Cogent Industries

Petroleum

The Petroleum Industry (also referred to as the downstream sector) includes:

  • Stabilising, refining and manufacturing
  • Storage, blending and distribution
  • Retail sale of automotive fuel

The main products of the downstream sector are transport fuels (aviation fuel, diesel and unleaded petrol), for which the market in the UK amounts to about 50million tonnes per year. The commercial market includes industrial transport (cars, trucks, buses, and trains), marine (marine diesel for ships) and agriculture (tractors etc), as well as public services and military vehicles. The industry is creating new “greener” fuels such as biodiesel and bioethanol, made from renewable sources including vegetables and wheat, to reduce harm to the environment. The UK Petroleum Industry Association (UKPIA) has said that over coming years, vehicles will become cleaner and less polluting. Hybrid vehicles are likely to become more common, particularly in urban areas. (A hybrid car is a vehicle which operates using a mix of petrol and electric power and causes less pollution).

Trends
Refined petroleum products and coke oven products
Year* Total Turnover Approximate gross value
added at basic prices
1998 £21,652 million £1,387 million
2006 £27,550 million £1,873 million
Petroleum retail
Year* Total Turnover Approximate gross value
added at basic prices		 Total employment average
1998 £14,884 million £19,589 million 73,000
2006 £27,550 million £2,001 million 60,000

*data not available, disclosive data
Source: Annual Business Inquiry 2006

Research and development


Source: R&D in UK Businesses 2006, ONS, January 2008

There has been an overall increase in R&D spend since 1998.

Total Expenditure UK Government Overseas Own funds Other UK Businesses
£298m .. .. £129m ..

43% of R&D in the Petroleum industry is funded by the industry itself.

1,000 employees are employed in R&D activity in the Petroleum industry.

The skills gap in the petroleum market


For direct employment in the Petroleum industry:

  • There is an under supply of people qualified to S/NVQ level 2 and 3 compared to the proportion of jobs at those levels
  • There is a 27% deficit of people qualified at S/NVQ levels 2 and 3
  • Level 4 and 5 occupations such as senior mangers, scientists and chemical engineers account for 61% of the overall workforce.
The Industry 2020

The future direction of the industry remains stable with a declining need for petrol but a rising demand for diesel.

Department for Business, Enterprise and Regulatory Reform statistics indicate a growing demand for diesel and jet fuel.

Priorities

The future direction of the petroleum industry appears stable, with a declining need for petrol but a rising demand for diesel. Maintaining this stability, however, will require investment in UK refineries to meet the changing product demand and crude oilsupply, and avoid reliance on imports.

Over many years, the refining sector has sought to minimise its impact upon the environment and improvements continue to be made to reduce emissions. Cogent works with the refineries and the regulators to ensure that the correct skills mix is achieved in maintaining the best environmental standards.

Regarding renewable fuels, a major change in the UK during 2008 has been the introduction of the Renewables Transport Fuels Obligation. The industry has been working for some time now to achieve targets and timetables of 2.5% by volume bio fuels content in 2008/9, 3.75% in 2009/10 and 5% onwards.

Cogent has considered the skills impact with regard to the manufacture of bio fuels and has concluded that no new skills are required for such manufacture – but more likely an extension of existing skills will suffice.

Process safety continues to be of the highest priority for the downstream petroleum sector, given the response to high-profile accidents such as that at Buncefield, and further regulations are likely to emerge from continuing reviews of safe working practices.