3rd fuel supplier considered

| 29/01/2014

(CNS): Government appears to be in preliminary discussions regarding the possibility of a third fuel supplier for the island to enable CUC to source cheaper diesel. Kurt Tibbetts told his legislative colleagues that government believes competition would provide the best avenue for addressing the problem of high fuel costs, and although there was nothing yet to report, the possibility of allowing CUC to find a cheaper supplier and to facilitate a new terminal and moorings was under discussion. The revelations came during question time in the Legislative Assembly on Wednesday when the planning minister confirmed that ESSO's Caribbean assets, including those in Cayman, have been sold to Simpson Oil Ltd (SOL).

Following the question about the change of ownership of Exxon Mobil-ESSO posed by Opposition Leader McKeeva Bush, Tibbetts explained that the government had learned only as a matter of rumour that the company was being sold. When the chief petroleum inspector checked the website, he discovered that SOL had acquired Exxon-Esso's Cayman assets. He then called the firm, which confirmed the deal had been finalized earlier this month and it was now in the legal process of making the necessary changes and applications to the Trade and Business Licensing Board.

Tibbetts confirmed that government had not been informed about the sale and no one here was advised of the transaction until the CPI asked.

This sale comes in the wake of the sale of Chevron-Texaco to Rubis and will see the branding at ESSO stations changed to SOL in the coming weeks in the same way that Texaco was transferred to Rubis.

Answering further questions from both Bush and the member for East End, Arden McLean, about price and competition, Tibbetts revealed that government had met with both Rubis and Esso, now SOL, and had engaged in myriad discussion on a number of different issues.

When it came to price, he said government understood there were no simple solutions but a policy decision had been taken that competition would be the best way to address prices for the benefit of the public. He said government was now looking "earnestly" at how that can happen beyond the existing competition between the two firms and pointed to CUC.

"I can't disclose any specific details as those details don't exist yet," he said, noting that a huge part of the fuel consumed on Grand Cayman was used by CUC. He implied that was where government was considering expanding competition. He confirmed that within reasonable terms, government was prepared to allow CUC to purchase diesel elsewhere if interested parties were identified.

The minister also stated that as the current mooring, distribution equipment and terminal is owned by one of the two existing oil companies, government would not stand in the way of a new facility if it was required.

Following the legislative session, CNS contacted CUC for comment about the revelations from Tibbetts but the president, Richard Hew, gave nothing away. Pointing to the trend globally of big oil companies concentrating on exploration, extraction and refining of oil and moving out of terminal operations, retailing and marketing the terminals, he said that the retail operations locally have now also been sold to regional operators.

“CUC anticipates continued reliable service and competitive pricing from both companies,” he said referring to SOL and Rubis. “As to whether it would make sense to have more fuel providers on island, this would be a commercial decision taken by any potential provider looking at cost to setup infrastructure and to operate against the potential price and volume of fuel sales on the island,” he said, indicating that any new oil terminal or supply line would be paid for by the supplier rather than CUC.

With few details coming from either government or CUC on the possibility of expanding competition in the oil industry for such a small jurisdiction, there may be no cause for concern. But the idea of encouraging more fossil fuel consumption may prove to be at odds with other government efforts to move to greener alternative fuels.

Answering further questions about the oil companies’ responsibilities for environmental issues relating to spills and potential contamination, Tibbetts said that the change in name of the local companies control license held by ESSO, which would be transferred to SOL, was not necessarily a time when government could renegotiate the terms of the licence. He explained that the licence held by ESSO, which will pass to SOL, is almost identical to that held by Rubis and it would not be possible to re-negotiate one without putting the other at an unfair advantage.

He did state, however, that the CPI was keeping a close eye on the possibility for spills and environmental damage.

Category: Local News

Comments (30)

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  1. Anonymous says:

    Everyone we put in there always promise to deal with cuc & NO ONE DOES NOTHING=Yellow belly! Caymanian

  2. Confused says:

    PPM you can fool them most of the time but you cannot fool them all the time. Everyone sees through this  and the excuse about not knowing is just BULL!  You lost my vote in 2017.

    we need to see your platform promises come tuition. We hungry, unemployed, CUC killing us, insurances robbing us, we can't afford to live and this is the best you all can do?

  3. Anonymous says:

    Ppm agreed to deal with cuc n dart! I’m losing trust in all politicians! Gt voter

  4. Anonymous says:

    Lower fuel cost to increase the profits for the already wealthy shareholders (politicins) of CUC.

  5. Nicholas Robson says:

    What the Cayman Islands needs in not another petroleum supplier but a move into the modern age of Alternative Energy.

    The Carbon War Room's Smart Island Economies initiative may be what these islands need to move away from very expensive oil and on to clean solar and wind energy. See <http://www.carbonwarroom.com/content/smart-island-economies#mission&gt;

    "Islands face increasing challenges from their dependence on imported fossil fuels, which impacts the prices they pay for everything from electricity to food. This is further complicated by the added demand that tourism places on the island’s resources. Natural energy resources are abundant on islands. However, the systems required to use them have not been widely implemented and scaled. 
     
    This lack of implementation is the result of multi-market barriers that islands and technology providers encounter. These multi-market barriers include local permitting, long-term fossil fuel contracts, and other legislative barriers. What is missing is a scaled regional approach to these barriers. 
     
    We seek to bridge this gap by working with islands to identify these barriers and create a regional roadmap for making the necessary changes. This roadmap would detail solutions that can attract both private sector investment and aggregated demand for large-scale renewable energy systems. Learn more about our island selection criteria in the background section.
     
    Our finish line has islands rich with renewable energy systems–and with a strong commitment to fast track becoming completely fossil-fuel-free."
     
    A Cayman Islands Government delegation will be attending a summit meeting in the British Virgin Islands in the near future where they they will be hearing more about this initiative of Sir Richard Branson's. 
    The Smart Island Economies initiative is a win-win initiative in that there is no capitol cost to the participating governments. The major corporate manufacturers of of the varying types of alternative energy equipment would like to use the ten participating islands as showcases for their equipment and are therefore willing to install their equipment with no up front costs and make a return on investment after the fact over the long-term. 
     
    The advantage of generating with solar, wind and other types of renewables is that there is no fuel (oil) costs to escalate.
     
    Secondly a renewable energy industry will provide jobs in the community. CleanTechnica reports 'Solar Jobs Increase 20%, Rise to 143,000 In US'
     
    Nicholas Robson
    Director-General
    Cayman Institute
     
  6. Anonymous says:

    Competition is good but what is really needed is the establishment and enforcement of fuel quality standards. We don't need more companies selling crap and calling it gasoline and diesel.

  7. Anonymous says:

    Shouldn't PPM be discussing this in a public forum? Fuelcost  impacts everyone.That's the whole point of weekly press briefings -also known as tranparency. Kurt gave this info onlty because he was being pressed by Arden. PPM by their own admission is doing plenty behind closed doors. Eastern bypass deal with a private person who has already got history of sorts is an example. Negotiations with Dart is another example – complete darkness. Ozzie dealing privately on the dump with some woman in USA – who in turn is linked to CEC in Cayman … list goes on.

    The standard PPM excuse is 'we have nothing to report'. Well you spoke with someone on a potential deal on behalf of the people of Cayman. What did you say?The more PPM claim to be different from UDP – the more they look the same.

    • Anonymous says:

      So in your mind Kurt was hiding something he did not know, the eastern bypass extension suggestion is a done deal, Ozzie is talking with a person he has stated he has not met. What a fantastic mind.

    • The Seeker says:

      Heller, wasn't this the same people that beat up on hrlio and Big Mac about keeping negotiations secret, well shiver me timbers, these politicians are all cut from the same mold.  Rooster come forward with your twisted views on this!.

  8. dolly says:

    I like some of the people in CUC, but let's face it:  CUC need Competition and not the fuel suppliers!

  9. Anonymous says:

    Please bring 98 octane to our islands. The 93 octane that Esso (SOL) and Rubis have on island just don't cut it for many individuals. 

    • Anonymous says:

      Does it taste better?  That stuff Rubis is selling now tastes awful.

    • Anonymous says:

      what do you need 98 octane for unless you are determined to break the speed limits in your boy racer cars?

      • Anonymous says:

        Higher octane does not mean more speed.  Some of you high end luxury cars have engines that need the higher octane to run properly. Whether at the speed limit, below it, or over it.

  10. Anonymous says:

    typical kurt/ppm….go back to sleep……..zzzzzzzzzzzzzzzzzzzz

  11. Anonymous says:

    Kurt……Esso (Exxon-Mobil) owns the sea port / berthing facility at Jackson Point now. Why would the new owner wish to build a 2nd sea port berthing facility, why would it need to be considered? Ownership of the current location would go to the new owners in their purchase. The story is making it sound like some great deal is on the horizon for both CUC & consumers, where in reality all the pubic will see is new signage & flashy color stickers on the old gas station pumps , just like Rubis did when Texacogot sold. 

    Hopefully…SOL will do something about the rotten above & in- gound fuel storage tanks

    • Anonymous says:

      Please re-read the article. The reason for the possibility of another facility would be IF another supplier decided to enter the market. As in a 3rd supplier. Not Rubis or SOL. Careful reading is important in everything.

  12. Foreign Devil says:

    People, we won't need more diesel the world is going to be run on solar power, soon.

  13. Anonymous says:

    Here is an idea.  When a company is entitled to sell such a strategically vital product in the market which is naturally oligopolistic, put a requirement that the government has to approve any transfer of ownership.  It is not rocket science guys.

    • Anonymous says:

      Why do you care? It makes no difference.

    • John says:

      Increasing government power is what leads to corruption.  Increased regulations decreases free market trade and leads to monopolies where competition is eliminated and prices are inflated.  Less regulation and more competition is what drives down costs for consumers. That is what is needed. 

      • The real bobo says:

        Less regulation drives economies yes, however, you would think a major change of ownership  should have had entry discussions with the central Government in order to ensure that the country benefits from the continued, timely and affordable supply of fuel.

    • The Seeker says:

      Absolutely right how can a major change of this type occurr without Governments sanction, nobody is asking who these new owners are, what is their background, how substantial are then, ate they flly by night outfits, don't expect no better from PPM people , just another set of dudes.

  14. Cayman Concern says:

    About time:  My great grandparents would roll over in their graves if they knew the hardship our own elected Cayman government has imposed on us for their spoils. 

    I used to put aside $500 per month towards myh childrens college fund and thought I was pinching the penny and doing the right thing to sacrifice vacations and new cars for my children's future university.  Now, every penny of that planned savings and so much MORE goes right to Govt taxes via CUC.  Shameful, yet "we the people still allow this?"  For what?  The average household electric bill for a family of four is over $600…I know of many families who even have no a/c on during the day are at a $1000 per month bill??? How can we possbily survive? 

    Roll back the Electricity Tax!  MLAs you are killing your own people's progress by filling your pockets and the Govt coffers.  Cut wasteful Govt (and Authorities!!) spending and give us our money back!!! No more energy tax….

    • Anonymous says:

      If you don't burn it, you don't have to pay for it.  Pay CUC, if you use it.  A/C is expense.  When since everybody is living in A/C homes?

  15. Anonymous says:

    Pfft….This merely moves the industry into an oligopoly, there won't be much change in pricing, sorry folks. Maybe just more bottom line for CUC…..watch this space….

  16. Anonymous says:

    Mr. KT are you invloved in a new company or one of your good friends?

  17. Otherview says:

    Great, now Essos assets have been sold to another foreign company with no interest other then 

    sucking as much money out of the affluent Cayman Islands as possible.

    FLASH: More crappy, unregulated gas and diesel coming to a pump near you soon.

  18. Bling Man says:

    No matter wha happen.  Price gonna go up.  I bet mah bling on it.

  19. Anonymous says:

    We need another electric company in here, they will continue to KILL US! Gt voter