The downstream oil sector directly employs over 120,000 people, with the UK economy relying heavily on petroleum products - which equates to over a third of the total energy demand.
Given the major changes to EU legislation, the UK Government’s E10 Consultation, and the sector’s own view of the importance of low carbon liquid fuels, biofuels have become an increased focus for the industry. However, petrol continues to lead production levels at UK refineries (26%) followed by diesel (21%).
Gross sales of petroleum products grew in 2018, in part reflecting a rise in crude prices in that year. UKPIA member companies, combined, saw their net profits remain stable at around £1 billion on gross sales of around £70 billion.
UK demand for oil products fell by nearly 1.5 million tonnes, to 68.5 million tonnes, in 2019. The decrease in demand was due to the increased decoupling of GDP as well as the significant increase in demand for oil product and improvements in vehicle efficiency. The largest decrease in demand came from transport and domestic fuels, which experienced decreases of 1.5% and 1.9%, respectively. Demand for diesel fuels in particular continued to decrease, while demand for hydrocarbon petrol fuel increased in 2019.
In 2018, the UK’s downstream oil sector engaged in £28.3 billion worth of trade, an increase of 16% over the £24.4 billion of trade occurring in 2017. The downstream oil sector manufactures a range of refined petroleum products. Diesel remains the leading product delivered (note: not the most produced) in the UK and there is still significant demand for petrol, jet fuel, and domestic kerosene.
The Insurance Market
The insurance marketplace for the fuel industry is niche, with only a small number of insurers offering the specialist products and solutions which are required to ensure clients are correctly protected in the event of a claim.
Historically the market has been dominated by one broker in the marketplace. At Aon, we introduce a new product suite to the market which is bespoke to our client’s needs. A dedicated account executive will review your insurance portfolio, providing a review not only in relation to your existing insurances, but also offering information and advice in respect of other suitable insurances to fully protect your business.
We have gained the expertise needed to operate successfully within this market through the acquisitions we have made, such as Henderson Insurance Brokers, who have been offering products to this market for many years following close discussions with UKIFDA. Aon are able to offer our clients access to a wide panel of insurers available in the market. This is due to access to both current scheme facilities and our own bespoke products; ultimately allowing us to find the right deal for our clients and make the process as streamlined as possible.
Client services, policy cover and claims management are key to us providing our customers with a complete insurance solution.