Boral Moves Into Petrol Retailing

Press, Volume CVII, Issue 31462, 31 August 1967, Page 14

Boral Moves Into Petrol Retailing

Boral, Ltd., has made a restricted entry into the marketing of motor spirit—a move which points to the possibility of important new developments for the company and its oil-refining operations, writes L. T. Vincent in the Australian “Financial Review.”

Boral’s move into marketing, not yet officially announced, is only on a small scale. Three suburban outlets in Sydney are being supplied with petroleum marketed under the brand name of Fleetwing.

The motor spirit comes in super and standard grades and the three selling points are at Matraville, Enmore and Auburn. Boral does not own the service stations and a spokesman for the company said yesterday that there were no plans for a large-scale entry into the retailing field. However, there are signs that important new developments could be pending for Boral and its refining operations. Surplus Output The motor spirit which Boral is selling through the three petrol stations represents part of the company’s production which is not sold to Caltex. The bulk of Boral’s refinery output is sold to Caltex under a contract which does not expire until 1975. The amount which is not taken by Caltex is sold by Boral to industrial users, including trucking groups. A spokesman for Boral yesterday indicated that the new marketing venture could be considered as an “experiment in the marketplace.” From some viewpoints, the three service stations would not represent a particularly valuable experiment They are all old and were closed down for some time before they were reopened by private owners to market Boral’s Fleetwing. At the same time, however, they would provide Boral with some experience in marketing as well as taking the part of production which is left after the Caltex contract has been met

The Fleetwing venture is not the first time that Boral has shown an interest in getting into the marketing field. Five years ago the boards of Boral and H. C. Sleigh, the Golden Fleece marketers, agreed in principle that there could be benefits in a merger, but negotiations were discontinued after protracted consultations.

Since then, H. C. Sleigh has made long-term arrangements for its supply of refined petroleum products. Although it has made its first move through Fleetwing, Boral would not be' in a position to set up an extensive service-station chain.

The cost would be too high

and the highly competitive state of the industry would not allow for entry which would be particularly profitable—if at all.

Probably the most effective way for Boral to gain a big share in petroleum marketing would be to link with a company operating an established chain of service stations. Boral’s “experiment” with motor spirit marketing is significant in so far as it comes only a fortnight or so before the much-vaunted Isomax plant comes into operation. The Isomax plant was expected to be in production some time ago, but delays were experienced and it is expected to start up in about 12 days.

Costing more than $5 million, it is claimed that the Isomax hydrogenation process will bring substantial economies.

The Isomax will also give Boral a much bigger productive capacity. It is claimed that the Isomax process could reduce Boral’s crude-oil intake by between 16 and 20 per cent for the company to produce the same amount of refined products as at present. If Boral’s refinery output was to remain roughly in line with current levels, the company could reduce its crude intake. Extra Capacity But if it wished to expand production for new outlets, the Isomax plant is capable of lifting the refinery’s capacity considerably. The Isomax plant is also especially suitable for processing lighter crude oils, the type discovered in Australia.

Boral’s shipments of crude from the Persian Gulf are of the heavier type. Boral has previously stated that the Isomax will produce “a greater variety of refined products of higher quality."