Downstream

Sponsorship of UK downstream oil market

The UK Government's main objective for the UK downstream oil sector is to promote open and competitive markets. This policy is set within the overall policy framework of creating strong and competitive energy markets that will ensure the UK has secure, diverse and sustainable supplies of energy at competitive prices.

The Department of Trade and Industry (DTI) is the sponsoring UK Government department for the downstream oil industry, covering the refining and oil products markets. It represents the industry's views in UK and EU policy formulation. This includes regular consultation with oil companies, industry trade associations and other players.

The DTI does not lead within the UK Government on regulation as the majority of regulation covering the refining and oil products markets covers environmental and health and safety areas, which are the responsibility of the Department of the Environment, Transport and the Regions (DETR), the Environment Agency (EA) and the Health and Safety Executive (HSE). Competition policy is the responsibility of the Office of Fair Trading (OFT). Please refer to the separate sections covering these areas and the section on useful contacts and sources of information.

Petroleum products market

The UK oil products market mainly consists of motor fuels, gasoil and kerosene primarily for space heating, and heavy fuel oil primarily for space heating and power generation. This section will primarily cover the largest UK products market, the retail market for motor fuels.

Data on information relating to petrol retail sites are given in Table 1. This information is taken from the Institute of Petroleum's "UK Retail Marketing Survey" published as a supplement to its "Petroleum Review" magazine each March (www.petroleum.co.uk). Since 1990, the number of petrol sites in the UK has fallen from 19,465 to 13,043 a reduction of almost a third. Most of the closures have come from the smaller independently-owned dealer-owned sector. The proportion of company owned sites and average site throughputs have increased (for reasons of efficiency). The number of sites classified as "self service" (no pump attendants) has declined slightly in recent years after increasing during the early part of the decade. Around 80 per cent of all petrol retailing outlets have "convenience" shops (some also have restaurants) which explains why non-petrol revenues have grown in importance during the 1990s.

The petrol retailing market is still dominated by the oil companies - Esso, BP, Shell, TotalFinaElf, Texaco and Conoco account for around 58 per cent of total UK petrol retailing sites. The supermarkets now have around 1,041sites, or 8 per cent of the total. This compares with just 290 sites in 1990 (or 1.5 per cent of total). Supermarket sites are generally larger than those of the oil companies, having almost twice the number of fuelling positions. The smaller petrol retailing companies typically have 100-500 retail outlets, whilst there are around 900 unbranded, privately owned retail sites.

Retail sales of petrol totalled 28 billion litres in 2000 (retail sales of DERV fuel were 8 billion litres), slightly lower than in 1999. Average site throughput of petrol (see Table 1) has increased steadily through the 1990s, from 1.62 million litres in 1990, to 2.12 million litres in 2000. Further statistics on the UK petroleum products market are available from DTI's monthly "Energy Trends" publication, http://www.dti.gov.uk/epa/et and its annual "UK Digest of UK Energy Statistics", http://www.dti.gov.uk/epa/dukes. If you want to subscribe to "Energy Trends", please contact Gillian Purkis, tel. 020 7215 2697, Gillian.Purkis@dti.gsi.gov.uk.

Prices

The DTI publishes monthly average petroleum product prices in "Energy Trends" (link). Latest provisional average prices are published in the monthly "Advance Energy Statistics" press notice issued on the first Tuesday of each month. Historical price information is published in "The UK Digest of Energy Statistics", http://www.dti.gov.uk/epa/dukes.

Taxation

Taxation of petroleum products is the responsibility of HM Treasury and HM Customs and Excise. Duty rates for hydrocarbon oil products are available from Customs and Excise press notice BN107/01 of 7 March 2001: "Hydrocarbon Oils: Changes in duty rates" available from http://www.hmce.gov.uk.

VAT of 17.5 per cent is incurred on oils used in motor vehicles. The rate for heating oils such as kerosene, gas oil and LPG is 5 per cent. A useful table (table 9.16) chronicling historical rates of duty and VAT is included in the "UK Digest of Energy Statistics", http://www.dti.gov.uk/epa/dukes.

The main legislation covering duty policy on hydrocarbon oils is the Hydrocarbon Oil Duties Act 1979, and subsequent regulations (available from The Stationery Office, http://www.ukstate.com.  Further information on this legislation and other duty issues is available from HM Customs and Excise (please see section on "Useful Contacts and Sources of Information (including Select Committee reports).

Environmental standards and product quality

EU Auto Oil Programme

The Auto-Oil programme has brought together the oil and automotive industries and the European Commission to agree tighter fuel specifications to reduce greenhouse gases and other pollutants. Under the Auto Oil I programme, which resulted in directive 98/70, specifications were agreed for 2000, which came into effect on 1 January 2000 (the directive is available from the European Commission website, www.europa.eu). The directive was transposed into UK law by the Motor Fuel (Composition and Content) Regulations 1999 (SI. 1999/3107, available from The Stationery Office Ltd, http://www.ukstate.com. The main specifications for petrol were 150 ppm sulphur and 42% vol. max for aromatics and for diesel, 350 ppm sulphur and 845 kg per cubic metre max. density.

The directive also agreed some specifications for 2005: 50 ppm sulphur and 35% vol.max. aromatics for petrol and 50 ppm sulphur for diesel and banned the general sale of leaded petrol from 1 January 2000.

Other EU Directives

The Sulphur Content of Liquid Fuels Directive (1999/32/EC) was implemented in the UK by regulations that came into force on 27 June 2000. These limit the sulphur content of gas oil, including that for marine use, to 0.2 per cent from 1 July 2000 (no change apart from marine) and to 0.1 per cent from 1 January 2008. Similarly, heavy fuel oil sulphur content will be limited to 1 per cent from 1 January 2003 as compared to a current specification of 3.5 per cent, with the option of having a limit on total sulphur dioxide emissions rather than fuel sulphur. This is important to oil refineries which burn sulphur free gas as well as fuel oil. Although fuel oil now represents a very small part of UK demand, this further tightening will reduce the flexibility to process higher sulphur crude in future and therefore increase reliance on North Sea crude sources.

Motor Fuel Standards

Four main types of fuel are sold at UK petrol retail sites. These are:

The European Fuels Directive 98/70/EC, implemented into UK law by the Motor Fuels (Composition and Content) Regulations 1999, covers the technical requirements for these fuels, including chemical composition. The fuels also meet the requirements of the following British Standards ( http://www.bsi-global.com ):

Ultra low sulphur fuels are required to meet the following additional requirements:

In addition the requirements for autogas (liquid petroleum gas) are covered by BS EN 589:2000.

Health and safety legislation (including licensing of petrol stations)

Control of Major Accident and Hazards

The main current legislation covering the downstream oil sector are the Control of Major Accident and Hazards (COMAH) regulations 1999 implemented by the Health and Safety Executive (HSE).

Licensing of Petrol Stations

UK motor fuels outlets are subject to a licensing regime under the Petroleum (Consolidation) Act (PCA) 1928, and subsequent regulations, which is the responsibility of the HSE. The PCA is enforced by local authorities, which have individual petroleum licensing officers. The existing PCA licensing regime is currently being reviewed by the Health and Safety Commission (HSC) as part of a project to implement the EU Chemical Agents Directive. For further information, please visit the HSE website, http://www.hse.gov.uk.

Competition

The UK downstream oil market is subject to competition law. The Director General of Fair Trading (DGFT) has responsibility under the Competition Act 1998 and the Fair Trading Act 1973 to investigate allegations of anti-competitive agreements and abuses of dominant market positions. The Office of Fair Trading (OFT) is responsible for enforcing competition law in the UK.

Recent Reports

Details of the reports below are available from the OFT website, http://www.oft.gov.uk.

(i) "Competition in the supply of petrol in the UK - a report by the Office of Fair Trading (May 1998).
Competition authorities in the UK have held a number of inquiries into the UK petrol market over the past decade. The OFT published the last major review of the market, "Competition in the supply of petrol in the UK", in May 1998 (please see OFT press notice 23/98 of 18 May 1998). The review did not find any evidence to suggest that petrol prices across the UK reflected either predatory or collusive behaviour on the part of suppliers or retailers. Overall, it was found that the market was operating competitively for the benefit of the consumer and did not warrant any intervention now, although the OFT would monitor the market to ensure that this situation did not change.
(ii) "Petrol and Diesel in the Highlands and Islands - an Office of Fair Trading review of petrol and diesel prices in the Highlands and Islands (July 2000").
The second comprehensive OFT inquiry into the price of petrol and diesel in the Highlands and Islands in recent years concluded that, with the possible exception of the Western Isles, that were was no evidence of anti-competitive behaviour and that pump prices reflected the conditions of the market (please see OFT press notice 28/00 of 13 July 2000).
(iii) "Office of Fair Trading inquiry into wholesale petrol and diesel prices in the UK (November 2000)"

Following allegations by independent petrol retailers of oil company differential wholesale pricing, the OFT carried out an inquiry into wholesale petrol and diesel prices and he announced its findings on 21 November 2000 (please see OFT press notice 47/00). The DGFT said that a combination of high world oil prices and public pressure on UK retail prices had resulted in a squeeze on diesel and petrol margins, rather than anti-competitive behaviour on the part of the major oil companies.

The DGFT said the Office of Fair Trading would continue to monitor the UK motor fuels market very closely and would not hesitate to take action if it found that firms in the industry were deliberately damaging competition.

Useful contacts and sources of information

Oil companies and major petrol retailers (by retail market share*).

Asda Stores
Petrol Trading Dept
Asda House, Southbank
Great Wilson Street
Leeds LS11 5AD
Tel: 0113 2435435
Fax: 0113 241 8709
Internet: www.asda.co.uk
 
BP Oil UK Ltd
Witan Gate House
500-600 Witan Gate
Milton Keynes
Bucks, MK9 1ES
Tel: 01908 853000
Fax: 01908 853051
Internet: www.bp.com
 
CPL Petroleum Ltd
Central House
Otley Road
Harrogate
North Yorkshire HG3 1RF
Tel: 01423 568068
Fax: 01423 531182
Internet: www.cplindustries.co.uk
 
Conoco Ltd ('Jet')
Conoco Centre
Warwick Technology Park
Gallows Hill
Warwick CV34 6DA
Tel: 01926 404000
Fax: 01926 404236
Internet: www.conoco.com
 
Esso Petroleum Company Ltd
ExxonMobil House
Mailpoint 22, Ermyn Way
Leatherhead
Surrey KT22 8EU
Tel: 01372 222000
Fax: 01372 223222
Internet: www.esso.com / www.exxon.com
 
Kuwait Petroleum (GB) Ltd ('Q8')
Burgan House
The Causeway
Staines
Middlesex TW18 3PA
Tel: 01784 467788
Fax: 01784 467522
Internet: www.knpc.com
 
Wm Morrisons Supermarkets plc
Hilmore House
Thornton Road
Bradford
 
Yorkshire, BD8 9AX
Tel: 01924 875334
Fax: 01924 875300
Internet: www.morrisons.plc.uk
 
Murco Petroleum Ltd
4 Beaconsfield Road
St Albans
Herts AL1 3RH
Tel: 01727 892400
Fax: 01727 892544
Internet: www.murphyoilcorp.com/ukmrkt
 
Petroplus (formerly Phillips Petroleum Products Ltd)
35 Guildford Road
Woking
Surrey GU22 7QJ
Tel: 01483 752317
Fax: 01483 752718
Internet: www.petroplus.nl
 
Safeway Stores plc
6 Millington Road
Hayes
Middlesex UB2 4AY
Tel: 020 8756 2027
Fax: 0208 8970 3605
Internet: www.safeway.co.uk
 
Sainsbury's Supermarkets Ltd
JS Petrol
Stamford House
Stamford Street
London SE1 9LL
Tel: 020 7695 6720
Fax: 020 7695 6856
Internet: www.sainsburys.co.uk
 
Save Service Stations Ltd
Walton Lodge
Walton Street
Aylesbury
Bucks HP21 7QY
Tel: 01296 395951
Fax: 01296 394300
 
Shell Oil Products Ltd
Camino Park
James Watt Way
Crawley
West Sussex, RH10 9TZ
Tel: 01293 894498
Fax: 01293 894497
Internet: www.shell.co.uk
 
Tesco Stores Ltd
PO Box 44
Cirrus Building C
Shire Park
Welwyn Garden City
Herts AL7 1ZR
Tel: 01992 632222
Fax: 01992 644156
Internet: www.tesco.co.uk
 
Texaco Ltd
1 Westferry Circus
Canary Wharf
London E14 4HA
Tel: 020 7719 4457
Fax: 020 7719 5035
Internet: www.texaco.com
 
TotalFinaElf UK Ltd
40 Clarendon Road
Watford
Herts WD1 2TQ
Tel: 01923 694000
Fax: 01923 694400
Internet: www.totalfinaelf.com
 
* Retail market share data is collected by the DTI but is not publicly available as is provided by companies in a commercial in confidence basis.

Trade associations

Association of UK Oil Independents (AUKOI)
Cutlers Cottage
Carbrooke Lane
Shipham
North Thetford
Norfolk IP25 7RP
Tel: 01362 820739
Fax: 01362 820124
Contact: Mrs Meg Annesley
Represents UK hypermarkets, independent retailers and traders.
 
British Association for Biofuels and Oils (BABFO)
Curlew Court
Guy's Head Road
Sutton Bridge
Spalding
Lincolnshire PE12 9QQ
Tel: 01406 350848
Fax: 01406 351791
Contact: Mr Peter Clery, Chairman
Represents UK biofuels industry.
 
British Lubricants Federation (BLF)
Berkhamsted House
121 High Street
Berkhamsted
Herts HP4 2DJ
Tel: 01442 230589
Fax: 01442 259232
Internet: www.blf.org.uk
Contact: Rod Parker, Executive Director
Represents UK lubricants industry.
 
Federation of Petroleum Suppliers Ltd (FPS)
2 Slaters Court
Princess Street
Knutsford
Cheshire WA16 6BW
Tel: 01565 631313
Fax: 01565 631314
Internet: www.federation.u-net.com
Represents UK and Republic of Ireland independent oil distributors.
 
LP Gas Association (LPGA)
Pavilion 16
Headlands Business Park
Salisbury Road
Ringwood
Hampshire BH24 3PB
Tel: 01425 461612
Fax: 01425 471131
e-mail: lpga@btinternet.com
Contact: Mr Tom Fidell, Director General
Represents equipment and fuel suppliers for liquid petroleum road fuel industry.
 
Natural Gas Vehicle Association (NGVA)
P.O .Box 24
Launceston, PL15 7XQ
Tel: 01579 363803;
Fax: 0870 1675066.
Contact: Mr Frederick J Parker, Executive Director
Represents equipment and fuel suppliers for natural gas vehicle industry.
e-mail: fred.parker@uphill.fsnet.co.uk
 
Petrol Retailers Association (PRA)
9 North Street
Rugby CV21 2AB
Tel: 01788 538304
Fax: 01788 538339
Internet: www.rmif.co.uk
Contact: Mr Ray Holloway, Director
Represents UK independent petrol retailers.
 
UK Petroleum Industry Association (UKPIA)
9 Kingsway
London
WC2B 6XH
Tel: 020 7240 0289
Fax: 020 7379 3102
Internet: www.ukpia.com
Contact: Mr Chris Hunt
Represents major oil refiners with operations in UK.

Government departments and agencies

Department of the Environment, Transport and the Regions
Transport, Environment and Taxation Directorate
Great Minster House
76 Marsham Street
London SW1P 4DR
Tel: 020 7944 3000
Fax: 020 7944 2512
Internet: www.detr.gov.uk
Area of responsibility: fuel quality and clean fuels policy and legislation.
 
Department of Trade and Industry
Oil and Gas Directorate
1 Victoria Street
London SW1H 0ET
Tel: 020 7215 5000
Fax: 020 7215 6972
Internet: www.og.dti.gov.uk
Area of responsibility: sponsorship of downstream oil industry, including petrol retail sector. Provision of general information and advice on the sector.
 
Environment Agency
Rio House
Waterside Drive
Aztec House
Almondsbury
Bristol BS12 4UD
Tel: 0845 933 3111
Internet: www.environment-agency.gov.uk
Area of responsibility: enforcement of air quality and groundwater pollution legislation.
 
HM Customs and Excise
Excise Policy - Oil
Ralli Quays West
3 Stanley Road
Salford M60 9LA
Tel: 0845 010 9000
Fax: 0161 827 0322
Internet: www.hmce.gov.uk
Area of responsibility: hydrocarbon oil excise duty policy and legislation.
 
Health and Safety Executive
Safety Policy Directorate
St Anne's House
Stanley Precinct
Bootle
Merseyside, L20 3RA
Tel: 0151 951 4000
Fax: 0151 951 3418
Internet: www.hse.gov.uk
Area of responsibility: petroleum safety and licensing policy and legislation.
 
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX
Tel: 020 7211 8000
Fax: 020 7211 8800
Internet: www.oft.gov.uk
Area of responsibility: enforcement of UK competition law.

Other useful contacts

British Standards Institute (BSI)
British Standards House
389 Chiswick High Road
London, W4 4AL
Tel: 020 8996 9001
Fax: 020 8996 7001
Internet: www.bsi-global.com
Area of responsibility: sets standards on motor fuels and provides information on existing standards. The BSI standards database can be searched on http://bsonline.techindex.co.uk
 
Institute of Petroleum (IP)
61 New Cavendish Street
London, W1M 8AR
Tel: 0207 467 7100
Fax: 0207 255 1472
Internet: www.petroleum.co.uk
Area of responsibility: independent body that advances and disseminates technical, economic and professional knowledge relating to the oil and gas industry. The IP is involved in setting technical standards, manages research programmes, arranges industry conferences and fora and holds industry training courses. It has an extensive library and publishes a monthly magazine, "Petroleum Review".
 
LACOTS
10 Albert Embankment
London, SE1 7SP
Tel: 020 7840 7200
Fax: 020 7735 9977
Internet: www.lacots.com
Area of responsibility: LACOTS is the Local Authorities Coordinating Body on Food and Trading Standards. It assists local authorities across the UK to improve the quality of trading standards enforcement and by ensuring a consistency of approach and good regulation.
 

List of relevant legislation covering UK downstream oil market

Competition

Consumer legislation Duties Environment Fuel quality legislation Health and safety Licensing of Retail Sites Pipelines

The above legislation is available from The Stationery Office Ltd, Tel. 0870 600 5522, http://www.ukstate.com

Recent Select Committee Reports Covering Downstream Oil Industry

The above reports are available from the Stationery Office, http://www.ukstate.com


Back | Title | Table of Contents
Appendix 1 | Appendix 2 | Appendix 3 | Appendix 4 | Appendix 5 | Appendix 6 | Appendix 7 | Appendix 8 | Appendix 9
Appendix 10 | Appendix 11 | Appendix 12 | Appendix 13 | Appendix 14 | Appendix 15 | Appendix 16 | Appendix 17
Index Map | Plate 1 | Plate 2W | Plate 2E | Plate 3W | Plate 3E | Plate 4W | Plate 4E | Plate 5 | Plate 6
Plate 7 | Plate 8W | Plate 8E | Plate 9W | Plate 9E | Plate 10W | Plate 10E | Plate 11 | Plate 12 | Legend