* Stake in Liberty Oil shores up supply relationship
* Liberty expects to buy more fuel from Viva's refinery
* Rival Caltex reports jet fuel market share gain
(Adds Liberty Oil comment)
By Sonali Paul
MELBOURNE, Aug 25 Swiss-based trading giant
Vitol has bought a minority stake in an Australian
fuel supplier to help shore up demand for fuel from the Geelong
refinery it recently took over from Royal Dutch Shell.
Vitol's Viva Energy, which bought Shell's refinery and 870
service stations in Australia for A$2.9 billion ($2.7 billion),
said the investment in Liberty Oil was aimed at improving the
"We look forward to further strengthening this relationship
by supporting Liberty both as an investor and a reliable fuel
supplier," Viva Chief Executive Scott Wyatt said in a statement.
Viva Energy and Liberty declined to comment on how big a
stake Viva acquired or how much it paid. The deal is subject to
regulatory approval by Australia's anti-trust watchdog.
Liberty had held talks with other companies about the stake,
but Liberty Managing Director Paul Edmends said Viva was a
"natural fit" given it is a big supplier to Liberty.
"A significant percentage of our offtakes are sourced from
Geelong and we expect this to grow in the coming years," Edmends
told Reuters in an email.
Australia's ageing refineries have mostly booked losses over
the past several years as they struggled to compete against
newer mega processing sites in Asia, leading majors like Shell
and BP to sell plants or convert them to fuel terminals.
Taking advantage of the new fuel importing opportunities,
Vitol and rival Trafigura Beheer BV have moved into
Australia to become fuel retailers over the past 18 months,
changing the local landscape.
Rival Caltex Australia Ltd reported a flat
underlying profit of A$173 million on Monday, with growth in its
marketing and distribution business offsetting losses in its
Caltex Australia Managing Director Julian Segal said while
the big traders were very competitive, they were also
disciplined about earning a good return on their investments,
suggesting they were unlikely to slash prices just to win
"What's within our control is getting fit to meet this
competition ... I think this set of results we published today
demonstrates that we are capable of doing that," Segal told
Caltex, in the process of converting its Kurnell refinery in
Sydney into a fuel terminal, gained market share in jet fuel,
with sales up 11 percent in the first half of the year to 1.3
billion litres in a market where demand grew 4 percent.
The company plans to axe a tenth of its workforce, or 350
jobs, within the next 12 months to help cut around A$100 million
a year in costs from 2016. The job cuts and depot closures are
expected to cost between A$130 million and A$155 million, to be
booked in results for the year to December 2014.
Caltex shares rose to a seven-year high after it raised its
dividend more than expected, and closed up 7.4 percent on Monday
at A$27.45, adding to its heavy outperformance of the broader
market this year.
(1 US dollar = 1.0733 Australian dollar)
(Reporting by Sonali Paul; Editing by Tom Hogue)