Energy and Climate Change CommitteeSupplementary written evidence submitted by David Blakemore, Phillips 66 Limited

I would like to thank you for the opportunity to discuss the UK Refining Industry and Oil Supply Security with you at the Energy and Climate Committee oral evidence meeting on 11 June, 2013. At the close of the hearing, Sir Robert Smith said “If there is anything that occurs to you that you did not say that you thought you should have said, if you could write to us afterwards, that would be great”. I would like to therefore take this opportunity to write to you with the following additional comment.

At the oral hearing, question 98 was as follows:

Chair: Any other suggestions? Are there any steps the Government should be taking on the critical infrastructure of pipelines, terminals and jetties that support the industry?

Mr Andrew Owens responded:

I think free access is a positive. I do not think it is as important in the UK as it might be in other countries, because most of the population live close to a port. The viability of ports is important and one longer-term risk, perhaps, is that some oil ports are under pressure to be converted into other uses. That is a possible issue.

Phillips 66 is supportive of the response made by Mr Andrew Owens. The UK Government’s own forecasts show that a secure supply of oil products to UK customers will be of critical importance for many years to come. Over the past years (including when the ports were publicly owned businesses), both oil refiners and importers have built critical oil supply infrastructure such as pipelines, terminals and jetties within the UK’s ports. These ports are now under private ownership, are not regulated and are not accountable for oil supply security. Furthermore, these privatised ports have sometimes also been appointed as the Statutory and Competent Harbour Authority, a role which provides them with influence over the ability of other persons to construct their own facilities in harbours.

When Phillips 66 Limited constructed the Humber Refinery in the late 1960’s, we came to an arrangement with the British Transport Dock Board to construct our road loading terminal and much of our import/export shipping infrastructure within their Immingham docks. An example of a clear threat to UK critical oil product supply infrastructure can be seen in Associated British Ports’ “Port of Immingham Master Plan 2010–30”. This shows a plan to replace Phillips 66 Limited’s oil product road loading facility and a third party shipping gas jetty with a container storage area and import facility. Both of these facilities are critical to our Humber Refinery.

The road loading facility is also recognized by DECC as being one of the major supply points by road for oil products to the inland UK. Unlike many other port users such as container shippers, the scale of oil refining operations means that we do not have any choice, but to use the port located next to our refinery. Immingham Port is therefore in an effective monopoly position.

Government should ensure that oil product supply security is not threatened by new port developments displacing critical oil supply infrastructure. Furthermore, Government should ensure that privatised ports acting as Statutory and Competent Harbour Authorities are not placed in a potential conflict of interest position by having influence over the development by third parties of new harbour facilities that could be in competition with their own existing port business. We therefore request that a regulator is appointed to oversee these important areas.

June 2013