Rubis wants more
MARKET LEADER Rubis is not content with its current 31 per cent share of the local petroleum distribution trade.
Rubis Energy Jamaica, the locally incorporated business of the big French fuels and lubricants corporation, Rubis, is in expansion mode with an eye on building service stations along the country’s newly developed highways. It is also hunting liquefied natural gas (LNG) and liquid petroleum gas business in Jamaica and the rest of the Caribbean.
“Yes, we have a plan, which is confidential, to further expand in this country but also in the region,” a guarded Alain Carreau, CEO of Rubis Jamaica, said in an interview with the Financial Gleaner.
But as to the details, Carreau said he could not outline them, but noted that parent company Rubis, one of the top 60 companies listed on the Euronext in Paris – the French securities market of the pan-European stock exchange spanning France, Belgium, Netherlands and Portugal – is “ready and available” to expand “whenever the opportunities arise”.
Rubis entered Jamaica in 2012 after acquiring the local assets of Shell West Indies for €58 million. It was part of a larger deal in which Rubis acquired other regional assets.
Although those figures were published by Rubis, Carreau himself declined to speak about them, and he also sidestepped questions on the size of the investments made in Jamaica in the five years of operation.
He said, however, that the company is hunting deals.
“Already we are thinking and working on LNG opportunities in the Caribbean,” he noted.
Carreau oversees a network of 50 gas stations across Jamaica. The local operation is pursuing a model of total value chain ownership, a business philosophy which has pitted the petroleum marketing company against some of the operators of its retail outlets. The franchises of some former dealers have been terminated as Rubis upgraded and took control of the stations.
Rubis Jamaica has missed at least one opportunity before in its push for greater control of the petrol market, with Carreau himself noting that they had wanted to acquire Petcom two years, but lost out to Jamaican-owned Phoenix Fuels and Accessories Limited, which paid US$19 million to the State for the chain.
Had Rubis prevailed, it would have given the French-owned company another 12 per cent market share.
Early in 2013, Rubis took control of the Shell assets in Jamaica, including service stations and a refinery at Rockfort in east Kingston, from the private equity firm Blue Equity, which itself had bought the Shell operations from former owners Joey Issa and Neal & Massy earlier that year.
A great company
Frenchman Carreau, a former Shell executive trained in manufacturing and marketing and dispatched at various times to some 14 countries by Shell, described the Jamaican assets taken over by Rubis five years ago as “a sleeping beauty. “Shell is a great company. They trained me and gave me global experience. The work that they did in terms of putting in proper infrastructure (here in Jamaica) was excellent. This facility is unparalleled,” the Rubis Jamaica CEO said from his Rockfort office.
“We have our private port, private network of pipelines, our own terminal 100 per cent owned by Rubis, several loading gantries, our own laboratory with skilled people, our own fleet of trucks, nearly all our service stations are owned by Rubis. We own property, plant and goodwill ... everything.”
The Jamaican acquisition, completed in early January 2013, was a sizeable portion of the €139.26 million that Rubis, in it’s 2013 annual report, attributed to acquisition of assets by its Caribbean division during 2012. That year Rubis also bought the Chevron assets in The Bahamas, Cayman Islands, and Turks and Caicos Islands. The year before, the company had acquired the assets owned and operated by Chevron under the Texaco brand in the Eastern Caribbean.
Since then, Carreau said Rubis has refurbished the Rockfort terminal, added a loading gantry to the one Shell operated with for 90 years, fully automated its operations, and refurbished its wide network of service stations. The investments amounting to “millions of US dollars” were made from locally earned revenues, Carreau said.
The expenditure includes training for staff at its head office as well as some 1,200 employed by persons who operate its service centres under contract.
Asked whether Rubis’ value chain strategy was squeezing out smaller operators, as it is often accused, Carreau rejected the notion, while insisting there was room for everybody.
“It is not our intention or in our interest to squeeze anybody out. Nobody is forced to work with us. We are a private listed company. We offer the service stations on tenders and the people in front of us, working with us, are not our employees at all. They are private business people, private individuals free to work with us or not
to agree to work with us. We do not force anybody. Same as in a marriage, you agree or disagree,” he said.
“We offer different service stations to different operators. There is no union relationship at all. It does not apply. Some of our service stations employ 30 to 40 people (and are) making millions of Jamaican dollars per month, hundreds of millions of Jamaican dollars per year. These people are not small operators, they are business people.”
In 2016, the Ministry of Science, Energy and Technology placed Rubis’ market share at 31 per cent, followed by Total at 22 per cent, Texaco/GB Energy with 16 per cent, and Petcom at 12 per cent.
Explaining Rubis’ size and scope, Carreau said: “We are typically in the midstream and downstream. We are refining, marketing fuels lubricants, chemicals, LPG and LNG worldwide – Africa, Caribbean, Europe, the Middle East ... 35 to 40 countries.”
Rubis’ 20 or so markets in the Caribbean and South America also include Antigua & Barbuda, Barbados, Dominica, Grenada, Guyana, St Lucia, St Kitts-Nevis, St. Vincent & the Grenadines, Trinidad & Tobago, Bermuda, Guadeloupe, Martinique and French Guiana.
Last year, Rubis bought the largest fuels distributor in Haiti, Dinasa, which marketed fuels under the National brand.
This is a large footprint, which Carreau says enables Rubis to reap economies of scale as it seeks to supply its fuels directly to consumers at affordable prices while maximising profits.
He explained that the fuels business has not seen the best of times since the major fall-off in fuel consumption around the time of the global financial crisis in 2008, but has experienced some recovery since 2014.
Globally, he added, it is accepted that a country’s energy sector grows by 0.5 percentage point for every percentage point growth in GDP. With Jamaica’s very small but improving growth, he said the fuels business is growing only moderately.
As Rubis expands in Jamaica, Carreau says the company is also focused on its role of good corporate citizen by working with the police in the East Kingston division, and funding the development of the artistic talent of youth in the area through its Rubis Mecenat cultural fund and the Inpulse Art Project that involves schools in Kingston.
Additionally, unused land owned by the company in the Rockfort area is utilised by a group of farmers who pursue environmentally friendly methods of farming to earn a living.