Even as the UK moves towards a low-carbon economy, we will still rely upon fossil fuels for a significant portion of our energy requirements, in particular for use as transport fuels. Consequently the downstream oil sector will continue to play a vital role in the UK economy by providing the required transport fuels and associated infrastructure to produce, import and distribute these fuels.
The downstream oil sector also has an important role in the wider drive to decarbonise the economy and reduce emissions of greenhouse gases. For the public, this will be noticeable in their role to ensure the successful implementation of biofuels.
The downstream oil sector has demonstrated its resilience to various supply disruptions but there is always scope to improve and draw upon the lessons learned from Buncefield and other incidents. It is therefore only right and proper to seek to develop the evidence base around the resilience of the downstream oil sector in an open and transparent way.
DECC works collaboratively with industry through its relevant trade associations within the Downstream Oil Industry Forum to consider how to address the diverse challenges being faced by the industry.
To help inform these discussions, DECC commissioned Wood Mackenzie, well known consultants in the oil industry, to analyse the market framework in the downstream oil sector. Their independent report, below, forms the basis for further work and discussion between DECC and industry.
In 2010, DECC commissioned a report from Deloitte LLP examining the short term resilience and longer term security of supply of the UK’s downstream oil market.
In 2011 DECC commissioned a report from Purvin and Gertz examining developments in international refined product markets, the competitiveness of the UK refining sector and the changing profile of UK refinery ownership.
Within the UK, the downstream oil sector (including the refineries, distribution terminals and filling stations) employs more than 120,000 people, who together provide an important technical knowledge base within the UK economy. Maintaining these skills are vital not just to ensuring resilience of the sector against disruption but also to the wider economy. DECC is working with the Department for Business, Innovation and Skills (BIS) on this nationally important agenda.