* Vitol invests in gas stations from Turkey to Pakistan
* Increases presence in growing consumer markets
* Being end-user strengthens position with fuel suppliers
By Julia Payne and Dmitry Zhdannikov
LONDON, March 10 From Pakistan to Turkey, the
world's largest independent oil trader Vitol is betting on a
spike in gasoline and diesel demand in young and growing nations
by snapping up filling stations that disappointed oil companies
are prepared to sell.
With the sharp drop in global oil prices, major integrated
oil companies have been shedding assets, including the
marginally profitable retail outlets, to cut costs.
But privately-held Vitol, which trades 6 million barrels per
day of crude oil and refined products, says these assets present
an opportunity to strengthen its presence in end-markets and in
This month, Vitol secured more than 23 percent of Turkey's
retail market after it agreed to buy Petrol Ofisi from Austrian
oil firm OMV for $1.45 billion.
"The volume we trade means integration into the distribution
chain makes sense. Retail also allows you to participate in
markets on an on-going basis, so it's not always ad hoc or
spot," Chris Bake, a top Vitol executive, told Reuters.
"It allows us to have different kinds of discussions with
our suppliers," said Bake, who sits on Vitol's executive
committee and is the chairman of retail unit Vivo Energy.
The purchase will add another 1,700 outlets to Vitol's
portfolio of 3,000 stations acquired through investments in the
last few years in Viva Energy in Australia, Vivo Energy in
Africa, Varo in central Europe and OVH in Nigeria.
It has also consolidated its initial investments such as by
buying Royal Dutch/Shell's stake in Vivo and Viva and
its aviation business in Australia last year.
The eastern Mediterranean is a major import market and Vitol
sees Turkey as a good destination because of its proximity to
transport routes from the Mediterranean, Black Sea and Red Sea.
"With fuel and non-fuel retailing, we can optimize the
system. We are able to look closely at how to streamline the
assets and we are willing to invest capital. With Vivo, we have
added around 100 new service stations per year," Bake said.
Of its main trading competitors, only Trafigura is also
vying for a piece of the retail pie. It has a large presence in
Africa through its subsidiary Puma Energy and is set to acquire
a large stake in India's Essar Oil.
Glencore, Gunvor and Mercuria have favoured
upstream or midstream assets. Last year, Gunvor bought a
refinery in Rotterdam, Mercuria bought oil and gas marketing and
distribution assets in the United States and Glencore invested
in oil deposits in Chad.
Vitol's retail investments fit in with its view that
transport will be the major driver of fuel demand growth, with
aviation demand to outstrip that for cars, which is slated to
peak in about 10 years time.
"Global demand for gasoline and diesel will peak but you
can't apply the macro picture to individual countries that have
high growth prospects like Pakistan where the Chinese are
investing tens of billions of dollars in the CPEC (China
Pakistan Economic Corridor), so demand will grow compared with
developed economies," Bake said.
Last year, Vitol increased its stake in Pakistan's Hascol
Petroleum Ltd that runs around 450 service stations from 15 to
Like Turkey, apart from its own growth prospects, Pakistan
will become even more a gateway to the rest of Asia as CPEC will
see the Chinese government invest $57 billion, mainly in a
network of rail, road and pipeline projects, to connect Western
China to Pakistan's sea port of Gwadar.
(Editing by Peter Graff)