An integrated Supply & Distribution department was formed in 2007 bringing together supply planning and operations (for both crude oil and petroleum products) with terminals and distribution activities.
Integrating the supply chain from crude oil to customer has enabled a stronger focus on improving the processes and infrastructure to better ensure safety, reliability and security of supply.
During the year progress was made in upgrading the terminals network and implementing improvements in data management and reporting, refinery scheduling and product supply planning. Caltex’s trebling of biofuels sales during the year required expanded purchases of ethanol and biodiesel by the supply team and work was accelerated on building terminal facilities to blend biofuels with petrol and diesel.
Larger shipments from further afield
Caltex’s crude oil supply sourcing is changing in response to declining regional oil fields and increased global competition for crude oil supplies. This requires going further afield to obtain light sweet crudes, oil with low sulfur content and low density well suited to Caltex refineries. The longer distance also requires larger cargoes to achieve economies of scale.
In June 2007, Caltex took delivery of an 875,000 barrel (140 million litres) cargo of crude oil from West Africa in the Suezmax tanker Energy Sprinter. This was the biggest shipment ever received by Caltex and came from 14,000 kilometres away in the Congo Republic.
Despite the distance, the cargo was landed in Australia at a lower cost than a regional cargo of equivalent quality. It marked Caltex’s first purchase of cargo from a region that provides alternative good quality low sulfur crudes comparable to Australian and South-East Asian crudes.
Securing biofuels supply
The rapid growth of Caltex’s biofuels business is reflected in the trebling of biofuels purchases in 2007. The current suppliers of ethanol to produce Caltex’s Bio E10 Unleaded (10% ethanol) are Manildra which produces ethanol from wheat in NSW and CSR which produces ethanol from molasses in north Queensland.
In June 2007, Caltex announced a major new contract for supply of ethanol from a new bio-refinery under construction at Dalby in Queensland’s Darling Downs by Dalby Bio-Refinery Limited (DBRL). Caltex is contracted to buy a minimum of 30 million litres of ethanol each year for three years, an undertaking that underpinned the plant’s development.
The grain-to-ethanol plant is expected to be in production by the end of September 2008, producing 80 million litres a year using over 200,000 tonnes a year of sorghum purchased from local growers.
For biodiesel, Caltex’s current main source is Biodiesel Industries Australia at Rutherford near Newcastle, NSW which supplies around 12 million litres a year of biodiesel for production of Caltex’s New Generation Diesel (2% blended biodiesel).
High feedstock prices forced the closure of several Australian biodiesel suppliers in the fourth quarter of 2007. Caltex has not purchased imported palm oil based biodiesel and won’t unless it can be shown to be sustainable to the satisfaction of key stakeholders in the countries in which it is produced. To this end, Caltex has been negotiating with other local producers to establish new supply arrangements for quality biodiesel that are economic and meet Caltex’s stringent quality requirements.