Petroleum supply - take or pay agreements – high volumes, high stakes

By Christopher Hewitt

Each year 40 billion litres of petrol are sold into the retail and industrial markets of Australia. Petroleum distributors – sandwiched between powerful suppliers and extremely competitive customers – operate in a challenging business environment. Like commodity trading businesses, profits depend on achieving ever higher volumes on ever thinner margins. But distributors don't just play the margin – they have a physical responsibility that extends from supplier to retailers and end users. They face a whole host of safety, social, environmental, and statutory reporting requirements. Costs need to be carefully managed, customer relationships need to caringly maintained, and contracts need to be cleverly negotiated.