Trafigura buys the Company You’ve Never Heard Of — but one which dominates UK road fuel supply

On 4 March, a press release appeared in the inboxes of commodity and financial publishers to be met by most with a shrug of mild indifference. It announced that commodities trading giant Trafigura is buying UK-based road fuel supplier and biofuels producer Greenergy from a Canadian asset management company called Brookfield.

Ask 100 people on the streets of London what Greenergy is, and it’s likely that at least 99 of them will have no idea — or might perhaps guess the company is a wind farm developer or a tidal energy innovator. Sounds pretty green, right?

It certainly started that way. Greenergy was founded in the depths of recession in 1992, when oil trader Andrew Owens set up a niche business to make low-emission diesel and sell it to the Swedish government. But that first version was a far cry from the titan that today dominates the UK’s fuel imports. The Swedish venture was actually sold off way back in 1996, and Owens and Greenergy turned their attention to the fragmented world of Britain’s road fuels distribution sector.

Key milestones in the company’s history include:

• the 2003 acquisition by the UK’s largest fuel retailer, supermarket chain Tesco, of a 25% stake, subsequently increased to 36%, in Greenergy; 
• the 2007 launch of a biodiesel production facility at Greenergy’s Immingham plant in the northeast of the UK; and
• the 2012 acquisition of two former Petroplus oil refineries, in Coryton near London and in Teesside, also in the UK northeast.
  
  

Buying these plants enabled Greenergy greatly to increase its footprint in the UK — because it proceeded to convert the refineries to import terminals, facilities where the company could blend road fuels — rather than manufacture them — to meet the specifications of the UK market. These investments meant that Greenergy essentially controlled the country’s fuel imports, and as a result massively enhanced its turnover and “pricing power”.

In Greenergy’s last published filing for 2022, the company stated its turnover at £18.9bn, compared with just £60mn back in 1999 — a 315-fold increase in size.

The acquisition of Coryton and subsequent investment in the site meant that the company could import diesel on larger, long-range (LR) oil tankers, and benefit from substantial economies of scale. It also meant Greenergy now controlled most of the oil storage facilities in the densely populated southeast of England. The result was that the business suddenly packed a big punch in the gasoline market, since it was in a position to import a full range of gasoline blending components — mostly naphtha, butane, ethanol and reformate — and could maximise its blending margins to produce gasoline with the right specification for the UK market.

In a UK Competition and Markets Authority (CMA) study of UK road fuel supply published in 2023, the CMA noted that one company (guess who?) was responsible for almost half of the UK’s gasoline imports between 2017 and 2022. In terms of the company’s involvement in the formation of wholesale gasoline prices, according to Argus information, during the same period Greenergy bought about half of all the gasoline that was publicly traded in the 10ppm cargo market for cif NWE delivery. The gasoline 10ppm cargoes cif NWE assessment published by S&P Global Commodity Insights, a competitor of Argus, is the main gasoline reference price for wholesale and retail markets in the UK, Ireland and Scandinavia.

In Greenergy’s 2022 results filing, the company noted that “the increase in gross profit was driven by strong gasoline blend margins” and a widening spread between naphtha and finished-grade gasoline.

Thus while most media attention is likely to focus on Trafigura’s takeover of Greenergy’s biofuels manufacturing facilities in the UK and the Netherlands, it is actually its access to the UK transport fuels market that presents the largest business opportunity for the trading giant.

A continuous wave of refinery closures across the UK over the past 15 years, and Petroineos’ further planned closure in 2025 of Scotland’s Grangemouth refinery, mean that the country is now one of the largest importers of diesel fuel in the world. The latest figures from the UK Department of Energy and Climate Change show that imports accounted for 56% of the country’s 23.5mn t of diesel demand in 2022. Greenergy’s share of those imports could be more than 20%, a percentage which gives Trafigura’s trading division very sizeable market power.

Meanwhile, although the UK is a net exporter of gasoline — by contrast with diesel — it nevertheless imports more than 2mn t/yr through Coryton and other ports in the south and east. Again this gives Trafigura, as one of the foremost traders and — crucially — blenders of gasoline in Europe, a sizeable outlet for its finished gasoline, one of a dwindling number of such outlets in Europe.

Ben Luckock, global head of oil at Trafigura, uses the press release to note the growing importance of companies such as Greenergy in helping Europe make the move to a lower-carbon future. No doubt biofuels represent a key part of the rationale for the acquisition. But it is the mineral oil assets that Trafigura has also bought which have the eye-catching potential to be a game-changer in European oil trading markets.