annual review 2006 Group activities LPG and petroleum products distribution LPG and PETROLEUM PRODUCTS DISTRIBUTION

Transcription

1 4 Summary annual review 2006 Group activities LPG and PETROLEUM PRODUCTS [42] DISTRIBUTION

2 [43] Summary annual review 2006

3 4 Summary annual review 2006 Group activities GLOSSARY Bottling plant: Installation for filling butane and propane cylinders. Bulk: Name for LPG delivered in tanks made available to customers. Butane: A liquefied saturated hydrocarbon, formula C4H10. France is a structural importer of butane. Cylinders: Butane and propane distributed in 13-kg and 35-kg cylinders. [44] LPG: Abbreviation of Liquefied Petroleum Gas. LPG is mainly made up of butane and propane, and is an extract of crude oil obtained by refining or by simple separation. LPG has no carbon dioxide in its composition and is an efficient, environmentally-friendly and cheap source of energy. It has three different uses: heating fuel, motor fuel and as a raw material for the petrochemicals industry. LPG is also found in all economic sectors, including residential (basic household uses such as cooking, hot water and heating), agricultural, industrial and carburation (motor fuel). LPG motor fuel: Mixture of butane and propane used in automobile fuel. LPG Trading: All trading operations on Liquefied Petroleum Gas. Propane: Saturated liquefied petroleum product (C3H8). France is a structural importer of propane. Secondary storage: Secondary storage unit serving as a logistics relay between big import terminals and the end customer. Self-service retail outlets: Supermarkets and hypermarkets (large- and medium-sized stores, as used here) Small household bulk: Name for customers whose LPG consumption does not exceed two tonnes per year.

4 RUBIS ENERGIE currently has : 300,000 tonnes of LPG 170,000 m 3 of motor fuels et 360 m 3 of lubricants 27,000 tonnes of bitumen 24% stake in the French Antilles refinery 66 service stations in the Caribbean 343 LPG fuel stations in mainland France [45] and will have in 2007: - New storage capacities and plants to meet the development need of our businesses - A conversion of the Orientation programme on Energy Policy - A new market for LPG fuel - Positioning in renewable energies - A service-stations renovation campaign in the French Antilles and French Guiana - Optimisation of the Customer Space Summary annual review 2006

5 4 Summary annual review 2006 Group activities [46] RUBIS ENERGIE, through its VITOGAZ (1939) brand, distributes liquefied petroleum gas (LPGs), best known under the names of butane* and propane*. LPGs are notably useful in meeting the needs of individuals, manufacturers, farmers, livestock breeders and public authorities. They serve the purposes of cooking, production of sanitary hot water, heating, and many technical applications. CONSOLIDATED KEY FIGURES RUBIS ENERGIE, through its GAZ L brand, distributes LPG fuel (LPG-c) and is present through 343 service stations in self-service retail outlets as well as in BP service stations that distribute LPG fuel throughout the French road and motorway system. (in EUR millions) Change 2005/2006 (%) Consolidated net sales % Gross Operating Income % Current Operating Income % - France % - French Antilles and French Guiana ns - Africa % Cash flow % Capital expenditure

6 Initially present in mainland France, RUBIS ENERGIE significantly expanded its international development. In Africa, it entered Morocco in 2000, Madagascar and the Comoros Islands in 2001 and Senegal in It then became active in the Caribbean region with the French Antilles and French Guiana in 2005 and Bermuda in The year 2006 was also marked by the creation of FRANGAZ, a joint venture with BP for bottling and marketing cylinder LPG in self-service retail outlets. The first contract was signed with the Groupement des Mousquetaires, whose retail outlets include the names Intermarché, Roady, Stationmarché, Bricomarché, Logimarché, Ecomarché and Netto. At the start of 2007, RUBIS ENERGIE s annual sales exceeded 500,000 tonnes of petroleum products, including 300,000 tonnes of LPG*, and it occupies leading positions on many of its markets. It uses a powerful logistics format that combines maritime import terminals, a network of 66 service stations and a 24% stake in the Antilles refinery (SARA) in Martinique. RUBIS ENERGIE operates in France through its VITOGAZ (established in 1939) and STAROGAZ (established in 1998) brands, with niche positions in bulk* propane for residential, agricultural and livestock rearing. In LPG fuel*, through its GAZ L brand, RUBIS ENERGIE is one of the leading French distributors of clean motor fuel. With the acquisition in January 2006 of BP s LPG fuel network (105 stations), RUBIS ENERGIE has 343 retail outlets. In the French Antilles and French Guiana, RUBIS ENERGIE has been one of the leading players in the distribution of petroleum products since 2005, with premium petrol, diesel, fuel oil, marine diesel, lubricants, bitumen and LPG representing a volume of 210,000 tonnes/m 3 annually. In Bermuda, RUBIS ENERGIE has been one of only two distributors of petroleum products since October Its premium petrol, diesel, fuel oil, marine diesel, lubricants and LPG represent annual volume of 45,000 tonnes/m 3. In Africa since 2000 RUBIS has been building leading positions in distribution of LPG in Morocco, Senegal, Madagascar and the Comoros Islands, representing 86,000 tonnes in [47] Altogether, the business in France produces almost 170,000 tonnes of LPG distribution, of which 50,000 tonnes is in trading*. Summary annual review 2006

7 4 Summary annual review 2006 Group activities FRANCE FINANCIAL RESULT of RUBIS ENERGIE - France (in EUR millions) Change 2005/2006 (%) [48] Net sales % Gross Operating Income % Current Operating Income % Cash flow % Capital expenditures In 2006, consumption of LPG in France totalled 2.55 million tonnes, down 6.1%, in a context of unfavourable climate conditions (climate index -4%). The new tank inventory on the French residential market in 2006 was estimated at 16,000 units, of which the share gained by VITOGAZ reached 1,300 units representing a market share of 8%. COMMERCIAL POSITIONING VITOGAZ, the Group s brand present since 1939, has focused its development on the most buoyant market segments: household-residential use (29% of sales) and farming and livestock rearing (22% of sales). This has allowed it regularly to post growth higher than for other companies in the trade. VITOGAZ business is very fragmented, made up of over 41,500 customers drawn from the residential, industrial, agricultural and municipal markets. In July 2004, VITOGAZ obtained its certification as a PSD (Public Service Delegation) gas distribution operator, which allows it to participate fully in all distribution channels of the pipeline market. Under its VITORESEAU brand, VITOGAZ provides a turnkey solution that enables it to guarantee the design, development, operation, maintenance and permanent security of the network. VITORESEAU works with public or private professional developers, local communities, small- and mediumsized businesses and large industrial companies. At end-2006, VITOGAZ had signed 27 agreements representing 636 meters (customers).

8 CUSTOMERS Tonnage Change Breakdown 2005/2006 of sales (%) (%) Household - Residential 33, Poultry/livestock farming 26, Agriculture - Drying/Greenhouses-Horticulture 6, LPG motor fuel* 24, Industrial companies-services-local authorities 25, TOTAL 116, [49] CHANGE in VOLUMES and MARKET SHARE Tonnages sold in 2006 came to 117,000 tonnes, down 3.3%, in line with the industry and amounting to market share of 4.6%. The significant increase (8%) in new domestic customers facilities is noteworthy, at 1,300 units. VITOGAZ has particularly continued its sales efforts to strengthen its presence in the LPG motor fuel* segment (21% of sales in 2006). In this field, VITOGAZ maintains a key position with a network of nearly 238 service stations in partnership with self-service retail outlets*, which has taken the VITOGAZ market share in these outlets to over 50%, to which can be added the 105 sales outlets in the BP service station network (since January 2006), placing the total number of stations at 343. At the end of 2006, the total number of tanks installed was in excess of 41,500 units, corresponding to the number of customers. The VITOGAZ name is well established in its market, having managed to develop brand awareness and an image of quality with a network of leading proponents: developers, architects, heating specialists, plumbing engineers and wholesale engineers. A total of one million VITOGAZ cylinders* are in circulation, with an increase in 2006 in all sectors of activity, in butane* as well as propane*. Summary annual review 2006

9 4 Summary annual review 2006 Group activities A POWERFUL LOGISTICS SYSTEM - HP Trading, its international trading arm, supplies VITOGAZ and also carries out trading operations for third parties (see next page). The Group has diversified its supply sources geographically with three large production areas: the North Sea, the Mediterranean area and the Persian Gulf. - NORGAL, in which the Group has a 21% stake, is one of the largest import terminals (60,000 m 3 ) in Northern Europe. It is located at Le Havre and can receive ships of all sizes and places of origin: 660,000 tonnes processed in A bottling plant,* SIGALNOR, located in Le Havre, in which the Group holds 35%, that is responsible for packaging butane* and propane*, with 30,000 tonnes processed in [50] - A FRANGAZ bottling plant* and bulk depot in Sillery (Champagne Ardennes): two underground tanks of 2,500 m 3 each, 50%-owned - A FRANGAZ bottling plant* and bulk depot in Port-la- Nouvelle (Languedoc Roussillon): three underground tanks in 2007 with total capacity of 1,250 m 3, 50%- owned - An intermediate storage network with total capacity of 7,250 m 3 intended to increase the independence of VITOGAZ in terms of downstream logistics, divided among: Seven secondary storage* centres with a unit capacity of 50 m 3, RUBIS ÉNERGIE has a powerful upstream logistics system, controlling more than 15% of the storage capacities installed in France. This guarantees its independence in terms of supply and ensures safe and regular deliveries. This logistics system is strategic because it offers an advantage in terms of the cost of supply. It is composed of six essential resources: The Le Hoc centre (Seine Maritime): 4,500 m 3 with an underground propane tank with 3,500 m 3 capacity and a 1,000 m 3 butane sphere The Lorient depot (Morbihan): 1,000 m 3 The Hauconcourt depot (Lorraine): 1,000 m 3, 35%- owned The Brûlon depot (Sarthe): 400 m 3 placed in service in early 2006

10 UPSTREAM from LPG DISTRIBUTION Most liquefied petroleum gas (LPG) traffic on the North Sea moves by means of 20,000-tonne vessels. A ship typically transports refrigerated propane, cooled to about -40 C to its liquid, not gaseous form, and unloads it at an import terminal, which has either a refrigerated above-ground storage tank (as at Norgal in Le Havre) or an underground storage facility in which the propane is stored in gaseous form by heating it during unloading (as at Geogaz in Lavera). HP TRADING, the subsidiary of VITOGAZ responsible for supply, buys cargoes of LPG. A complete or partial cargo corresponds to either a spot purchase on the international market or a contract delivery by one of HP TRADING s suppliers, particularly in winter, to assure optimum reliability of supply and to avoid any risk of a supply shortfall. Winter deliveries to Norgal generally average five to six cargoes a month for all partners in the terminal. The two main terminals for loading LPG in the North Sea, Braefoot Bay in the United Kingdom and Kaarstoe in Norway, supply about ten vessels every month. To these locations natural gas production and condensates (products associated with extraction of crude oil) are transported by land-based or undersea pipelines from the North Sea s offshore fields to separate their various components, including propane* and butane*. In addition to production associated with natural gas and crude oil (there are no fields exclusively for propane* or butane* production), refineries also supply part of the world s resources of LPG through the crude oil refining process. All resources managed by HP TRADING to cover the distribution needs of VITOGAZ are divided between imports by marine transport and direct purchases from refineries (for example, Antwerp for Belgium, Karlsruhe for Germany, and the French refineries) or from other importers or distributors. HP TRADING negotiates annual contracts and/or spot purchases on the basis of prices in international markets. Monitoring of operations occupies an important place in the day-to-day activities of HP TRADING, as they manage resources to maintain a smooth pattern of availability through the distribution logistics system. [51] Summary annual review 2006

11 4 Summary annual review 2006 Group activities CARIBBEAN Keys figures for the CARIBBEAN region as a whole: (In EUR millions) Caribbean SARA TOTAL network (24%) Net sales Gross Operating Income Current Operating Income Cash flow Capital expenditure History [52] In 2005, RUBIS became one of the leading players in the distribution of petroleum products in the French Antilles and French Guiana when it bought all the Shell Group s local downstream petroleum activities. The company, renamed RUBIS ANTILLES GUYANE, has a high reputation and a sustainable competitive advantage in the region. Market The regional market covers a population of over 1 million inhabitants, with nearly 400,000 vehicles. Petroleum products consumption (excluding aviation) represents 1 million tonnes per annum, of which a quarter is fulfilled by RUBIS ANTILLES GUYANE comprising the distribution of LPG, motor fuel, marine fuel (for fishing, pleasure boating and cargo) and trading of heating oil and bitumen. Position RUBIS ANTILLES GUYANE has the leading position in the distribution of LPG and is second in the service station network. RUBIS ANTILLES GUYANE has a

12 powerful upstream supply structure with a 24% stake in SARA (Société Anonyme de la Raffinerie des Antilles), the only refinery in the region, and its associated terminals, and direct control of the two bitumen depots in Guadeloupe and Martinique as well as the motor fuel terminals at Marie-Galante and Saint-Barthélémy. The Company operates the second-largest motor-fuel distribution network in the French Antilles and French Guiana, comprising 54 service stations, and in the second half of 2006 undertook a programme of renovation of its network. In LPG, RUBIS ANTILLES GUYANE is the leading player locally, with a market share of 60% via its network of 1,700 depositories. Its 50% control of the region s only import terminal in Guadeloupe (Stocabu) and 100% ownership of the Martinique bottling plant give it a strategic logistics position. History In October 2006, RUBIS became one of the two players in distribution of petroleum products in Bermuda when it bought all of Shell Group s downstream petroleum activities. Market [53] Bermuda, an overseas territory of the United Kingdom with 62,000 inhabitants and a land area of 53 km 2, is developing vigorous activity in the service sector and tourism. Its income per capita is among the highest in the world. Its population owns 27,000 vehicles, with a limit of one per household. Position The Company operates the largest motor-fuel distribution network in Bermuda, with 13 service stations putting it ahead of Exxon, the only competitor. Boasting an independent logistics system that includes two motor-fuel import storage facilities and an LPG import terminal, RUBIS ENERGY BERMUDA holds a leadership position in Bermuda, in both the service station network and LPG supply. The company sells nearly 50,000 tonnes/m 3 petroleum products per annum. of Summary annual review 2006

13 4 Summary annual review 2006 Group activities AFRICA Key combined figures for Morocco-Senegal and Madagascar/Comoros islands: (in EUR millions) Change Net sales % Gross Operating Income % Current Operating Income % Cash flow % Capital expenditure % [54] History RUBIS ENERGIE was established in Morocco in 2000, in partnership with ceramics manufacturers, with the building of the continent s largest propane* import terminal at Jorf Lasfar, 120 kilometres south of Casablanca. This logistics platform soon helped RUBIS to develop a retail distribution strategy that propelled it to market leader. The Group operates through its logistics subsidiary Lasfargaz (70 %) and its distributor, VITOGAZ MAROC (100 %) Market The fast-growing Moroccan propane* market, geared to a range of business customers, was estimated at more than 130,000 tonnes in In the last few years, the propane* market has grown steadily, making a name for itself as a reliable, clean and competitive form of energy in an energy market where heating oil and natural gas are nonexistent. The ceramics industry accounts for about 60% of the propane market. The rest of this rapidly expanding market is spread over a variety of sectors, including industry, services, hotels, agriculture and residential. Position UPSTREAM RUBIS has unique logistics facilities: an import terminal with total capacity of 10,500 m 3 made up of three 3,500 m 3 underground tanks. These facilities, which can receive large-capacity ships, have sharpened the Group s competitive edge.

14 DOWNSTREAM RUBIS has chosen to expand in the propane segment, where it is the second largest of the four market players. Through its partnership with ceramics manufacturers, VITOGAZ MAROC has been a dynamic market leader since its entry on the market. It has developed its sales with a diversified customer base that has grown faster than the global trend. VITOGAZ MAROC s market share in the supply of propane* to ceramics manufacturers is estimated at 45%, and in the fast-growing non-ceramics market it is 20%. VITOGAZ MAROC is favoured by all categories of decision-makers (architects, design offices, plumbing and heating specialists, etc.) The number of customers has grown by more than 50%, from 550 at end-2005 to more than 800 at end employees, who are spread throughout the Company s business activities, and a significant project was carried out regarding procedures, delegations and work processes, in order to strengthen the effectiveness and productivity of the structure. Outlook The growth outlook is favourable in the medium term, with the buoyant construction sector providing the engine of growth, linked especially to the development of tourism and to the growth of central heating as a priority for Moroccan households. In 2007 we plan to complete this stage of quantitative and qualitative strengthening of our work force and will also see the opening of new Company-owned headquarters in the first quarter. The logistics subsidiary Lasfargaz which operates the Jorf Lasfar import terminal has experienced robust growth, with 41,000 tonnes of throughput, including 35,000 tonnes of propane* and 6,000 tonnes of butane* amounting to eight shiploads. [55] Financial year 2006 The year 2006 was favourable for VITOGAZ MAROC, whose business continued to develop at a sustained pace. Volumes distributed amounted to nearly 40,000 tonnes, an increase of 12% from This positive change resulted from both the relative stability of the ceramics manufacturing segment and the vigorous growth of the traditional small, medium and large bulk* segments, whose growth ranged from 20% to 50%. Despite an environment of especially unfavourable purchase prices, margins were preserved and operating profit grew in line with tonnages distributed. In line with objectives, the Company s organisation changed to respond to its development and to the marketing and management challenges that it faces. Staffing was strengthened with the hiring of six new Summary annual review 2006

15 4 Summary annual review 2006 Group activities DOWNSTREAM VITOGAZ SENEGAL strengthened its position as one of the country s major players, with a market share of about 28%. Sénégal The proactive strategy aimed at giving the network a national dimension continued in 2006, and gave VITOGAZ SENEGAL a marketing presence nearly everywhere in Senegal. VITOGAZ hopes to develop in the household and industrial bulk* market, sectors that are still emerging, and to extend its regional coverage in bulk* exports. [56] History RUBIS ENERGIE has been operating under the VITOGAZ SENEGAL brand in Senegal since September 2003, when the Group acquired Shell s LPG distribution business and became one of the leading operators in the country with nearly 39,000 tonnes distributed in Market Started in the 1980s, in particular to meet the need to protect forest resources, the Senegal butane-heating development program has set an example of success for all countries south of the Sahara. Household consumption multiplied by 20 in the intervening decades, and the penetration rate of butane* in households is estimated today at 65%. The market, which is mainly for 6-kg bottles, is driven by an annual growth rate of around 5% per annum in recent years, and butane* is still a priority in the government s energy policy. Position UPSTREAM VITOGAZ SENEGAL s distribution network is based on a powerful logistics centre, located in Mbao, just outside Dakar. These facilities consist of two underground storage tanks, each with a 2,500 m 3 capacity, and a bottling plant for LPG that is large enough to meet the requirements of the expected growth of the Senegalese market. Financial year 2006 In 2006, its third full year in operation, VITOGAZ SENEGAL, like all participants in the energy market, experienced turbulent conditions. SAR, the local refining company, was not able to assure continuous supply, with the result that for more than a month product was not available. Despite these extreme conditions, tonnage distributed in 2006, amounting to 38,800 tonnes, was stable compared to The structural difficulties encountered during the year have been resolved and the market is not expected to experience such severe difficulties in the future. The strategy to give the distribution network a national dimension continued in 2006 and will reach its mature stage in It will centre on the increase in bottling capacity at the Mbao depot, which was carried out in 2006, the strengthening of the minimum stock of 6-kg cylinders and the increase in the rental vehicle fleet to assure distribution logistics. Outlook For 2007, we expect a strong rebound in the market following a return to normal supply conditions, with sales rising above the 40,000 tonne threshold.

16 History After acquiring a gas distribution package in 1999 under the privatisation of the Malagasy energy sector, RUBIS started its distribution business in June In the meantime, the Group built logistics and distribution infrastructures to ensure that it had all the independent resources it needed to establish and develop business. Market In terms of energy, the Malagasy economy is still largely dependent on charcoal (70% of energy requirements). As regards household energy consumption, wood fuels represent more than 95% of consumption. [57] The country is still well below the African average in terms of LPG* consumption per inhabitant, per annum: less than 500 grams as against more than 7 kg on the mainland. This situation contributes to massive deforestation that the public authorities and investors are trying to contain by encouraging LPG substitution for charcoal. The LPG market doubled in five years to reach 8,000 tonnes in 2005, then dropped to 6,800 tonnes in 2006 because of the economic situation. Position VITOGAZ MADAGASCAR has succeeded in strengthening its positions through a strong local presence, marketing initiatives and development of the bulk* customer segment, helping market share to grow to 68.4% from 68% in Summary annual review 2006

17 4 Summary annual review 2006 Group activities Promotional activities for gas applications (hot water, heating, cooking, etc.) were implemented with success in supporting volumes. Financial year 2006 The year 2006 was marked by a major change in the tax treatment of butane*. The 2006 tax code introduced a VAT of 18% on this heretofore exempt product. This measure, together with increases in other taxes, automatically raised butane prices to consumers significantly, and it combined with the decrease in purchasing power of households from a 10% inflation rate and the high nominal price of the product to produce a market decline of 15%. VITOGAZ MADAGASCAR s sales (6,641 tonnes) declined by only 5%, thanks to the growth in volume of bulk* gas sales and a supply and bottle-filling contract with the GALANA company signed in [58] Outlook Prospects for 2007 are brighter, with presidential elections taking place under favourable conditions and significant investment projects (mines, property) scheduled to be in operation in the coming months. Development plans call for strengthening of the distribution network and implementation of sales and marketing activities. At the same time, investment and training continue to improve the health, safety and environment (HSE) conditions in which VITOGAZ MADAGASCAR operates. Moderate growth in sales is expected, thanks especially to the continued development of the portfolio of bulk* customers and expansion of business with existing customers.

18 A NEW ERA for GPL motor fuel [59] Coming more and more from processing of natural gas in production, LPG motor fuel is positioned as a genuine alternative motor fuel for the future. With a high octane index, no emissions of sulphur, lead or benzene, and lower emissions of pollutants such as nitrogen oxide (NOx), this ecologically-sound motor fuel is attracting interest in many countries. This is certainly true in Central and Eastern Europe, particularly Bulgaria, Romania, the Czech Republic and Poland, and also adjacent to France in the Benelux countries, Italy, and recently Germany, where the government has decided to maintain a favourable tax treatment until 2018 and a number of automobile manufacturers are adopting product positioning with emphasis on this new fuel. Without question, this new era for LPG motor fuel will similarly take hold in France, where RUBIS ENERGIE is one of the largest domestic distributors of clean motor fuel. Under its GAZ L brand, RUBIS ENERGIE now has 343 sales outlets (238 in self-service retail outlets and 105 in the Shell network) and a 17% market share Summary annual review 2006