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Shell joins effort to electrify services at petrol stations

Sky’s Ian King explains a change in attitudes among oil majors to the petrol station forecourts carrying their brands.

Wednesday 21 March 2018

Ever wonder what happened to all the petrol stations in Britain?

It’s no secret that the number has fallen substantially during recent years, with just over one in three petrol stations closing since the beginning of the century.

At the end of November last year, according to the Petrol Retailers Association, the UK was down to 8,407 sites, just over half of which trade under the BP, Shell, Esso and Texaco brands.

Going further back, the numbers are even more stark. Since 1970, three-quarters of petrol stations have shut.

Fierce competition from the supermarkets and terrifyingly low profit margins – contrary to what some people seem to think, selling petrol is not a lucrative business – has forced the closure of many sites, despite there being record numbers of vehicles on the road.

During this period, the only operators to have opened significant numbers of new petrol stations have been the big four supermarkets.

So it was striking that Shell announced plans on Wednesday to increase the number of forecourts it operates globally by a quarter, from 44,000 to 55,000, between now and 2025.

The bad news for British motorists is that half of these 11,000 new sites will be in just five countries: China, India, Indonesia, Russia and Mexico.

John Abbott, Shell’s director of downstream – the part of the business that includes petrol stations – said the move was aimed at helping the company navigate its way to a world in which motoring becomes less harmful for the environment.

He told investors: “Downstream is helping Shell to thrive during the global shift to a lower-carbon energy system. As the energy system evolves, our marketing businesses will provide agile platforms for meeting the changing needs of our customers.

“We are making products from today’s technologies as good as they can be, with better fuels and lubricants. We are also helping to deliver tomorrow’s products, services and technologies. From battery-electric vehicle charging to next-generation biofuels, LNG for transport to hydrogen; and smartphone apps that enable more efficient driving.”

In other words, in developed economies like the UK, you can expect to see a lot more charging points for electric vehicles on Shell’s forecourts.

The company opened its first electric vehicle charging points last year and, in October, it bought NewMotion, one of Europe’s largest electric vehicle providers.

In July last year, the company’s chief executive, Ben van Beurden, said the next car he bought would be an electric one and, earlier this month, he told an industry summit that, by 2050, he expected to be “selling enough energy on Shell’s forecourts to meet the power demands of Australia and Argentina combined”.

That is not the only other measure Shell has taken to move away from its traditional business of discovering oil and refining it into products like petrol into becoming an all-round ‘energy solutions’ company.

It also recently bought First Utility, the UK’s largest independent household energy supplier, putting it into competition with the so-called Big Six.

Shell is not the only one thinking along these lines. BP, whose brand is seen on more UK forecourts than any other, acquired a stake in January in FreeWire, a developer of mobile rapid charging systems for electric vehicles, with a view to rolling out the technology across its forecourts.

So too are the independent operators. Motor Fuel Group, the UK’s second largest independent operator and whose 400+ forecourts operate under the BP, Shell, Jet, Murco and Texaco brands, has also pledged to offer rapid chargers to drivers.

Yet it is the change in approach and attitude from the oil majors to their forecourts that is the most eye-catching.

Once, these sites were seen as good for nothing other than selling on the refined products they made, perhaps with a car wash on the side or, on occasions, a curled-up sandwich. Oil companies only made a very small proportion of their profits at such sites.

They now present a major opportunity. Research by National Grid suggests four in every five drivers either do not have a garage at home or use their garage for a purpose other than storing their car. That means most people will have to charge their electric vehicles in a public place like a forecourt.

There is a business logic to this and not just because the UK has pledged to phase out motors powered by the internal combustion engine over time.

SOURCE

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