United Petroleum in oil reserve storage talks

United Petroleum has opened talks with the government over developing a domestic oil reserve.

David Szymczak, chief operating officer of United Petroleum

The fuels retailer owned by Melbourne billionaires Avi Silver and Eddie Hirsch has opened talks with the federal government over developing a domestic oil reserve as it embarks on a major expansion to boost storage capacity.

United Petroleum, operator of 450 Australian petrol stations, has received development approval for a new fuel import terminal at the Port of Brisbane with up to 200 million litres of storage while boosting capacity by a third in Victoria’s Hastings terminal.

Australia is looking to boost its local stockpile to meet International Energy Agency fuel security rules that require emergency oil stocks equivalent to 90 days of net oil crude imports.

While rivals Caltex, Viva Energy, ExxonMobil and BP have all been involved in discussions over using or expanding their existing storage facilities, United said it was also a logical partner.

“We’ve flagged our interest with the government to look at construction of strategic storage,” United’s chief operating officer, David Szymczak, told The ­Australian. “We’re very keen and we think it is something that ­Australia needs. The ball is in their court.”

Energy Minister Angus Taylor has indicated the government will spend $94m on the strategic fuel reserve, with supplies initially stored in the US until Australia has developed further capacity to store its reserves.

United plans to deliver 120 million litres of storage at the Brisbane fuel terminal with a second phase adding an extra 80 million litres while Hastings would lift to 190 million litres, from 140 million litres currently.

“We’re talking to the government about how we can help them and what can we do around construction of more storage,” Mr Szymczak said. “We’re in a growth phase anyway so boosting security of supply in Australia is something we’re very attuned to.”

United Petroleum controls 10 per cent of the retail petrol market in Australia, propelling Mr Silver and Mr Hirsch to combined wealth of $3.5bn in the 2020 edition of The List — Australia’s Richest 250. The business partners appeared in court in 2018 claiming law firm Freehills was at fault for the failure of its $500m service station float, while the law firm said it was owed unpaid fees for work on the doomed effort.

However, the case was won by Herbert Smith Freehills and Mr Szymczak confirmed United Petroleum has no plans to revisit an initial public ­offering.

United sees itself challenging Australia’s “major oil club” and remains open to acquisitions three years after buying the troubled Pie Face chain, which operates in 200 of its service station locations.

Ampol, formerly known as Caltex, is running a dual track process for 250 of its retail sites ­either through a sharemarket float or potential trade sale and United confirmed it would look at the opportunity.

“We haven’t had any discussions about it at this stage, but we’ll always have a look,” Mr Szymczak said.

Fallout from COVID-19 restrictions saw its fuel volumes fall in a similar 30-50 per cent range suffered by its rivals such as Caltex and Viva, but United said the worst was now over.

“Volumes are coming back as the government eases restrictions and we’ll start to see that flow through,” it said.