Last update - 00:00 27/08/2007
Oil refineries' price increases spur fuel imports
By Avi Bar-Eli, Haaretz Correspondent
The oil refineries' announcement late last week that they will lower wholesale prices does not seem to have impressed the Delek Israel fuel company, which has now decided to set out in a new strategic direction.
TheMarker has learned that by the end of 2007 Delek is expected to import 70 percent of the fuel it sells, and will continue at the 60-70 percent level of overseas purchases through 2008.
Today Delek imports only 40 percent of its fuel needs, which is higher than that of the other fuel companies. It buys the remainder in Israel, mostly from newly privatized Haifa Oil Refineries. Delek has already signed contracts enabling it to reach the 70-percent import level and should achieve it within a few months; thus, for the first time, it will import a majority of its fuel.
It seems that Delek changed its policy after the most recent price hike, last month, by the refineries in Ashdod and Haifa, which raised local wholesale prices above international levels. The move came after the state removed price supervision on refinery products; as a result, the fuel companies started to look for alternatives. Most alternatives have focused on import via the Haifa refineries, since the Ashdod refineries are now owned by Paz and sell most of their production to that company, as well as the Palestinians.
At the end of last week the refineries did announce that they would partially reduce their price hikes, but that move would come at a time when world oil prices are dropping anyway.
At the end of 2007 the Pi Glilot terminal and storage facilities will become available to Delek, which bought them this year, and they may be used to store large quantities of imported fuels. In addition, the taxes and import duties, as well as port fees, are expected to drop due to expected reforms, and fuel importing should become much more competitive.