point of delivery.
major issues affecting refining and
Finally, I should like to record our
whole and the impact upon security
input into all the valuable work of
indeed the downstream industry as a

of energy supply and resilience.
Good progress has been made with

reviewing the UKs oil stockholding
system; we welcome the consultation

on proposed options and support
the concept of an independent oil
Introduction from the President
thanks for everyones continuing
UKPIAs committees and the work of

UKPIA generally.
Gary Haywood
June 2013
Processing Crude Oil in a Typical UK Refinery

Many refineries in the UK came on stream in the 1950s and 1960s. Since that time they have evolved to meet the
growing demand for transport fuels and reducing demand for heating and power generation from oil. The composition
of fuels has also changed over recent years to reduce the environmental impact of their use. In addition to transport
fuels, refineries produce a wide variety of important feedstocks used in the manufacture of other products, such as
petrochemicals, lubricating oils, solvents, bitumen and petroleum coke for aluminium smelting.
No two refineries are identical. They share common technology such as crude distillation, but each UK refinery takes a
slightly different route to achieve the common goal of extracting maximum value from each barrel of crude oil processed.
Typical refinery process units

Fuel Gas
for refinery
boilers &
furnaces
Sulphur
Recovery
Sulphur
Isomer
Crude
oil
Crude
Distillation
Unit
LPG
Unifiner
Reformer
Petrol
Merox
Kerosene
Hydrotreater
Vacuum
Distillation
Unit
Gas
Liq Petroleum Gas
Petrol components
Kero components
Diesel components
Fuel oil components
Fluid Catalytic
Cracking Unit
Treating
Units
Isomerisation
Unit
Derv/
Heating oil
Alkylation
Unit
Visbreaker
Unit
down into five main processes:
Distillation which separates crude

oil into different refinery streams
Conversion and reforming which
improve the quality of these streams
and adjusts the yields to meet
market demand
Desulphurisation which reduces
the sulphur in the streams to the
required level
Blending of the refinery streams to

produce the final products meeting
current regulations and specifications
Waste treatment ensures that all

waste meets current regulations
Merox
Fuel oils
Refinery operations can be broken
and standards
Import
Butane
Distillation
as propane and butane to heavier,
The starting point for all refinery
They are then sent on to other refinery
operations is the crude distillation

unit (CDU). Crude oil is boiled in a
distillation column, which separates the
crude down into fractions with different
boiling points. The crude oil enters the
column near the bottom and is heated
to around 380C. The lighter fractions
are vaporised and rise up the column.
As they rise, they are cooled by a
downward flow of liquid and condense
at different boiling points. This enables
fractions with different boiling points to
be drawn off at different levels in the
column. These fractions range from
lighter, low boiling point gases such
higher boiling point diesel and gas oil.

units for further processing. What is left
over at the bottom of the column is a
liquid residue, which requires further
processing to be turned into more
valuable, lighter products or blending
components. This residue is first
sent to a second stage of fractional
distillation in the vacuum distillation
unit (VDU). This unit performs the
distillation under reduced pressure
which allows the distillation of the
crude residue at lower temperatures.
The streams are then sent on to the
In the visbreaker, the heavy fractions
the VDU separates into different
catalytic reformer and isomer units for
are held at high temperature until they
components from gas oil to a heavy
processing to raise the octane number
become less viscous. This stream is
liquid residue.
of the petrol by modifying its molecular
then blended into other fuel oil product
structure. The reformer produces a
streams.
The streams from the CDU and VDU

are then processed further by the
remaining refinery units to provide the
high quality products that consumers
expect and that comply with all
relevant legislation.
large amount of hydrogen as a

by-product, and this is recycled for
use in desulphurisation (hydrotreater)
units.
Distillation does not produce enough

of the lighter, more valuable products
such as petrol that the market wants.
Therefore conversion units eg fluidised
catalytic cracking (FCC) are used to
process some of the streams from the
vacuum distillation column with the
aim of turning the heavy components
into lighter transport fuels. Reforming
units are used to upgrade the octane
of the petrol components produced
from the CDU.
Desulphurisation units are then used
to remove sulphur from the products.
This enables the products to meet
todays tighter fuel specifications.
Extra desulphurisation will be required
to allow the refinery additional
flexibility to process higher sulphur
sourer crude oils. Reliance on low
sulphur crude oils alone limits the
flexibility of a refinery.
Main Products
unit, the isomerisation unit and the

alkylation unit are blended to meet fuel
specifications and current regulations.
Jet fuel/kerosene streams from
distillation are cleaned in the merox

unit. This uses a caustic wash
and additives to remove sulphur
compounds and to inhibit gum
formation.
Diesel/heating oil streams are
processed in the hydrotreater, which

removes sulphur and other unwanted
hydrogen sulphide from the units

which remove sulphur from product
streams. The hydrogen sulphide is
then reacted with oxygen to give solid
elemental sulphur and water vapour.
After treatment, this sulphur is sold to
other process industries.
All other waste streams are treated
according to the current regulations.
units such as the reformer. The diesel/

heating oil streams are separately
blended to meet fuel specifications
and current regulations.
The lighter fuel oil streams from the
VDU are processed in the FCC unit
whilst the heavier residues from
the VDU can be processed in the
visbreaker.
In the FCC unit, heavy oils are reacted
at high temperature with a catalyst
which breaks the heavy fractions
Petrol streams from the distillation
in an isomerisation or alkylation unit
This unit strips out excess sulphur
components. The FCCs products are
The sulphur recovery unit takes waste
recycled hydrogen from other process
are then cleaned in a merox unit
sulphide and ammonia.
Desulphurisation and
Waste Treatment
(desulphuriser) is supplied with
and the FCC unit.
and nitrogen compounds as hydrogen
and specifications.
catalyst. The hydrotreater
into more valuable lighter products.
process are cleaned in the unifiner.
fuel oil meeting current regulations
compounds using hydrogen and a
LPG (liquified petroleum gas) is taken

directly from the crude distillation unit
different units are then blended to give
Finally the petrol streams from the

reformer, fluidised catalytic cracking
Conversion, Reforming,
Desulphurisation and
Blending of Different
Streams
The fuel oil components from the
Using the same approach as before
The LPG and petrol components

and some of the LPG is converted
into high octane petrol blending
blended into petrol, LPG, diesel/gas
oil and fuel oil product streams.
Refineries in the UK
The members of UKPIA run the seven major operating refineries in the UK, which are situated around the coast for
ease of crude tanker access. They supply about 88% of the inland market demand for petroleum products. The UK
has the fourth largest total refining capacity in the EU and some UK refineries are among the largest in Europe.
Over many years, the refining sector has sought to minimise its impacts upon the environment and improvements
continue to be made to reduce emissions.
Section 2 covers refining in more detail, with key figures on production, changing product demand and refinery
emissions.
Petroineos Grangemouth
Essar Stanlow
Total Lindsey
Phillips66 Humber
Murco Milford Haven

Valero Pembroke
ExxonMobil Fawley
Distribution of Products
Around 50 major oil terminals are supplied by pipeline (51% of the volume), rail (15%) and sea (34%) from UK refineries.
There is an extensive network of private and Government owned pipelines in the UK, with around 3,000 miles of pipeline
currently in use.
The 1500 miles of privately owned UK pipeline network carries a variety of oil products, from road transport fuels to heating
oil and aviation fuel. It provides an efficient and robust distribution system across the UK and directly provides jet fuel for
some of the UKs main airports. It can take several days for fuel to travel from the refinery to the terminal by pipeline. At the
terminal, products are stored in large above-ground tanks and are transported to the filling station by road tankers.
The Government also has an oil pipeline system which is largely designed to meet the needs of military airfields.
Privately owned oil pipelines in England and Wales

U.K.O.P.
Shell
BP
Valero
Total
STANLOW
ESSO PIPELINE SYSTEM
NOTTINGHAM
MAINLINE PIPELINE SYSTEM

Esso
Valero
Total
Shell
WALTON GATWICK PIPELINE
BP
Shell
Valero
L.O.R.
MANCHESTER
KINGSBURY
BIRMINGHAM
NORTHAMPTON
PEMBROKE AND
MILFORD HAVEN
HEATHROW
AVONMOUTH
BUNCEFIELD
GATWICK
WEST LONDON PIPELINE

BP
Shell
Valero
Total
CORYTON/THAMES
WEST LONDON
PURFLEET
FAWLEY
FINA-LINE
Total
Government oil pipelines in England and Wales

INGRESS LOCATIONS:
RAWCLIFFE
KILLINGHOLME
(Total, Phillips 66, BP)
BACKFORD
(Shell)
KILLINGHOLME
BLACKMOOR
BACKFORD
MISTERTON
BRAMHALL
HETHERSETT
AVONMOUTH
HAMBLE
(BP, Esso)
CLAYDON
ISLE OF GRAIN
(BP, BA)
THAMES HAVEN
(BP, Shell, O.I.K.O.S.)
SAFFRON
WALDEN
SANDY
STANSTED
PURTON
HALLEN
AVONMOUTH
ALDERMASTON
THAMES
HAVEN
WALTON
ISLE OF GRAIN
HAMBLE
Product Distribution
The UK has a number of oil-company and independently-owned terminal facilities, linked either by pipeline, rail or road.
Around a half of all terminals are supplied by pipelines, 15% by rail and around a third by sea.
The south of the country heavily relies on pipelines that connect Fawley, Coryton, Stanlow and Milford Haven refineries
with distribution terminals serving major demand centres. The north tends to be more dependent on road transport with
large road terminals at Stanlow and on the Humber. Scotland is dependent on supplies from Grangemouth and Northern
Ireland on imports delivered to the Belfast port.
Key Indicators for 2011 and 2012

2011
%
CHANGE
10/11
TREND
2011
Contribution to balance of payments
4.3bn
+62%
Import volume of petroleum products
27.4mte
-1%
Export volume of petroleum products
36.1mte
+6%
2012
%
CHANGE
11/12
TREND
2012
Duty from road fuels
26.6bn
-0.7%
Average duty rate, ppl
58.0bn
-0.3%
Average VAT rate, ppl
23.2bn
+0.8%
-3.1%
-0.8%
Total demand
67.3mte
-3.1%
Petrol*
13.2mte
-5.0%
Diesel*
26.6mte
+2.7%
Fuel oil
1.7mte
-16.7%
Jet Fuel
11.1mte
-2.4%
Burning oil
3.3mte
+0.4%
Total throughput
68.9mte
-8.2%
Utilisation Rate
78.9%
-3.0%
NW Europe Cracking refining margin per bbl
$4.28
N/A
COMMENT
Economic indicators in 2011

Contribution to balance of payments
continued to increase in 2011 as a result of a
slight increase in exports and minor decrease
in imports. Rising prices of finished products
however made the greatest impact in the
change to the overall contribution to BoP.
COMMENT
Duty and VAT in 2012

The duty rate remained fixed throughout 2012
whilst VAT contribution increased only as a
reflection of rising crude prices. As demand
for finished products also fell, overall duty
from road fuels declined for another year.
Product demand has declined by almost 18%
in comparison to 2005.
Oil Product Demand in 2012

Product demand growth
Overall demand continued to fall in 2012,

and now stands at its lowest point in over 20
years. Nearly all the main petroleum products
recorded a fall in volume demanded in
2012, although diesel showed some signs of
recovery relative to other transport fuels. The
petrol market however continues to fall and
has now lost over a third of volumes relative
to the turn of the decade.
Refining Industry
Total throughput and utilisation rate fell
again despite previous years marginal
improvement. North Western European
refining margins improved relative to recent
years record lows.
*Biofuels in Petrol and Diesel not included.
10
Petrol pump price (avg)
136.1p
+1.8%
Diesel pump price (avg)
142.5p
+2.5%
Number of retail outlets (year-end)
8608
-1.1%
Number of supermarket sites
1306
+3.1%
11m litr
-1.5%
Average throughput of filling station
4,212 klitr
-1.2%
Demand for road fuels (billion litres)
43.8bl
-0.6%
Refinery CO2 emissions
16.3mte
-0.6
Refinery SO2 emissions
56kte
-5.1
Refinery NOX emissions
22.2kte
-6.6
Road transport PM10 emissions
25.3kte
-3.4
Road transport NOX emissions
378kte
+4.7
Road transport CO2 emissions (mtCO2)
111mt
0.0%
Road transport Methane emissions
3.4kte
-20.9
Av. throughput of supermarket filling stations
Although the number of UKs retail sites

continues to fall decline in response to
market conditions, as a result average
volume throughput per site has gradually
increased in recent years, particularly in the
supermarket sector. However, as a result
of the current economic climate, a decline
in total road fuel demand has dampened
average throughput per site for both
supermarkets and average filling station.
Retail Indicators
Air Quality (2010 data)*

Most air quality indicators continued to
improve in 2010 as steps to reduce
emissions were continued despite the
difficult business climate. The RTFO was
amended (in line with the EU Renewable
Energy Directive) to introduce mandatory
Carbon and Sustainability criteria for all
biofuels used in the manufacture of road fuel.
*2010 data only available at time of publication.
11
1. Economic Contribution and Refinery Economics
he UK oil and downstream refining industry is
return remaining on average, 8% in the period from
one of the largest in Europe, comprising of 7
1997 to 2011 (graph 1.4). The 2008 credit crisis added to
operating refineries, 50 terminals and extensive private
the industrys continued pressures, from volatile crude
and government pipelines carrying over 30 million
prices to increased motor fuel taxation and rise in VAT.
tonnes of fuel each year. The sector has undergone
Reported margins have shown some signs of recovery,
a number of changes over the years. During the 70s
moving from to $0.12 per barrel in 2011 to $4 per barrel
and 80s refiners moved from atmospheric distillation
in 2012 although hydrocracking margins remained
towards the production of gasoline and distillate to take
negative in 2012 - whilst crude utilisation rate fell below
advantage of the changing economic and legislative
80%, as shown in graph 2.6.
landscape. And more recently, refiners have had to

increasingly adapt and focus on reducing emissions
The oil refining and marketing industry plays a very
due to increased environmental legislation and tighter
important role in the UKs economy, supporting the
fuel specifications, and changing consumer needs with
employment over 88,000 people at refineries, head
the growth of diesel demand driven partly by fiscal
offices, forecourts and as contractors, and supplying
policy.
over 33% of the primary energy used in the UK from a

secure supply base. Over 100 million litres of petrol and
Despite the strong economic growth seen in the late
diesel are sold in the UK each day to an estimated 4
90s and early 00s, refining margins continued to fall
million customers. Today, our industry collects around
in both the UK and North West Europe as a whole.
37 billion in fuel duty and VAT each year, which
Increased environmental and energy policy reforms
contributes around 6% of the Exchequers total receipts.
and taxes squeezed the sector further, with rates of
1.1 Contribution to Balance of Payments

Contribution to Balance of Payments from
Imports and Exports of Petroleum Products
(excluding crude)
Contribution (m)
4,000
3,000
2,000
1,000
0
5,000
-1,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-2,000

Source: DECC
12
The graph illustrates the value of imports and

exports of petroleum products
Oil refining has historically been a major contributor

to the UKs balance of payments
However, the growing demand for diesel and jet fuel
has resulted in the UK becoming increasingly reliant
on large-scale imports of diesel and jet fuel; a 100%
increase of diesel imports and a 70% increase for
jet fuel between 1999 and 2010
Although net export volumes are similar to those in
2010, the graph indicates that the overall monetary
contribution to the UK economy has almost
doubled, which as a result pushes the value of
finished products up (including those exported)
Exported oil products, on the other hand, are
heavily dependent on international markets. As a
result, exports tend to have a more unpredictable
pattern
Oil products will remain central to the nations
energy needs for decades to come, alongside a
developing role for alternative fuels and energy
sources
1.3 Duty from Road Fuels
GDP Growth vs. Oil Product Demand Growth
Duty from Road Fuels
6%
30
4%
25
2%
2000
-2%
2002
2004
2006
2008
2010
2012 p
Duty (bn)
20
0%
15
10
-4%
-6%
Product Demand (% Growth)
GDP (% Growth)
94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13
Source: DECC/ONS
l
Oil product demand growth is a key indicator to an

economys health, and reflects loosely both cyclical
and growth trends
The impact of the 2008 credit-crisis can clearly be

seen by both the GDP and product demand growth
curve; they indicate a deep recession in 2008 and
another downward trend since 2011
Duty(bn)
02/03
04/05
06/07
08/09
10/11
11/12
12/13
Change
y/y%
22.10
23.5
23.6
24.6
27.3
26.8
26.6
-0.7%
Source: HM Treasury/HMRC
The 2012 Budget estimated fuel duty receipts for

2012/13 at 26.6 billion. In addition, around 10.2
billion was collected as VAT on road fuels
1.2 Annual Oil Trade
This combined figure is around 6.5% of total public

sector current receipts and almost equivalent to the
countrys total spending on defence
1.5 Gross Sales
1.4 Average Return on

Capital Employed
Gross Sales
120
1997-2011 Average Return on Capital Employed
100
Sales (bn)
30
ROCE (%)
25
20
15
40
20
UKPIA
Manufactu ring
Ser vices
1995
1998
2001
2004
2007
2010
Upstrea m Oil
Pro duction
Source: UKPIA/Office for National Statistics
he average return on capital employed for

T
period between 1997-2011 was only 7.9% for the
downstream oil industry compared to 15% average
of the other three comparable industries
Over the same time period, manufacturing

industries ROCE was 9.8% on average, and that of
service industries was 15.7%
60
10
0
80
Source: UKPIA
In 2011, gross sales by UKPIA member companies

in the UK were 101.3 billion, including duty
This is an improvement compared to real numbers

from the previous year, partly as a result of rising
crude prices, and smaller impairment charges
Service industries include communications, hotels,

catering, distribution, transport and storage.
13
1.7 UKPIA Refinery Share

of Inland Consumption
Refining and Marketing Employment
UKPIA Refinery Share of Inland Consumption

% share of inland
consumption
25,000
20,000
Employees
1.6 Refining and Marketing

Employment
15,000
10,000
5,000
-
80
70
60
1996
1999
2002
2005
2008
2011
1995
Consumption
Source: UKPIA
The refining and marketing industry is a major

employer in the UK, with a little under 14,000 people
directly employed by UKPIA members in 2011
90
1997
1999
2001
2003
2005
2007
2009
2011
2001
2003
2005
2007
2009
2010
2011
Change
y/y%
88.3
90.0
91.2
89.7
88.9
85.90
87.60
2.0%
Source: UKPIA
UK refining makes a substantial contribution; 8,500

jobs in refining support 54,000 jobs in the extended
supply chain industries; expenditure by these
employees supports a further 25,500 jobs in the
wider economy, making an overall total of 88,000
jobs (Source: IHS Purvin & Gertz 2013)
In 2011, around 88% of inland oil consumption in

the UK was supplied by UKPIA member companies,
a slight increase on the previous year due to a rise
in total production capacity by refiners
This provided vital energy resilience and security

of supply to the nation along with the provision of
high quality fuels at competitive prices
1.8 Regional Refining Margins

l
Regional Refining Margins
30
27
24
Margin $/bbl
21
18
15
12
6
3
0
199 0
BP RMM
199 4
199 8
North-West Euro pe
US Nor th-West
Australia
200 2
200 6
201 0
US Mid-West
Mediterran ean
201 4
1990
1995
2000
2005
2010
2011
2012
Change
y/y%
6.54
4.00
7.22
13.39
10.44
15.28
18.85
23.4%
Source: BP Statistical Review of World Energy 2012/ BP Trading Conditions

Update
NB: RMM Refining Marker Margin Basis. The aggregate BP RMM is based on
BPs 2013 portfolio.
14
Refining is a highly cyclical business with poor

margins occurring in 1995, 1999, 2002 and most
recently, 2009/10
European and Asian refinery margins have been

significantly lower than those achieved by refineries
on the US Gulf Coast in recent years
The BP Global Indicator Margin uses generic
refinery configurations for a number of products to
calculate the average regional refining margin
1.10 Crude and Ex-Refinery

Prices
NWE Refining Margins

Crude and Ex-Refinery Prices 2012
60
55
2007
2009
Pence per litre
Margin $/bbl
5
4
3
2
1
0
-1
-2
-3
2011
Cracking Refining Margins
HSkimming Refining Margins
2007
2008
2009
2010
2011
2012
Cracking
3.94
3.56
2.06
2.30
0.12
4.28
H-skimming
-0.19
-0.62
-1.01
-0.54
-2.20
-0.30
Source: Wood Mackenzie

l
The underlying trend for European refining margins

over the last two decades has been cyclical as the
previous graph indicates, however, more recent
periods have shown much more severe cycles,
notably in 2011- a direct impact of the recession
2012 data indicate a trend towards recovery with

cracking margins improving from last years $0.12
per barrel to $4.28 per barrel
Although hydro-skimming margins continue to
be negative - around $-0.3 per barrel they have
improved significantly relative to the previous years
negative margin of $-2.2 per barrel
40
35
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Petrol
Diesel
Crude Oil
45
30
50
Wholesale ex-refinery product prices tracked crude

closely throughout 2012
Crude oil is the main driver for prices of refined

products such as petrol and diesel and is reflected
in pump prices in the UK and globally
1.9 NWE Refining Margins
In recent years, diesel has been more expensive

than petrol with the differential narrowing by mid-
2012 but then again widening by the end of year
The UK and EU are net importers of diesel, a
product for which there is strong global demand
The refining margin is the difference between cost

of crude purchased and value of product sales
and is needed to cover fixed costs of operators and
maintenance, and to remunerate capital
15
2. Refineries
2. Refineries
here are seven major crude oil refineries operating
The current economic and legislative climate continues
in the UK, situated around the coast for ease of
to prove difficult for all European refiners, including
crude tanker access. Onwards distribution is achieved
those in the UK. The countrys utilisation rate in 2011
via an extensive pipeline system plus road, rail and sea
continued to decline, dropping below 79% - a 3% drop
transport.
from previous year. However, industry investments

have continued in the UK in spite of a challenging
The UKs crude feedstock is primarily low sulphur
economic backdrop, with Totals Lindsey Refinery
crude from the North Sea, although in recent years
having undertaken one of the largest investments of
there has been an increasing diversification trend.
2010/11 for a new diesel hydrotreater.
Imported crude accounted for 46% of total processing

in 2011, with UKs dependency on imports set to rise as
The current economic and financial downturn has also
domestic production declines - almost every year since
had direct impact on global demand for oil products.
1999.1 Europe is still the largest region from which the
Demand in the UK continues to be subdued as a result,
UK imports crude oil, with Norway continuing to be
combined with the drive to reduce emissions in the
the single largest source, whilst Africa accounts for
transport sector and improved vehicle efficiency.
approximately 10.5%.
1 PFC Energy report Downstream monitoring service: UK (December 2011)
2.1 UK Refineries
2.2 Number of Refineries

Number of Operating UKPIA Refineries
Petroineos Grangemouth
Essar Stanlow
Total Lindsey
Number of major ref ineries
20
Phillips66 Humber
15
10
5
0
197 1
197 7
198 3
198 9
199 5
200 1
200 7
201 3
Source: UKPIA
Murco Milford Haven
Valero Pembroke
ExxonMobil Fawley
Source: UKPIA
l
16
There are seven major crude oil refineries operating

in the UK which supply the bulk over 88% in 2011-
of the inland market demand for petroleum products
The refineries are situated around the coast and
most are connected to pipelines for product
distribution
The Petroplus Coryton refinery closed in June 2012
The number of major oil refineries in the UK has

fallen from a high of 19 in 1975 to 7 currently in
operation
There are two further smaller speciality refineries in

the UK producing bitumen and other products
In 2011, two of the eight refineries then operating
were sold; Chevrons Pembroke refinery to Valero
and Shells Stanlow refinery to Essar. Milford Haven
refinery remains on the market
2.4 Refinery Throughput
European Capacity 2000/2011

2000
2,5 00
Refinery Throughput
100
2,0 00
1,5 00
1,0 00
500
120
2011
Throughput (Mte)
Thousand barrels per day
3,0 00
Ger ma ny
Italy
UK
France
Spa in
80
60
40
20
Nethlnds Belg ium
Source: BP Statistical Review of World Energy 2012

l
2. Refineries
2.3 European Capacity
In 2010, according to the BP Statistics Publication,

the UK regained its position as the third largest
refining capacity in Western Europe and continues
to maintain its position with total refining capacity of
1.76 million barrels per day (not including
Coryton closure)
The change in position is a direct result of refinery

closures in France rather than an increase in
UK refining capacity, which in fact has continued to
steadily decline since 2004
l
There are 94 mainstream refineries in the EU
199 0
199 4
199 8
200 2
200 6
201 0
Source: DECC (DUKES)
Since the refinery closures in 1997, 1999, 2009, and

most recently 2012, UK refining throughput has
fallen from its late 90s peak of 97 million tonnes of
crude oil
UK refining throughput was around 69 million tonnes

in 2012 an 8% drop compared to the previous year
Throughput depends on product demand, capacity
and other factors such as timing of maintenance
shutdowns
Post closure of Coryton, the UK refining capacity

at the end of 2012 was 1.5 million barrels per day
(Source: IHS Purvin & Gurtz 2013)
2.6 Crude Capacity and

Ultisation
2.5 Refinery Energy

Efficiency
Crude Capacity and Ultisation
Refinery Energy Efficiency
100 ,00 0
Fuel used as % of throughput
85%
40,000
4
3
20,000
1
198 8
199 4
200 0
200 6
201 2
Refineries use the equivalent of between 5 and 6%

of throughput as fuel, to provide energy to refine
crude oil into products for consumers
More energy is required to meet the current high

demand for cleaner transport fuels and to meet
challenging environmental standards, but this has
been offset by improved energy efficiency at
refineries
90%
60,000

l
95%
80,000
0
198 2
100 %
75%
200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1
Crude pro cessed
utilisati on rate
70%
80%
The capacity utilisation rate is the value of total

production capacity which is actually being utilised
over a specific period of time
Crude oil capacity utilization rate is equal to crude oil

processed, divided by crude oil production capacity
UK refineries in 2011 had a combined utilisation rate
of a little under 79% - a 3% decline compared to the
previous year
Although the industry undergoes regular cyclical
declines, the UK utilisation rate has consistently
declined in the last 8 years, barring 2009
2 Financial Times April 27th 2011 By Sheila McNulty
17
2. Refineries
2.7 Sources of Crude Oil
2.8 Destination of Oil

Products
Africa
UK
Norway
Domestic
deliveries
Venezuala
Others
Russia
1,000 tons
2005
2007
Middle East
2009
2010
Exports
2011
Change y/y%
84,721
76,575
68,199
62,962
51,972
Exports
58,885
57,357
60,041
54,587
57,586
5%
54,099
50,999
45,202
42,196
33,745
-20%
Net
-28,263
-31,781
-37,045
-33,821
-39,358
-8.7
Ind. Prod
Imports
-17%

l
Around 74% of UK refinery crude throughput is from

the North Sea; around 52% from Norway and 22%
from the UKCS
Currently, around 8% of crude oil processed at UK

refineries arrives from Russia and the Middle East,
an increase on last years 5.7%
Imports from Africa have also increased from 8.8%

to 10.5%
The majority of oil products processed at

UK refineries are consumed in the UK market
approximately 62%
The total number of oil products exported out of the

UK is slightly higher than the total number of
imported products, as the table indicates
The EU is the main destination for UK oil product
exports; the UK is part of a trade triangle with
Belgium and the Netherlands. The US, however,
is also an important export market - particularly for
excess petrol
There is, however, increasing uncertainty over the
future of the UKs export market as global
oversupply narrows down outlet opportunities,
particularly in the US and the economic downturn
continues to dampen global demand; relevant in
particular to petrol, where UKs structural surplus is
high
2.9 UK Net Product Flows

UK Net Product Flows: 2011
Source: DECC (DUKES) Production for year 2012
18
These are Net product flows; they represent the

overall import and export balance of the various
grades shown
UK refineries, in common with those in the EU, were

configured to produce petrol and therefore have a
mismatch between domestic production and
demand
Fiscal policy in the EU has driven up demand for
diesel and demand for air transport has dramatically
increased aviation fuel use
Consequently, the UK has a deficit of aviation fuel and
diesel, whilst exporting surplus petrol, fuel oil and gas oil
Imports are key for the jet fuel market as demand is
over 11.5 mmt with UK refiners supplying only half
the market demand
2.11 Products Produced
Annual Oil Trade 1999 to 2011
Products Produced 2012
120
30
100
25
80
Production (Mte)
Quantity (m te)
60
20
40
15
20
10
-20
-40
5
0
-60
Petrol
-80
-100
-120
200 1
200 3
200 5
Imports
Exports
200 7
200 9
Petr.
Gases
Bur ning
Oil
Others
Source: DECC (DUKES - provisional data)
Balance
The chart illustrates UKs annual trade; imports

and exports of crude oil and petroleum products
The negative imbalance in trade from 2006 has

largely been a result of increased imports and a
decrease in exports of crude oil; a consequence of
depletion of the UK continental shelf
The petroleum products balance has also shifted:

both diesel and aviation fuel demand have driven
an increase in imports, whilst fuel oil exports have
declined and motor spirits increased
Gas Oil/ Jet Fuel Fuel Oil

Diesel
201 1

l
2. Refineries
2.10 Annual Oil Trade
2.12 Product Demand
UK refineries are configured to meet historically

higher demand for petrol and fuel oil
As a result of reducing demand, refineries now

produce an excess of these products and are in
deficit in others, such as jet fuel and diesel
Changing refinery production to meet demand will
require major investment
See UKPIAs paper Fuelling the UKs future the
role of our refining and downstream oil industry
for more information and the IHS Purvin & Gurtz
report The Role and Future of the UK Refining
Sector published in May 2013
2.13 Changes in Refinery

Production
Product Demand 2012

100
30
20
15
10
5
0
Petrol
Gas Oil/
Diesel
Jet Fuel
Fuel Oil Petrole um Bur ning

Gases
Oil
Others
Gas Oil/ Diesel
Jet
Petrol
The majority of oil product demand comes from the

transport sector
40
20
197 6
198 0
198 4
198 8
199 2
199 6
200 0
200 4
200 8
201 2p
Source: DECC (DUKES))
UK refineries do not produce enough jet fuel or

diesel, consequently these are increasingly
supplemented by imports to meet demand
l
60
Source: DECC (DUKES - provisional data)

l
Fuel Oil
80
UK production Mte
Demand (Mte)
25
The major change in refinery production over the

last forty years has been a significant reduction in
the quantity of fuel oil produced
The increase in gas oil/diesel and petrol seen in the

80s and 90s has since levelled off
Over the same period, some of the surplus fuel oil
has been converted into petrol and gas oil/diesel or
exported
19
2. Refineries
2.15 Refinery CO2

Emissions
2.14 Changes in Product

Demand
100
Fuel Oil
Gas Oil/Di ese l
Jet
Petrol
Refinery CO2 Emissions
80
UK sales Mte
30
25
Emissions (Mte)
60
40
20
197 6
198 0
198 4
198 8
199 2
199 6
200 0
200 4
Since 1990 the demand for petrol has almost

halved, whilst jet fuel has seen demand rise by over
70%
owever, overall demand clearly shows a
H
downward trend in the last four years, linked in part
to the economic crisis, which has affected nearly
all categories of oil product consumption, except
diesel which has remained almost flat
20
200 6
201 1
Refineries emit around 30% of the UKs CO2

emissions and are included in the EU Emissions
Trading Scheme
CO2 emissions increased slightly in 2011by around

7%
Refinery SO2 Emissions
Refinery NOx Emissions

50
Emissions (Kte)
Emissions (Kte)
l
200 1
2.17 Refinery NOx

Emissions
120
60
1979
1983
1987
1991
1995
1999
2003
2007
2011
Source: DEFRA
199 6
Although it takes more energy to supply an

increased demand for transport fuels, particularly
low sulphur fuels, refinery CO2 emissions have
fallen since 1970 as a result of improved energy
efficiency and refinery closures
180
0
1975
Source: DECC (GHG Emissions)
The major change in product demand since 1979

has been the decline of the fuel oil market - natural
gas replacing fuel oil for power generation and gas
oil for space heating - and the growth of transport
fuels
240
10
0
199 1
2.16 Refinery SO2

Emissions
15
200 8 201 2p

l
20
Refineries release SO2 when sulphur, naturally

present in crude oil, is burnt
Refinery SO2 emissions have fallen by 72% since

1970, to around 60 thousand tonnes in 2011
This is due to investment to increase sulphur
recovery at refineries and the use of low sulphur
North Sea crude oil
Although there has been an increase in recent years
due to the use of higher sulphur crude oils, further
reductions are planned
40
30
20
10
0
1975
1979
1983
1987
1991
1995
1999
2003
2007
2011
Source: DEFRA
NOx is formed as a result of the combustion of fossil

fuels, and hence is produced at refineries
Refinery NOx emissions have fallen by well over a

third since 1990 to around 22 thousand tonnes; or
47% compared to 1975
This is due to the installation of abatement
technology at refineries
2. Refineries
2.18 Downstream VOC Emissions

l
Downstream VOC Emissions

250
Since 1990, refinery and storage emissions have

fallen by over 70%, to under 21 thousand tonnes
due to leak detection and repair programmes
200
Emissions (ktonnes)
olatile organic compounds are produced from the

V
evaporation of oil products
150
Additional reductions in the downstream industry

are due to the introduction of vapour recovery
equipment at storage facilities, on petrol deliveries
and at many of the higher throughput filling stations
100
50
0
198 2
198 6
199 0
199 4
Refining/Storage VOC Emissions
199 8
200 2
200 6
201 0
Distribution of oil products VOC emissions
Emissions from distribution have reduced by 40%

since 1970 or 14% y/y in 2010
*2011 data for VOC emissions was not available at time of going to print
Source: DEFRA
21
3. Road Transport Fuels
otal product demand last year was down for a fourth
where 4 billion litres greater than those of diesel, whilst
consecutive year, indicating a downward trend. This
annual registration of new diesel vehicles was still only
is linked in part to the downturn, which has hit nearly all
one third of the total vehicle fleet. A key reason for this
categories of oil product consumption, as well as higher
relatively slow uptake had been the lack of any tax
oil prices and improved vehicle efficiency.
advantage for diesel, which is taxed at the same rate as

petrol. However, with the advances achieved in diesel
The road transport sector, prior to the recession, was
engine performance leading to improved fuel efficiency
growing at a steady rate, with increases in diesel use
relative to petrol, combined with changes in company
offsetting weaker petrol demand.
car personal tax policy and VED rates, consumers in

recent years have increasingly favoured diesel cars.
The increase in diesel sales is part of a Europe-wide
Today, 48% of new registered vehicles in the UK are
trend, largely fiscally, driven that has been developing
diesel fuelled, and over 59% of the 44 billion litres of road
for over two decades with the UK coming comparatively
fuels sold last year was diesel.
late to the dieselisation process; in 2004, petrol sales
3.1 Demand for Road Travel
3.2 Road Fuel Sales
Demand for Road Travel
60
700
600
550
500
450
400
350
300
199 5
200 0
historic data
200 5
201 0
201 5
low demand
202 0
central
202 5
203 0
203 5
oad travel demand has been on an upward

R
trend for decades and, despite a flattening in
growth during the recession, demand is forecast to
increase in the future
However, due to advances in engine efficiency, this
trend is not reflected in product demand
40
Diesel
30
20
Petrol
10
Source: DECC
l
y 2035, central demand is predicted to have

B
grown by over 66% from 1995 levels
l
22
50
0
197 6 198 0 198 4 198 8 199 2 199 6 200 0 200 4 200 8 201 2p
high demand
Source: DfT (DfT Road Transport Forecast 2011)

l
Total sales billion litres
Billion km driven
650
Total Road Fuel Sales
Whilst total road fuel sales have shown a long term

increase since 1970, they dropped slightly between
2007 and 2011 by over 11% due to a combination
of higher prices driven by the cost of crude oil and
the economic recession
In 2012 however, diesel sales have increased a

rise of over 2.5% - whilst demand for petrol around
18 billion litres has continued to decline 5%
decrease on previous year
Share between petrol and diesel continues to shift in
favour of diesel, now accounting for 59% of total fuel
sales
This is the result of an increased proportion of diesel
vehicles
Petrol Sales
35
Total sales (billion litres)
30
25
Today, sales of petrol have fallen to 18 billion litres accounting for a little over 41% of total road fuel as
a result of lower demand for fuel due to the current
recession and declining demand for petrol vehicles
20
15
10
5
0
1976
ales of petrol have been falling since reaching a peak

S
of 33 billion litres in 1990 equivalent to 73% market
share of transport fuels
Average annual decline has almost doubled in the

last 5 years to over 5.5% per annum, relative to the
average of the last 20 years of 2.8% per annum
1982
1988
1994
2000
2006
2012p
Source: DECC
3.4 Diesel Sales
3.5 Maximum Sulphur in

Petrol
Diesel Sales
25
20
15
10
5
198 2
198 8
199 4
200 0
200 6
201 2p
Source: DECC
l
Max. Sulphur in Petrol
200 0
Sales of diesel have been steadily increasing for the

last twenty years, today reaching a little under 26
billion litres
This is the result of the increased popularity of

diesel vehicles due to their high efficiencies,
perceived lower running costs, and increased
demand for commercial vehicles
Parts per million sulphur (ppm)
Total sales (billion litres)
30
0
197 6
3.3 Petrol Sales
150 0
100 0
500
0
199 0
199 5
200 0
Legal L imi t
200 5
UK Actual
201 0
Source: BSI/UKPIA
The level of sulphur in road fuels is limited by law
From January 2009, all UK petrol was sulphur free,

containing less than 10 parts per million of sulphur
Diesel sales fell slightly in recent years due to the

economic recession and higher diesel prices but
returned to record sales in 2012
Prior to 2008, diesel was replacing petrol on a like

for like basis, with an average annual growth rate of
3% in the last 20 years, barring a short decline
period in 2008 and 2009
23
Max. Sulphur in Diesel
Sales of LPG for Transport
400 0
300
Total sales (million litres)
Parts per million sulphur (ppm)
3.7 Sales of LPG for

Transport
3.6 Maximum Sulphur in

Diesel
300 0
200 0
100 0
0
199 0
199 5
200 0
Leg al L imi t
200 5
201 0
150
100
50
0
199 9
200 1
200 3
200 5
200 7
200 9
201 1
The level of sulphur in diesel is also limited by law
All diesel in the UK became sulphur free by

January 2009 (below 10ppm)
Source: HM Revenue and Customs
24
200
UK Actual
Source: BSI/UKPIA
l
250
As well as petrol and diesel, liquefied petroleum gas

(LPG) is used as a road fuel in the UK
Sales of LPG rose rapidly between 2000 and 2006

based upon a favourable duty incentive, a
conversion grant scheme and favourable treatment
under the London Congestion Charge
However, the removal of the grant scheme and
gradual reduction in the duty differential between
LPG and standard fuels since has impacted on the
sales of LPG/petrol cars, which in turn has affected
sales of LPG, lowering sales to 185 million litres
down from a 2006 peak of almost 250 million litres
4. Biofuels
4. Biofuels
s a member of the European Union, the UK is
amount of work has been undertaken by the downstream
committed to reducing its carbon emissions as
oil industry to ensure that the Governments targets are
initially mandated by the 2003 EU Biofuels Directive that
met under the Renewable Transport Fuels Obligation
set an EU-wide target of 5.75% of the market share of
(RTFO) and that fuel quality standards are maintained.
transport fuels by 2010. This was followed by the recently
Key considerations are the amount of carbon saved
transposed Renewable Energy Directive (RED) that sets
by different biofuels, the sustainability of the source
out a target of 10% by energy for all forms of transport to
material, food crop production and the carbon balance
be from renewable sources by 2020.
associated with land use change. In December 2011, the

RTFO was amended to allow only biofuels to meet the
Given that over 25% of the UKs carbon emissions come
RED carbon and sustainability criteria to count towards
from the transport sector, with some 14% from the private
the obligation, and, from April 2013, the obligation was
car fleet alone, the transition to a low carbon model has
extended to include fuel consumed by Non-Road Mobile
been particularly challenging. As a result, an enormous
Machinery (NRMM).
4.1 RTFO Targets
4.2 UK Bioethanol
Consumption
4%
Million litres
% v olume biof uel in road

f uels
RTFO Targets
6%
2%
0%
07/08
08/09
09/10
10/11
11/12
12/13
13/14
Source: HMT
l
The RTFO was introduced in April 2008, with an

original target of 5% biofuel content (by volume) in
road fuels by 2010/11
However, this was revised due to sustainability
concerns and the targets for the biofuel content of
road fuels are 4.5% for 2012/13, and rising to 4.75%
for 2013/14
eans by which the RED obligation is met are
M
yet to be decided. For this reason future RTFO
obligation is still unknown
UK Bioethanol Consumption
03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13
Source: HMRC
l
l
880
800
720
640
560
480
400
320
240
160
80
0
Between January 2005 and March 2010, the

Government introduced a 20 pence per litre duty
reduction on bioethanol
In 2012/13, UK bioethanol consumption stood at a

little under 800 million litres, which represents
around 4.2% of all petrol sales by volume
The relatively low sales volumes reflect the current
logistical difficulties of adding bioethanol to petrol
There are various other renewable petrol fuels which
obligated companies use to meet their targets, such
as methanol
The buyout price in the RTFO is set at 30ppl
25
23
4. Biofuels
4.3 UK Biodiesel
Consumption
4.4 UK Progress towards

RTFO Targets
UK Progress towards RTFO Targets
UK Biofuel Consumption
% v olume biof uels in road f uels
120 0
4%
100 0
3%
Million litres
800
600
2%
400
1%
200
0
0%
02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13
Jan
Jul
2008
Jan
2009
Jul
Jan
Jul
2010
Bioe tha nol
Between July 2002 and March 2010, the

Government introduced a 20 ppl duty reduction on
biodiesel
In 2012/13, UK biodiesel consumption fell to around

520 million litres from previous years 992 million
litres as a result of waste fuels being used to fulfil
the RTFO obligation, which double count in the
RTFO
l
Jul
Jan
Jul
2012
Jan
2013
Biod iesel
Source: HMRC
Source: DECC
Jan
2011
2012/13 biodiesel levels represented around 2% of

total diesel sales by volume
The buyout price in the RTFO is set at 30ppl
The UK added 2.6% of biofuels during the first year

of the RTFO (2008/09), exceeding the target of 2.5%
In the 2nd year of the RTFO (2009/10), the UK met

the target of 3.25% of biofuels
In the twelve months of the 2010/11 obligation
period (Year 3), approximately 1,517 million litres
of biofuel have been supplied, of which 59% was
biodiesel and 41% bioethanol
In the 2011/2012 period, biofuel use increased to
3.7% of total road transport
In the last twelve months, total volume of biofuels fell
to 3.2%, according to latest data, as a result of
waste fuels now counting towards RTFO target at
double the value of bioethanol and biodiesel
4.5 Duty & Buy Out for Biofuels

Duty Differentials and Buy Out for Biofuels
40
Pence per litre
30
20
10
02/03
03/04
04/05
05/06
06/07
07/08
08/09
Duty Differential
Source: HMT/ RFA
26
22
09/10
10/11
11/12
Buy Out
12/13
13/14
A duty differential of 20 pence per litre has been in place

for biodiesel since 2002 and for bioethanol since 2005
In addition, a buy out price for the RTFO was

introduced at 15 ppl in 2008/09, giving a combined
incentive of 35 ppl
The duty differential was removed in 2010* with the
buyout price at 30 ppl
The buy out price is effectively a penalty on the
fuel supplier if the bio component is not added to the
final blend (or the fuel does not meet the carbon and
sustainability criteria)
* Except for cooking oil where the duty differential of 20 ppl remained until
April 2012
United Kingdom Petroleum Industry Association
A Question of Balance
How do we maintain a
competitive and growing
economy, and have sound
policy that meets
environmental objectives?
Europe has high environmental aspirations

The Europe 2020 strategy, adopted by the European Council in 2010, aims at achieving the following climate and energy targets:
To reduce greenhouse gas emissions by 20% compared with 1990
To increase the share of renewable energy sources in final consumption to 20%
To improve energy efficiency by 20%
EU Member States have committed to reach national targets, as defined in the National Reform Programmes. Furthermore,
2012 saw the launch of the European Commission's non-legislative report Roadmap for moving to a competitive low-carbon
economy in 2050. The roadmap includes plans and targets for the following sectors: power generation, industry, transport,
buildings, construction and agriculture, aiming to achieve a minimum of 80% reduction target by 2050.
EU Directives are transposed into UK legislation.
EU Low-Carbon Strategy
...but society needs oil to function

The International Energy Agency forecasts global primary energy demand rising by about 35% through to 2035, almost
comparable to adding another United States to the global demand balance. For several decades to come, oil is still likely to be the
most important fuel in the energy mix. In Europe, oil is set to account for 85% of total transport fuels in 2030 ( IEA World Energy Outlook
2011). In the UK, oil is projected to account for over 32% of total primary energy demand, with transport accounting for 41% of final
energy consumption (DDECC Updated Energy & Emissions Projections 2012 - Central Scenario). The projected global increase in demand for
primary energy creates a tremendous challenge. Sustaining and maximising domestic production are key to ensuring a reliable,
secure source of energy supply. The right infrastructure, policy and regulatory framework, are a prerequisite to ensure that oil
products can be supplied to consumers at affordable prices, meeting the UKs current and future energy needs in a way that is
consistent with sustainable environmental policy and to facilitate economic growth.
Primary use
Fuel
Billion tonnes
Billion tonnes
BP Energy Outlook 2030 = IEAs Outlook very similar
UK Final Energy Consumption 2030 (ktoe)
DECC Updated Energy & Emissions Projections 2012 - Central Scenario
Environmental aspirations have a cost

Against a backdrop of tough market conditions, cost pressures, supply vs. demand challenges, a burdensome legislative
background and growing competition from the USA and new players in the Middle East and Asia, our downstream oil industry is
at a key juncture. Oil will continue to play a major role in the UKs energy mix for many years to come. Most crucially, refineries
are impacted by multiple UK and EU legislation which places on them challenging incremental cost demands in terms of
operational and other requirements whilst severely disadvantaging them against EU and global competitors.
Crude cost and income from products UK refinery operating cost
Indicative graph potential impact of legislation assuming no cost pass through.

Margins shown are indicative, obtained under favourable market conditions.
Estimated cost impact of legislative requirements on UK

refineries (2013-2030) 11.4 billion
Not including: Fuel Quality Directive (FQD) Article 7a and Product Quality. FQD 7a cost
estimated in the indicative graph on the left. Most capital and operational costs are
non-recoverable. Source: IHS Purvin & Gertz 2013
...is energy supply at risk?

The 2013 IHS Purvin & Gertz report indicates that, with a level playing field with other refiners across the EU and
world, UK refineries would be considered to be competitive; indeed, they represent what is termed a core refining
capacity - refining capacity expected to survive and needed in order to keep the European market adequately supplied
(IHS Purvin & Gertz) .
However, there is the prospect of significant increases in capital expenditure and operating costs for UK
refiners as a result of proposed UK, EU and, in some cases, global legislation. Circa 11.4 billion is estimated to be
required to comply with UK and EU legislation to 2030. The legislative cost impact is likely to increase further once
the impacts from legislation which has yet to be fully defined, such as the Fuels Quality Directive (FQD), are factored
in. The report concludes that no industry would bear such an investment burden for no return. It would be highly likely
that, when faced with such a large mandatory capital expenditure requirement that provides no return on investment,
UK refiners could be forced to close more UK refineries.
This would leave the UK even more exposed to the international refined product market for those products already at
high risk, based on IEA measures developed to evaluate national energy security risks and resilience capacities. Using the
IEA MOSES (Model of Short Term Energy Security) net import indicator - 45% import dependence benchmark - and applying the
benchmark to individual products, the UK is already above the 45%, importing 56% jet fuel and 48% diesel. In the event
of further refinery closures, jet fuel imports could rise to 78% and diesel to 77% by 2030. In the UK, the Government is
working with the refining sector to develop a strategic policy framework - Refining Strategy - due for completion in Autumn
2013. At EU level, a permanent EU Refining Forum has been established and competitiveness checks - Fitness Checks - to
address EU refinings international competitiveness, are due for completion in 2014. However, as proposed, Fitness Checks will
not examine planned legislation or that being implemented (i.e. Industrial Emissions Directive (IED) and Fuel Quality Directive).
Refined Product Balance: Deficit in % for Scenario As is
Net imports
Refined Product Balance: Deficit in % Refinery Closure Scenario

Net imports
Net exports
Net exports
Source: IHS Purvin & Gertz 2013
A question of balance
On one side
The UK refining industry makes a substantial contribution to the UK supporting over 88,000 jobs in the extended supply
chain and wider economy. UK refining contributes, in a normal year, over 2.3 billion to the economy (Source: IHS Purvin &
Gertz 2013) and each large refinery is estimated to inject ~60m+ into the local economy where it is located (UKPIA estimate).
Even up to 2030 and beyond, oil is forecast by the IEA to be a major source of world energy.
The refining industry will continue to play a vital role in maintaining the countrys fuel supplies, given the right conditions.
To 2030, over 11.4 billion is estimated to be required to comply with a number of UK and EU policies. This figure
does not include the Fuel Quality Directive and will rise further once this is factored in. Most capital and
operational costs are non-recoverable.
With a level playing field, the UKs refining industry is competitively placed against EU and Global competitors.
On the other
The UKs refining industry recognises the importance of sustainable environment policy that meets objectives but does not
jeopardise competitiveness, employment prospects and mobility.
In order to continue keep the wheels turning, the planes flying and the economy growing, as well as meeting
environmental targets, a clear and balanced policy, based on sound science, is needed. Also, an approach that considers
the impact on key manufacturing industries, such as refining, is paramount.
Environmental ambitions can still be reached by amending policy, underpinned by practical and achievable measures,
without disadvantaging industry.
...the balance can be achieved

The UK oil refining sector will continue to play a central role in our future as a reliable, resilient and secure source of transport
fuels and feedstocks for other industries. In order to fulfil this role, UK refineries will require substantial investment.
To
attract this investment in a globally competitive market, the right policy environment, which does not place our industry at a
disadvantage against global and EU competitors, will be key.
The refining industry strongly believes that a balance between environmental ambitions and energy resilience can be
achieved. For these reasons, UKPIA calls for:
The DECC Refining Strategy to provide proposals to inform a future policy framework.
At EU level, the Refining Forums Fitness Checks must address past and current legislations effects on industry - e.g.
Fuels Quality Directive (FQD) and Industrial Emission Directive (IED).
For the FQD Article 7a, UKPIA advocates a linear and simple proposal: the GHG content of every fossil fuel sold at the
pump to be characterised as a fixed default value calculated as an EU average. Likewise, the country of origin of the
fossil fuel feedstocks can be calculated as an EU average, using publicly available data (i.e. EUROSTAT).
Under the IED, UKPIA proposes:

The bubble concept must be recognised as a valid Best Available Technique (BAT) as defined under IED Article 1(10).
BAT Conclusions and associated emission limit ranges must be based on robust evidence obtained from existing
refinery operations using the BATs.
Robust cost-effectiveness and cost-benefit assessment methodologies must be agreed, recognising investments
already made in emissions abatement.
It must be acknowledged, following revision of BREF documents, that the four year period for permit review and
achievement of compliance is unmanageable where investment in new abatement technology is required to meet the
revised emissions limits.
Economic recovery and growth will be driven by refined oil products provided by a healthy refining
industry. Our call is to UK and EU legislators to address the Question of Balance.
4. Biofuels
4.6 Sources of Biofuels used in the UK

Sources of Biofuels by Crop
Sources of Biofuels by Country
Unknown
6%
United States
39%
Soy
2%
Used cooking oil

52%
Palm
1%
Oilseed rape
3%
United Kingdom
12%
Spain
4%
Unknown
20%
Corn Non EC
31%
Corn EC
3%
Wheat
2%
Netherlands
10%
Italy
1%
Indonesia
1%
Canada
Germany
6% France 3%
2%
Argentina
2%
Source: DfT (covering period April 2011 December 2011)
Roughly 12% of biofuels used are produced in the UK, down from 18% the previous year; the remainder is imported
Ethanol is mostly sourced from sugarcane and sugar beet
Biodiesel is mostly sourced from used cooking oil, soy and rape
27
23
5. Other Products
5. Other Products
wide range of products are produced from crude
contrast, the domestic/industrial markets for other fuels
oil, ranging from transport and domestic/industrial
have altered markedly over the last twenty years as sales
fuels to chemical feedstocks. Over time, refinery
of fuel oil and gas oil have reduced, being displaced in
configurations have developed to increase the quantities
power generation and industrial applications by natural
of high value transport fuels that can be produced. In
gas.
5.1 Refining Production
5.2 Fuel Oil Deliveries
Refining Production in 2012*

Naphtha
Inland Fuel Oil Deliveries

30
Deliveries (million tonnes)
LPG
Petrol
Jet and
Kerosene
Diesel and
Gas Oil
Fuel Oil
Bitumen
Source: DECC *excludes refinery use and losses
The current trend of production is away from heating

fuels (fuel and gas oils) and towards transport fuels
(petrol, diesel and jet fuel)
10
0
1976
1982
1988
1994
2000
2006
2012
Source: DECC
Refineries produce naphtha, LPG, road fuels,

kerosene, jet fuel, heating oil, diesel, gas oil, fuel oil,
bitumen and other products such as chemical
feedstocks
20
The market for fuel oil has reduced significantly

since 1970 rising only briefly in 1984 due to the
miners strike
The reduction in demand is mainly due to fuel

switching to natural gas by electricity generators
the dash for gas
Refineries will require major investment to meet the

increased demand for diesel and jet fuel estimated
at up to 700 million at each major refinery
(Deloitte report for DECC on Downstream oil April 2010)
5.3 Gas Oil Deliveries

Inland Gas Oil Deliveries
16
Deliv eries (million tonnes)
14
12
10
6
4
0
197 6
Source: DECC
28
198 2
198 8
199 4
200 0
200 6
201 2
The UK demand for gas oil has fallen since 1970 to a little
over 5 million tonnes
Gas oil is produced from a similar fraction of crude oil

as diesel and so production is limited
The reduction in demand is mainly due to fuel switching
to natural gas
Product specification changed for inland marine fuels
and off road gas oil fuels from January 2011, moving
them to 10PPM, virtually sulphur-free. This adds further
pressure on middle distillate desulphurisation capacity
5.5 Aviation Fuel Deliveries
Inland Kerosene Deliveries
Inland Aviation Fuel Deliveries
4.5
15
4.0
12
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
197 6
198 2
198 8
199 4
200 0
200 6
201 2
Source: DECC
l
9
6
3
0
197 6
198 0
Kerosene (also called burning oil) is used as fuel for

domestic and industrial heating, and sales are
typically higher during the winter
Inland sales of kerosene have increased since 1980
reaching over 4 million tonnes in recent years, but
dipping to 3.3 million tonnes in the last two years
(2011 and 2012)
199 6
200 0
200 4
200 8
201 2
Aviation fuel demand has been falling for the last six
consecutive years barring 2011 mostly as a
result of the recession and more efficient engines
5.7 Lube Oil Deliveries

Inland Lube Oil Deliveries
3.0
1.2
2.5
1.0
2.0
1.5
1.0
0.5
0.0
197 6
198 2
198 8
199 4
200 0
200 6
201 2
Demand for bitumen has declined to just 1.3 million

tonnes/pa
Bitumen is produced from some of the heaviest
fractions of crude oil and is mainly used for road
surfacing and roofing
199 2
New legislation introduced in January 2008

restricted the sulphur levels in kerosene to 0.1%
Source: DECC
198 8
Aviation turbine kerosene is used in jet engines
Inland Bitumen Deliveries
198 4
Source: DECC
5.6 Bitumen Deliveries
5. Other Products
5.4 Kerosene Deliveries
0.6
0.4
0.2
0.0
197 6
198 2
198 8
199 4
200 0
200 6
201 2
Source: DECC
0.8
Sales of lubes and greases have fallen since 1970

to around 0.36 million tonnes/pa
Improved engines require fewer oil changes and the

use of synthetic lubricating oils has also contributed
to this reduction
The introduction of biodiesel at higher levels could
see oil drain intervals reducing and demand for
lubes increasing
29
23
6. Petrol Prices
6. Petrol Prices
s a result of the UKs competitive road fuels retail
It should also be noted that data hides variations between
market and efficient distribution facilities, the pre-
remote rural regions and urban areas, in part due to
tax price of major brand petrol in the UK is consistently
higher transportations costs. The government is seeking
amongst the lowest in Europe. However, despite this
to address this by setting up a pilot scheme to provide
competition, the price paid by consumers at the pump
a 5 pence per litre fuel rebate for very remote areas. The
is one of the highest in Europe, due to the higher levels
scheme launched on March 1st 2012 with more than 90
of duty applied by the Government. The retail/ex-refinery
businesses in the Inner & Outer Hebrides, Northern Isles,
price spread on average has been around 6 pence per
Islands in the Clyde and Isles of Scilly taking part.
litre on petrol for most of the last decade.
6.1 Petrol Pump Price
6.2 Average Contribution to

Pump Price
UK Petrol Pump Price Breakdown

140
Average Contribution to Pump Price 2012
120
Pence per litre
100
80
Retail /
Ex-refinery
Price Spread
6%
60
Duty /VAT
40
20
0
199 2
Pre-tax
199 6
200 0
200 4
200 8
Ex-Refinery
Price
30%
201 2
Source: Wood Mackenzie *The price of petrol is in money of the day
30
The price of petrol at the pump has steadily

increased over the last 20 years with the exception
of the most recent spike in 2008, which was a result
of crude oil prices reaching record levels
Since the petrol price-dip in 2009 as a result

of prices levelling-off from the previous year the
increase in petrol prices has grown at a much faster
rate in the last 3 years; an average of 6.6% from
2003-2008 vs. 11% between 2010 and 2012
Consistent growth is due in part to the general rise
in crude oil prices, reflecting increased global
demand
The increases in duty in December 2006, October
2007, December 2008, April 2009 and a significant
jump in 2010 also contributed to the rise in pump
prices along with VAT increase to 20% in 2011
Duty / VAT
64%
Duty and VAT are the main components of the pump

price of petrol in the UK, making up almost two
thirds of the total
VAT increased to 20% in January 2011 after a

temporary cut to 15% in 2008 rising to 17.5% in
2010; VAT was 22.7p on average throughout 2012
Duty remained steady at 58p throughout 2012
The average retail/ex-refinery price spread for 2012
was around 6.7 ppl
6.4 Pre-Tax Petrol and

Crude Prices
6. Petrol Prices
6.3 European Prices

Pump Prices of Unleaded Petrol 2012
Pre-Tax Petrol and Crude Prices
140
60
100
50
80
Pence per litre
Pence per litre
120
60
40
20
0
UK
Ger
Spa in France Neth
Excl Duty & VAT
Italy
Bel
Lux
he price paid at the pump by UK consumers was

T
however considerably higher third highest in
Europe - due to the levels of fuel duty
20
Crude Oil
Price
10
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: DECC
In 2012 the UK pre-tax price of major brands of

unleaded petrol was again the lowest in Europe
at 55.4 pence per litre, whilst the average of the 7
major EU countries was 60 pence by comparison
30
Duty & VAT
Petrol Price
40
The pre-tax price of petrol is related to the cost of

crude oil
The effect of crude prices on the final pump price is

lessened by the high levels of fuel duty
The /$ exchange has a significant influence on fuel
prices
6.5 Fuel Price and Tax

Comparison
Fuel Price and Tax Comparison
200
Duty
&VAT
1990 = 100
150
100
Pre Tax
50
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: Wood Mackenzie/UK Statistics Authority

l
he pre-tax price of petrol only recently increased

T
relative to 1990 levels, having remained below RPI
adjusted 1990 prices until 2005
uty and VAT steadily increased relative to 1990
D
levels throughout the 90s, until they were effectively
frozen following protests in September 2000
hey have recently risen again, and continue to show
T
a greater increase over the past 18 years than the pretax price. 2010 saw the largest growth since 1999.
In 2012, duty was effectively frozen, with VAT only
increasing the tax curve
31
23
7. Diesel Prices
7. Diesel Prices
he UK road fuels retail market is highly competitive
However, as petrol engine efficiency improvements
and distribution facilities are efficient; consequently,
continue to catch up with that of diesel, forecasting
the pre-tax price of major brand diesel in the UK is
the current dieselisation trend long-term is difficult.
consistently amongst the lowest in Europe. Despite this
Particularly as the growing drive for a reduction in
competition, diesel prices remain among the highest in
carbon emissions from transport will increasingly result
Europe, but while a much larger share of the price is
in tax levels becoming more aligned with vehicle carbon
taken up by tax compared to other European markets,
emission levels, and most likely lead to a marginal
the refining margin remains higher relative to petrol.
increase in the attraction of smaller capacity gasoline

fuelled vehicles. For these reasons, analysts argue that
The UK, unlike other European markets, doesnt tax
the growth in diesels market share will slowly cease
diesel at a lower rate than petrol, this results in diesel
and reach a peak in 2017, followed by a gradual reversal
prices in the UK being slightly higher compared to
in trend.
petrol. Nonetheless, as briefly discussed in chapter

3, diesel demand has continued to gain market share
since the late 90s, partly as a result of the fuel efficiency
advantage of diesel engines over petrol.
7.1 Diesel Pump Price
7.2 Average Contribution to

Pump Price
UK Diesel Pump Price Breakdown

Average Contribution to Pump Prices 2012
160
Pence per litre
140
120
100
80
60
Duty & VAT
40
20
0
199 2
199 6
200 0
200 4
Ex-Refinery
Price 37%
Excl. Duty & VAT
200 8
201 2
Retail/ ExRefinery Price

Spread 4%

*The price of petrol in figure 7.1 is in money of the day
The price of diesel at the pump has steadily

increased over the last 20 years with the exception
of the most recent jump in 2008 and again in 2011;
a direct impact from crude oil prices reaching
record levels and duty/VAT increases
l
32
Barring the price-dip in 2009 as a result of

crude oil prices levelling off from the previous
year diesel prices have grown at a fairly sharp
gradient, averaging over 11% in the last 3 years, or
approximately 7% since 1990
This growing increase is due to rising crude oil
prices, reflecting increased global demand
The increases in duty in December 2006, October
2007, December 2008, April 2009 and 2011 also
contributed to the rise in pump prices
Duty/VAT 59%
In 2012 duty and VAT made up almost two thirds of

the pump price of diesel in the UK
The retail/ex-refinery price spread was around

7.4 ppl
F
rom this the oil company and retailer must cover all
site, distribution and storage expenses
Pump Prices of Diesel 2012
Pre-Tax Pump Prices of Diesel 2012
160
Pence per litre
Pence per litre
64
62
60
58
Ger
Spa in Ireland France Neth
Lux
Italy
100
80
60
40
20
UK
Bel
he low UK pre-tax price is a result of strong

T
competition amongst retailers and an efficient fuel
distribution network
7.5 Pre-Tax Diesel and

Crude Prices
Crude Price
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

l
he pre-tax price of diesel is closely related to the

T
price of crude oil
he /$ exchange is a key factor in determining fuel
T
prices
Lux
Spa in
Ire
225
200
175
150
125
100
75
50
25
0
Duty & Vat
Pre Tax Price
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: Wood Mackenzie/UK Statistics Authority
Bel
Fuel Price and Tax Comparison
1990 = 100
Pence per litre
Diesel Price
30
Ger
7.6 Fuel Price and Tax

Comparison
60
10
Fra
The UK is the only major European country to apply

the same duty rate to diesel and petrol
70
20
Italy
he final pump price of major brand diesel in the

T
UK was the highest compared to major European
countries in 2012, reflecting the high level of duty
paid on fuel in the UK
Pre-Tax Diesel and Crude Prices
40
Neth
In 2012, the UK once again had the lowest pretax diesel price in the EU; around 2 pence lower
compared to the next lowest, Luxembourg
50
Duty & VAT
120
0
UK

l
Excl duty/VAT
140
68
66
7. Diesel Prices
7.4 European Pump Prices
7.3 European Pre-Tax Pump

Prices
he pre-tax price of diesel only increased relative to

T
1990 levels in 2004 and has since picked up pace
Despite the large price-drop in 2009, following a

rally in 2008, diesel price superseded the Duty and
VAT 1990 base indicator in 2011, suggesting that
the total price increase for that year was mainly
driven by crude oil prices along with a continued
squeeze in the diesel market across Europe
Duty and VAT steadily increased relative to 1990
levels throughout the 90s, until they were effectively
frozen following protests in September 2000
Following an almost 7 year hiatus, duty was again
steadily increased from December 2006 through to,
and including 2011, whilst VAT was briefly lowered
to 15% in 2009 but increased to 20% in 2011; this
explains the slightly higher gradient in duty and VAT
from 2006, as shown in the chart
33
23
8. Filling Stations Stats and Crime Data
ver the last forty years the number of filling stations
The only section of the retail market that is currently
in the UK has reduced dramatically, from over 37,500
growing is large supermarket sites. In 2012, hypermarkets
in 1970 to 8,608 at the end of 2012. In the last ten years,
accounted for around 41% of market share by volume,
on average more than 450 filling stations closed each
despite only owning 15% of all petrol stations versus
year due to strong competition between fuel retailers and
the oil companies 28% market share by volume with
the increasing costs of compliance with environmental
ownership of 25% of all petrol stations.
regulation. This favours large service stations with lower

overheads per litre sold. As a result many smaller filling
stations have become economically unviable.
8.1 Number of Sites
8.2 Ownership of Sites
Total Sites
Ownership of Sites
35,000
25,000
30,000
Supermarket
Number of sites
Number of sites
20,000
15,000
10,000
5,000
0
197 6
198 2
198 8
199 4
200 0
200 6
10,000
5,000
201 2
Source: Energy Institute until 2005; Catalist onwards
At the end of 2012 there were 8,608 filling stations in

the UK
The number of filling stations is now less than a

quarter of the 1970 total
Over the past ten years, the number of sites has
been falling at a rate of approximately 450 per year
199 0 199 2 199 4 199 6 199 8 200 0 200 2 200 4 200 6 200 8 201 0 201 2
34
Dealer / Independent
15,000
Oil Companies
20,000
25,000
any filling stations owned and operated by both oil

M
companies and independent retailers have closed
due to competition and low profits
The number of supermarket sites is increasing at a

steady rate of 2% p/y
Independent sites still account for the majority of
petrol stations at around 60% of total number but
only 31.3% of sales volume
In the last few years several oil majors have exited
the UK retail market
8.4 Supermarket Share of

Retail Sales
Supermarket Sites
1,4 00
Supermarket Share of Retail Sales

50
1,0 00
40
800
30
600
400
20
200
-
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
ver 15% of all filling stations are now owned by

O
supermarkets
lthough numerically in the minority, volume sales

A
are the significant factor and account for 41% of
market share
199 4
199 7
200 0
200 3
200 6
200 9
201 2
Source: DECC (ETS)
t the end of 2012 there were 1,306 supermarket

A
filling stations in the UK
Diesel
10

l
Petrol
% of sales
Number of sites
1,2 00
8.5 Throughput per Site
8.3 Supermarket Sites
As the retail market continues its decline for the 3rd
consecutive year, supermarket share of retail sales
has continued to grow steadily
upermarkets now account for 45% of all petrol sold
S
and 38% of diesel
8.6 Access to Filling

Stations
Throughput per Site

14
Access to Filling Stations 2011
12
350
250
Sites/million people
300
Million litres / y ear
10
6
4
2
0
199 7
200 0
200 3
200 6
Independents
200 9
100
50
Eng land
Supermarkets
he average throughput of all filling stations has

T
risen markedly since 1994 to around 4 million
litres per year. However, there is a huge disparity
between company, independent and supermarket
sites
he average supermarket site throughput is
T
currently around 11 million litres per year whilst
independent sites average just over 2 million litres
150
201 2
Source: DECC / Energy Institute / Catalist

l
200
Wales
Scotland
Northern
Ireland
Source: ONS / Catalist
he number of filling stations per capita is highest

T
in Northern Ireland with around 296 p/p relative to
England with 127 p/p
For the last four consecutive years, the number of

filling stations has consistently reduced in all four
regions
See UKPIA briefing paper Fuel Supply to Rural
Filling Stations for more information
35
23
Service Station Crime
OSS (British Oil Security Syndicate Ltd.) is an
motorists drive away without paying after taking fuel
independent trade organisation and forecourt crime
(Drive Offs) and customers fail to return and pay after
campaigner dedicated to reducing criminal activity on
claiming to have no means of payment with them.
service stations which cost the industry over 25.7 million

in 2012, up from 22.2 million in 2010. Its members are
BOSS collects statistical information from almost 1,200
the oil companies BP, Shell, Valero (Texaco brand) and
service stations supplied by its members and the charts
Total, as well as members of the Retail Motor Industry
below show the quarterly incident rates of different types
Federation Petrol. BOSS works closely with local
of crime. The data is also used to estimate the industry
police forces, the Home Office and forecourt owners and
loss each year.
operators, representing about 6,000 fuel station retailers

in the UK who employ over 55,000 people.
Visit www.bossuk.org for more information
Developing procedures to ensure the safety of staff and

customers and to reduce operational losses are the
primary drivers. The major source of loss arises when
8.7 Crime Related Injuries
8.8 Types of Weapon

Type of Weapon
Incidents per quarter per 100 service stations
Crime Related Injuries to Service Station Staff

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
2008 q1
2009 q1
2010 q1
Major
2011 q1
2012 Q1
2008 q1
Other
2009 q1
Gun
Source: BOSS
Major Injuries are RIDDOR reportable
Since 2010 q1 there have been many quarters with

no injuries reported and only a small proportion of
those reported were major
Knife
2011 q1
2012 Q1
Other
Source: BOSS
eports of incidents involving weapons have been

R
declining for several years
l
Reports of guns have declined in each year since
2007
36
2010 q1
Reports of knives declined each year from 2007 to

2010 but rose in 2011. In 2012 they resumed their
downward trend
Reports of other weapons were low in 2009 but rose
in 2010 and have remained stable in 2011 and 2012
8.10 Burglary Losses
Robbery
Burglary Losses
loss per quarter per 100 non 24hr service stations
14000
1.6
12000
1.8
1.4
1.2
10000
0.8
0.6
8000
0.2
6000
0.4
0
2008 q1
2009 q1
2010 q1
actual on oil company

actual on 3rd party
2011 q1
2012 Q1
4000
attempts on oil company

attempts on 3rd party
2000
Source: BOSS
l
0
2008 q1
obbery is theft with actual or threat of physical

R
violence and consequently carries the risk of staff injury
he incidents in the chart exclude attacks on cash
T
machine servicing and cash in transit carried out by
3rd parties
here was a high level of incidents in 2007/8 but they
T
have fallen back since then. Reports of incidents
involving 3rd parties showed a rise in 2012
2011 q1
2012 Q1
urglary losses are calculated in relation to the

B
number of non 24 hour service stations surveyed
Burglary losses exclude property damage
osses per service station continued on a long term
L
falling trend
8.12 Estimated Industry

Losses
35
30
25
20
15
10
5
2008
q1
2008
q3
2009
q1
2009
q3
Drive off
2010
q1
2010
q3
2011
q1
2011
q3
2012
Q1
2012
Q3
riving off without paying for fuel remains the major

D
source of loss at fuel service stations. Motorists
claiming to have no means to pay generates the
second highest source of loss
uel price increases are eroding the industrys
F
efforts to contain losses
2002
2004
Drive Off
No Means to Pay
Source: BOSS
2010 q1
Estimated Industry Losses - million per year
Drive off and No Means to Pay Losses

Loss per quarter 000 per 100 service stations
2009 q1
Source: BOSS
8.11 Drive-off and No

Means to Pay Losses
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
8.9 Robbery Incidents
2006
2008
No Means of Payment
2010
2012
Other
Source: BOSS
Industry losses are estimated by extrapolating from

data collected by BOSS in quarterly surveys
Losses exclude fraud, credit card losses, shop theft,

property damage and consequential losses such as
staff time following violent incidents
37
23
9. Air Quality
9. Air Quality
ne of the key drivers for the oil industry is reducing the
*At the time of publication data for 2011 was not available
environmental pollution from the use of fuels. Since
except for graph 9.2
1990 road fuels and vehicles have become significantly

cleaner, resulting in much lower exhaust emissions despite
an increase in traffic levels of around 25%.
9.1 Vehicular Emissions
Number of Days when Air Pollution is Moderate

or Higher
Relative Vehicular Emissions of Pollutants 1990 base
120
Av erage number of day s
100
% 1990 lev els
120
110
100
90
80
70
60
50
40
30
20
10
0
9.2 Air Pollution
Ben zen e
SO2 1,3 Butadiene NOx

199 6
200 2
VOC
PM10
CO
80
60
40
20
0
201 0
199 2 199 4 199 6 199 8 200 0 200 2 200 4 200 6 200 8 201 0 201 2
Rural Average
Source: DEFRA/AEA Energy & Environment
Urban Average
Emissions of exhaust gas pollutants have been

significantly reduced from 1990 levels
The largest reduction has been made for SO2

through the introduction of zero sulphur petrol and
diesel and will come with the move to zero sulphur
fuels for off-road machinery vehicles set for 2011
Air pollution in urban areas has fluctuated over time

but there has been a general long term decline
in high air pollution days at both urban and rural
monitoring sites despite an increase in 2011
Days of moderate or higher air pollution for rural

areas have shown a clear downward trend
The variability of weather from year to year plays
an important role; for example, the hot summers of
2003 and 2006 resulted in high pollution levels
mainly caused by ozone some associated with
trans-boundary sources. The comparatively cooler
summer in 2007, 2010 and 2012 ensured air
pollution reverted to low levels
9.3 Primary Particulate Matter

Primary Particulate Matter Sources 2010
Other
62%

Residential
16%
38
Road transport
22%
In 2010 the combustion of road fuels contributed 22% of

the UKs primary emissions of particulate matter
The residential sector produced 16% of the emissions,

with the rest produced by other sources including
industry and power generation
Ambient levels of PM10 include fine particles from
primary (around a third), secondary and other sources
9. Air Quality
9.5 Sources of NOX
9.4 Road Transport PM10

Emissions
Sources of NOX 2010
Road Transport PM10 Emissions
Other
36%
PM10 emissions (ktonnes)
50
40
30
20
10
0
197 4
Road transport
34%
198 0
198 6
199 2
199 8
200 4
201 0
Emissions of particulate matter (PM10) from road

transport peaked in 1994 at 44 thousand tonnes
Since then, emissions have fallen by a little under

44% due to tighter standards for vehicular
emissions and the move to sulphur free road fuels
However, the increased dieselisation of the car park

will continue to impact this trend since PM10
emissions are higher from diesel than petrol
Energy industries
30%
Nitrogen oxides (NOx) are mainly formed as a by-

product from the combustion of fossil fuels
30% of the UKs total NOx emissions in 2010 were

from energy industries
The largest single source of emissions was road
transport, producing 34% of the total
Tighter EU exhaust emission standards will reduce
vehicle NOx emissions
9.7 Sources of Benzene
9.6 Road Transport NOX

Emissions
Sources of Benzene 2010
Road Transport NOX Emissions

120 0
Manufacturing 7%
Road Transport 13%
Vehicle emissions (ktonnes)
100 0
800
600
Residential
10%
400
200
0
197 4
Other
34%
197 8
198 2
198 6
199 0
199 4
199 8
200 2
200 6
201 0

l
Nitrogen oxides are acidifying and eutrophying

gases and give rise to ground-level ozone
Road transport NOx emissions have fallen by over

two thirds from their peak in 1990 but rose by 4% in
2010
l
The overall gradual decline in NOx emissions is

as a result of oxidation catalysts (diesel vehicles)
and catalytic converters (petrol vehicles) which
have been enabled by sulphur-free diesel and
unleaded petrol
Fugitive Emissions from

Fuels 9%
In 2010, road transport was responsible for 13% of

the UKs benzene emissions
Stage II Vapour Recovery is being fitted to large

petrol stations
Benzene is naturally present in crude oil and is also
formed during refining
Most benzene is removed to comply with
specifications
39
23
9. Air Quality
9.9 Sources of CO
9.8 Road Transport

Benzene Emissions
Sources of CO 2010
Road Transport Benzene Emissions

Benzene emissions (ktonnes)
25
Road transport
43%
20
15
Residential
15%
10
5
0
199 0 199 2 199 4 199 6 199 8 200 0 200 2 200 4 200 6 200 8 201 0

l
Emissions of benzene from road transport have

reduced significantly since 1990 due to the
introduction of exhaust after-treatment technology
enabled by unleaded petrol
In 2000 emissions of benzene were further reduced

following the lowering of the benzene and aromatics
limits in petrol
Other
42%
In 2010 road transport was responsible for 43% of

the UKs carbon monoxide emissions down 4%
from the previous year
The residential sector was responsible for 15% of
emissions
9.11 Sources of VOCs
9.10 Road Transport 1,3

Butadiene Emissions
Sources of VOCs 2010
Vehicle emissions (ktonnes)
Road Transport 1,3-Butadiene Emissions
Solvent and
other product
use
44%
14
12
8
6
Oil products
6%
4
2
0
199 0 199 2 199 4 199 6 199 8 200 0 200 2 200 4 200 6 200 8 201 0
Emissions of 1,3-butadiene have reduced by more

than 90% since 1990
Further reductions are expected as a greater

proportion of vehicles meet new car exhaust
emissions standards
l
Fugitive
emissions from
fuels
19%
Road transport
9%
Residential
3%
40
Others
19%
10

l
Carbon monoxide is formed from the incomplete

combustion of fossil fuels
In 2010, road transport was responsible for 9% of

the UKs volatile organic compound emissions
The main source of emissions is from the use of

solvents and paints
Refining, storage and distribution of oil products
were 6% of the total emissions
9. Air Quality
9.12 Road Transport

Emissions of VOCs
Road Transport Emissions of VOCs
VOC emissions (ktonnes)
125 0
100 0
750
500
250
0
197 4
197 8
198 2
198 6
199 0
199 4
199 8
200 2
200 6
201 0

l
Road transport emissions of VOCs have

dramatically reduced since their peek in 1991,
falling by around 93%
This reduction has resulted from the introduction
of catalytic converters on cars and the switch to
more diesel vehicles
41
10. Greenhouse Gases
key driver for the downstream oil industry is the UK

Governments commitment to reduce emissions
mileage. In the last three years, the pace of reduction

of average new car CO2 emissions was more than twice
of greenhouse gases by 80% by 2050 relative to 1990
the rate averaged over the past decade and reflects the
levels. The main greenhouse gas is carbon dioxide, CO2.
improvements in vehicle efficiency enabled in part by
Emissions of CO2 from road transport have significantly
cleaner fuels.
been reduced when compared to the overall increasing
10.1 Greenhouse Gases

and Commitments
10.2 Source of Carbon

Dioxide
Greenhouse Gases and Commitments
Sources of Carbon Dioxide 2011
100 0
Business
16%
Ky oto target
by 2008-2012
Emissions (mtCO2e/y ear)
800
600
Energy Supply
40%
400
Carbon budgets
200
Residential
15%
199 0
Source: DECC
199 4
199 8
200 2
200 6
201 0
Basket of greenhouse gases
201 4
201 8
Carbon dioxide
Road Transport
26%
The UK met the Kyoto protocol in 1999 13 years

ahead of the target year - delivering a 12.5%
reduction in greenhouse gases compared to 1990
The 2009 UK Low Carbon Transition Plan set a

target to reduce greenhouse gas emissions by 34%
by 2020 relative to 1990
Other
4%
Latest emissions data (2011) measures UKs carbon

footprint at 456 million tonnes p/y, and basket of
greenhouse gases at 549 million tonnes
Road transport produces approximately 26% of the

UKs CO2 emissions around 119 million tonnes
The energy supply industry, along with the

residential and business sectors, are also major
sources of CO2
l
Carbon dioxide accounted for an estimated 83% of
the UKs man-made greenhouse gas emissions in
2011
Emissions in 2011 have already been reduced by 23%

relative to 1990
10.3 Road Transport CO2 Emissions

Road Transport CO2 Emissions
140
Emissions (mtCO2)
120
100
80
60
40
20
0
197 5
198 1
198 7
199 3
199 9
200 5
201 1
42
CO2 road transport emissions decreased for a fourth year

running in 2011 in part due to the 2008 economic crisis
and lower demand for road transport fuels
Since 1990, emissions from road transport have risen at

a much lower rate than vehicle mileage
This can be attributed to the use of more efficient
vehicle technologies enabled by cleaner fuels, and an
increased proportion of diesel vehicles
The CO2 levels from fuel will continue to reduce with
increasing use of biofuels as required by the RED
The Renewable Energy Directive (RED) mandates
that 10% of transport energy is to be from renewable
sources, whilst the Fuel Quality Directive (FQD),
mandates a reduction in emission by 6%, all to be
completed by 2020
10.5 Sources of Methane
New Car Fleet Average CO2 Emissions
Sources of Methane 2011
200
190
Agriculture
43%
180
10.4 CO2 from New Cars
CO2 g/km
170
160
150
140
130
Landfill
33.7%
199 7
200 0
200 3
200 6
EU average
UK Private
200 9
201 2
UK Business
UK Average
Coal Mines
4.7%
Source: SMMT/European Commission

l
UK average new car CO2 emissions have fallen

every year on record, although the UK average still
lags behind the EU average slightly
Future emissions of CO2 from road transport will
continue to be lowered by further improvements in
vehicle efficiency
Other
9.1%
Gas-expl, prod.+
trans.
9%
Road Transport
0.15%
Source: DECC/AEA Energy & Environment
s the UKs older vehicles are replaced and more

A
diesel cars purchased, the fleet efficiency will
improve
oad transport is a minor contributor to methane

R
emissions, producing around 0.15% of the UK total
in 2011
The main contributing sector is agriculture which

accounted for over 43%
he current trend to smaller vehicles will also

T
contribute to lower emissions
10.7 Sources of N2O
10.6 Emissions of Methane

Road Transport Emissions of Methane
Sources of N2O 2011
Emissions (ktonnes)
35
30
25
Agriculture
84%
20
15
10
5
0
197 5
198 1
198 7
199 3
199 9
200 5
Industrial
processes
1%
201 1

l
espite the low level of emissions, reductions are

D
still being achieved as a result of the introduction of
exhaust after-treatment technologies
Other
13%
missions in 2011 were over 90% lower than the

E
peak around 1989
l
Road transport
2%
In 2011 road transport was responsible for around

2.7 thousand tonnes of nitrous oxide (N2O), or 2% of
total emissions
Agriculture is the main source accounting for 84%

of emissions, mainly from agricultural soils
Weighted by global warming potential, nitrous oxide
emissions accounted for around 6% of the UKs
man-made greenhouse gas emissions in 2011
43
23
11. Process Safety
11. Process Safety
his section has been produced as one of the key
American Petroleum Institutes (API) Recommended
objectives of UKPIAs commitment to process safety,
Practice
(RP)
754,
Process
Safety
Performance
and in response to the challenges set by the Buncefield
Indicators for the Refining and Petrochemical Industries.
Major Incident Investigation Board regarding sector level
It is on the indicators classified as Tier 1, Tier 2 and Tier 3
reporting for key process safety performance indicators.
that this section is based.
To ensure consistency in reporting these indicators as

an industry sector, UKPIA members have adopted the
11.1 Tier 1 PSE Rate
11.2 Tier 1 events, refineries
Process Safety Event Rate
Events - Refineries
25
20
15
10
5
0
0.80
0.60
0.40
0.20
0.00
2010
2011
2012
2013
2014
2015
Tier 1 Events
PSE Rate per million hours

worked
Source: UKPIA
Source: UKPIA
The Tier 1 PSE Rate provides an indication of the

number of Tier 1 Process Safety Events (PSE) that
have occurred against the total number of hours
worked, this is normalised per million hours
The number of Tier 1 events reported at refineries in

a 12 month period
11.3 Tier 1 events, terminals

Events - Terminals
2
1
0
Source: UKPIA
44
Tier 1 Events
The number of Tier 1 events reported at terminals in a

12 month period
11.5 Tier 1 events by

consequence, terminals
Inland Kerosene Deliveries
Inland Aviation Fuel Deliveries

2
Worker injury
or fatality
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Worker injury
or fatality
Third party
injury or
fatality
Community
shelter or
evacuaon
Fire or
explosion
>$25k cost
Source: UKPIA
l
Third party
injury or
fatality
Community
shelter or
evacuaon
Source: UKPIA
The consequences of Tier 1 events at refineries for

a 12 month period. Note that there may be more
than one consequence per Tier 1 event
11.6 Tier 2 PSE Rate
The consequences of Tier 1 events at terminals for

11.7 Tier 2 events, refineries
Process Safety Event Rate
Events - Refineries
70
60
50
40
30
20
10
0
3.00
2.00
1.00
0.00
2010
11. Process Safety

consequence, refineries
2011
2012
2013
2014
2015
Tier 2 Events
PSE Rate per million hours

worked
Source: UKPIA
l
The Tier 2 PSE Rate provides an indication of the

number of Tier 2 Process Safety Events (PSE) that
have occurred against the total number of hours
worked, this is normalised per million hours
Source: UKPIA
The number of Tier 2 events reported at refineries in

a 12 month period
45
23
11. Process Safety
11.8 Tier 2 events, terminals

consequence, refineries
Events - Terminals
Events by Consequence - Refineries
5
4
3
2
1
0
Recordable
injury
Tier 2 Events
Source: UKPIA
l
60
55
50
45
40
35
30
25
20
15
10
5
0
Source: UKPIA
The number of Tier 2 events reported at terminals in

a 12 month period
The consequences of Tier 2 events at refineries for

11.11 Tier 3 Number of High

Alarm Activations on
PSLG Scope Finished
Gasoline Tanks*

consequence, terminals
Events by Consequence - Terminals
4
3
2
1
0
Fire or
explosion
>$2.5k cost
PR device
discharge to
atmosphere
Loss of
primary
containment
Number of High High Alarm Activations

(Finished Gasoline Tanks)
Recordable
injury
1
0
Fire or
explosion
>$2.5k cost
2010 2011 2012 2013 2014 2015
PR device
discharge to
atmosphere
Number of
High High
Alarm
Acvaons
(Finished
Gasoline)
Source: UKPIA
Source: UKPIA
l
46
The consequences of Tier 2 events at terminals for

High alarm activation provides an indication of

the number of times a safety related (or instrumented)
system has been activated on finished gasoline tanks
which fall under the scope of the PSLG report
*1. Excludes spurious trips and activations due to planned alarm testing
2. The definition of PSLG scope finished gasoline tanks can be found in
the final PSLG report, paragraph 24
he refining and marketing industry continued to
in terms of refining employee safety performance with
maintain very high standards of occupational safety
European competitors. Particularly strong improvements
during 2012. It remains one of the safest manufacturing
have been made in contractor safety since the 1990s and
industries in the UK, with proportionately fewer injuries
these have been helped by the introduction of Contractor
occurring than in the manufacturing sector as a whole.
Safety Passport Schemes.
The UK downstream industry also compares favourably
12.1 RIDDOR >3 day Injuries

by Sector
12.2 RIDDOR >3 day Injuries

by Category of Worker
RIDDOR >3 Day Injuries
600
600
500
500
400
300
200
100
0
Offshore All Manuftg
All UK
All Service
Ref
Cont
Mkt
Empl
Ref
Empl
Source: UKPIA / HSE

l
Significantly fewer injuries (RIDDOR >3 day) occur

at refineries than in the manufacturing sector as a
whole
Injuries in downstream oil marketing were at a

record low in 2012, with zero RIDDOR > 3 day
injuries recorded
>3day injuries/100,000 workers
>3day injuries/100,000 workers
RIDDOR >3 Day Injuries 2011-12
NB: Previous editions used extraction of crude/gas as one of the

indicators in the 12.1 graph, but did not include data on offshore. This

year we use offshore data for a better comparison.
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
400
300
200
100
0
Mkt Employees
Refy Employees
Refy Contractors
Source: UKPIA
12. Occupational Health and Safety
In 2012, the frequency of injuries (RIDDOR >3 day)

fell further for marketing employees and refinery
contractors to their lowest levels recorded
The number of refinery employee injuries increased

again in 2012 despite a record low in 2011.
These occurred during maintenance turnaround
and recommissioning activities
Marketing statistics include filling station staff
directly employed by some companies
47
23
12.4 Refining Lost Work

Injury Frequency
Refining Injuries
Refining Lost Work Injury Frequency
2006
Source: UKPIA
l
In 2012, restricted work injuries fell to lowest levels
ever recorded, whilst the number of medically
treated cases was only a tenth of those reported in
2000
This reflects a continued high level of attention to

safe practices
ontractor lost work injuries at refineries has

C
reduced in frequency over the years as a result of a
new Contractor Safety Passports scheme, but rose
in 2011
Refining LWIF decreased in 2012 for contractors,

and only slightly increased in frequency for
employee injury
12.6 Marketing Lost Work

Injury Frequency
12.5 Refining Lost Work

Injuries
Marketing Lost Work Injury Frequency
Ref Staff
Ref Contr
4
2
2001 02 03 04
05
06
07
08
UKPIA
09
10
11 2001 02
03
04
05
06
07
08
09
10
11
CONCAWE
Source: UKPIA / CONCAWE

l
48
omparisons with European safety data from

C
CONCAWE indicate that UK refinery employees are
less likely to suffer a lost work injury than European
counterparts
In 2011, refining contractors in the UK were 80%

less likely to miss work due to an injury than their
European counterparts
CONCAWE (Conservation of Clean Air and Water in
Europe) is the European oil industry technical body
focussed on environment, health and safety
Lost work injuries/million hrs
Refining Lost Work Injuries

8
6
2012
Source: UKPIA
Injuries reported at refineries continue to fall or

remain in the low quartile
2011
Lost Work Injuries
2010
Restricted Work Injuries
2008
Medical Treatment Cases
Employ ee
2009
2007
50
Contractor
2006
100
2005
150
2004
200
2003
250
2002
2005
2012
2001
2004
2011
2000
2003
2010
1999
2002
2009
1998
2001
2008
1997
2000
2007
Reported incidents
12.3 Refining Injuries
10
8
Contractor
4
2
0
Employ ee
2000
2002
2004
2006
2008
2010
2012
Source: UKPIA
Lost work injuries amongst marketing contractors and

employees have in recent years converged and
continue to be in the very low levels seen over the past
few years
The Contractor Safety Passport Scheme for

forecourt contractors introduced by UKPIA in 1999
helped achieve this
NOTES
49
23
NOTES
50
NOTES
51
23
UNITED KINGDOM
United Kingdom Petroleum Industry Association, Quality House, Quality Court, Chancery Lane, London WC2A 1HP
Tel: 020 7269 7600 E-mail: info@ukpia.com Website: www.ukpia.com

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Statistical Review 2013

UKPIA Statistical Review 2013

Introduction and overview of UK refining.

The refining and marketing sector is a major

There are seven operational crude oil refineries in

Introduction and Overview

Oil the driving force behind modern life.

Filling Station Stats

Emissions of carbon dioxide from road transport

The Process Safety Performance Indicators for the

A wide variety of fuels are produced,

The refining and marketing sector is one

Statistical Review 2013

Introduction and Overview

Introduction from the Energy Minister

background in the EU and the UK

stocking agency with compulsory

The recently published independent

UKPIA and the industry remain,

sponsored by UKPIA to inform

with government to help find the

that adds enormous costs.

report from IHS Purvin & Gertz,

DECCs review of the Refining Sector

Long-term net refining margins are

projected to average around $2.6 per

Presidents introduction to the UKPIA

Before touching upon some of the

challenges that face our industry, it

is worth pointing out the value of the

some of the facts and figures about

transport, but also the many areas

continue to play a crucial role in

products that support everyday life.

DECC (Department of Energy and

UKPIAs Secretariat and our member

Although 2012 saw a brief respite

for oil refiners as a result of positive

the UK, and indeed those in the rest

continue to operate under enormous

of a tough commercial climate with

low margins, reduced demand for oil

Statistical Review 2013

capital and operating expenditure in

the period 2013-2030 of 11.4 billion,

which is required just to meet UK and

expenditure would not be recoverable

Directive and the Energy Efficiency

and were not included in the reports

The report concluded that no industry

investment burden for no return,

and a consequence could be the

closure of more UK refineries and

key products such as diesel and jet

already at a high risk level based on

I also welcome the Energy Ministers

introduction to this years Review. His

membership for obligated companies.

as ever, willing to work closely

best solutions to our future energy

challenges. We very much welcome

the detailed and valuable report from

resilience of the downstream sector.

Distillation which separates crude

Waste treatment ensures that all