Puma Energy to enter new markets in Asia this year

Singapore

PUMA Energy, the Singapore-head quartered fuel retail and storage company backed by commodity trader Trafigura, is planning to enter new markets in Asia this year, as it looks to take advantage of the nearly limitless opportunities it sees.

The growing populations and urbanisation are creating "strong robust growth" in transport fuels which Puma Energy supplies, said Robert Jones, its chief operating officer for Middle East and the Asia-Pacific.

Traditional players are either leaving the market or under-investing, which creates vast opportunities, he told The Business Times in an interview.

While the firm has been in the industry for two decades, "I think the opportunities we have in front of us here are more than ever," Mr Jones pointed out. "There seems to be no limit on the opportunities. It's just a question of cherry-picking the good ones."

Last year, Puma made a net profit of US$114.6 million on revenues of US$12.7 billion; it has some 7,600 employees across 43 countries. The group is 49.5 per cent owned by Trafigura and 27.9 per cent owned by Angola state-owned oil company Sonangol Holdings; the remainder is held by private investors and employees.

Puma Energy opened a US$92 million oil storage terminal in Myanmar over the weekend, built in a 80-20 joint venture with local logistics and trading firm Asia Sun Energy.

Located in Thilawa port, a deep-river port 25 kilometres south of Yangon, the terminal is Myanmar's largest and most modern petroleum products facility, with a capacity of 91,000 cubic metres. It will cater for a range of products ranging from petrol and diesel to bitumen and jet fuel.

This follows a deal with the government in 2015 on a joint venture that imports and distributes all aviation fuel to 11 airports in Myanmar.

There remains more that can be done in Myanmar, said Mr Jones. The group will start building a liquefied petroleum gas (LPG) terminal in Thilawa as part of a phase two project at the same site; this will have a capacity of 8,000 tonnes when completed by the end of next year or early 2019.

LPG, used for industries as well as cooking and heating in homes, typically make up a sizeable part of the fuel mix for emerging economies but is barely represented in Myanmar, noted Mr Jones. "If you get LPG to the market, it will fly off the shelves."

The next step is to build a distribution network throughout the country through secondary storage hubs, as well as to enter into the retail network to sell petrol and diesel through petrol stations.

"Over the next five years, there is easily capacity to double or triple the size of our investment in the country," he said. Puma Energy spent US$561 million in capital expenditure last year, of which US$118 million was invested in Asia.

The group's activities have grown rapidly in Asia, growing at 50 per cent each year for the last four years. The region accounted for one-fifth of revenues last year.

The company has so far been focusing its efforts on Myanmar, Papua New Guinea and Australia, though it has a presence in other markets in Asia as well, added Mr Jones.

In Papua New Guinea, where it acquired InterOil Corporation's oil refinery, service stations and fuel terminals for US$526 million in 2014, the group is now the largest downstream petroleum distributor. It is in the midst of upgrading the refinery, as well as rebranding the service stations.

Over in Australia, where the group has 419 retail sites, Puma Energy last year started a new cafe convenience concept, offering customers meals and barista-made coffee as well as free wifi and phone charging points.

With these markets now reaching a certain stage of maturity, Puma Energy will enter into new markets through deals that will be announced later this year, said Mr Jones.

Overall, the group sees an increasing trend for premium fuels such as petrol with 95 or 98 octane ratings in emerging markets. "We're kitting ourselves for higher demand in premium products," said Mr Jones. For industries, lower sulphur products have been in demand, he added.

Even as the use of electric vehicles gains momentum in large oil-consuming countries such as China and India, Puma Energy is not too concerned.

"Looking at the industry and the growth in demand overall, we don't see a major threat coming in the near- to mid-term from a major drop in petrol demand," said Mr Jones.

India's power minister said two weeks ago that the government wants the country to have an all-electric car fleet by 2030, while China is reportedly contemplating rules that require up to 8 per cent of car sales to be electric vehicles as early as next year.

Electric vehicles will have an impact on more mature markets first, said Mr Jones, adding that within these, the impact will be stronger in more metropolitan areas where commute distances are shorter as the electric vehicle technology is not ready for long drives.

"When you look at our business, it seems unlikely that we will suffer any major volume downturn."