Reuters logo
European oil pipeline firms clash as clients dwindle
January 11, 2013 / 5:16 PM / 5 years ago

European oil pipeline firms clash as clients dwindle

* French pipeline struggles after clients leave

* Rival pipeline accused of abuse of dominant position

* New refinery closures, fuel shortages feared

By Dmitry Zhdannikov

LONDON, Jan 11 (Reuters) - Oil pipeline operators in Europe are competing fiercely to supply a dwindling number of refiners, raising fears of further casualties in the refining sector and sporadic fuel shortages.

At the heart of the latest conflict is a clash between two major pipeline operators - France’s South European Pipeline (SPSE), which supplies oil plants in France, Germany and Switzerland, and the Transalpine Pipeline (TAL), supplying Germany, Austria and the Czech Republic.

Fluxel, a shareholder in the French pipeline and the operator of France’s oil port of Fos-Lavera, has warned that the French pipeline may not survive after last year’s exodus of clients, mostly oil majors, towards TAL.

Fluxel also said that if volumes did not return, the development might threaten the existence of two refiners it is still supplying in France and Switzerland.

“We consider that the current situation has become unbearable and cannot be allowed to go any further,” Fluxel’s President Michel Peronnet wrote to TAL managers in a letter, obtained by Reuters.

Peronnet declined to discuss the letter when contacted by Reuters. TAL and SPSE declined to comment.

The rising competition between pipelines in Europe is similar to developments in the United States although reasons for that rivalry are very different.

The U.S. shale boom has led to a stampede of shippers who want to use limited pipeline capacity, preferably at regulated tariffs, while in Europe falling fuel demand and refining closures have led to a rivalry between underused pipelines for shippers.

Europe has seen several refineries close down in the past decade as the continent’s fuel consumption declined steeply due to slow economic growth and fuel efficiency.

The TAL-SPSE dispute has been running since August, when owners of Germany’s MIRO refinery in Karlsruhe ditched SPSE after using it for around 50 years. Instead, they started supplying the plant fully via TAL, which runs from the Italian port of Trieste to central Europe.

Peronnet’s letter says the Fos-Lavera port lost around 30 oil tankers in traffic between August and November 2012 as a result of the switch by MIRO, Germany’s largest refinery.


Sources at oil majors who own MIRO - Phillips 66, ExxonMobil , BP, Rosneft and Royal Dutch/Shell - say they switched flows as TAL offered lower shipping fees.

Peronnet argues the switch and lower tariffs became possible as TAL uses its dominant position in the region to charge higher prices on other routes towards other refiners.

The letter says TAL charges oil majors 2.10 euros per tonne to supply MIRO, while charging 3.85 euros per tonne to a refinery at Ingolstadt in Germany, which belongs to trading house Gunvor and unlike MIRO has no alternative pipeline routes.

Last year, shortly after buying Ingolstadt, Gunvor discovered it had no access to the pipelines to supply it. It complained about TAL and access to its pipelines to Germany’s cartel office and was ultimately granted access.

Gunvor declined to comment on the fees.

TAL said the issue of fees was confidential.

“The aforementioned practices are liable to constitute a cartel and/or an abuse of dominant position,” said Peronnet calling on TAL to increase tariffs or face an official complaint from Fluxel to EU competition authorities.

When contacted by Reuters Peronnet said Fluxel had not yet filed a complaint to the European authorities. He declined further comment.

The European Commission declined to comment.

“There may be the intention to lodge a complaint, but at the moment we have received nothing,” said an EU official, speaking on condition of anonymity.

Apart from MIRO and Ingolstadt, TAL also supplies refineries of Austria’s OMV and Czech refineries.

After oil majors joined TAL, the pipeline became so congested that at one point last year it lacked capacity to supply the Czech refineries, raising fears of supply shortages ahead of winter

By contrast, flows along SPSE dried up so much that traders say it might become difficult to make it worth continuing to supply oil to the two remaining clients - refineries in France and Switzerland. The latter is owned by oil trader Vitol.

The French pipeline firm still has some negotiating power and could persuade majors to return. It has kept $250 million worth of crude belonging to oil majors for months after they left, saying it wants clarity on whether they would return. (Reporting by Dmitry Zhdannikov, Francesco Guarascio, Barbara Lewis, Muriel Boselli, Vera Eckert, Julia Payne; editing by Keiron Henderson)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below