Low Oil Prices Cause "Impressive" Downstream Growth for Brightoil

Brightoil said low oil prices resulted in "impressive" downstream growth.

Although low oil prices and other factors have impacted its upstream business, Brightoil Petroleum Holdings Limited (Brightoil) reports that the increased demand for oil storage and marine transportation caused its downstream business to maintain "an impressive growth" for the the latter half of 2015.

According to the Hong Kong-based company's interim results for the six months ended December 31, 2015, Brightoil recorded a significant increase in gross profit for the latter half of 2015 of HK$835 million, ($107.4 million), or a 490 percent increase compared with previous period of six months ended December 31, 2014.

The increase is mainly attributed to the company's two core business segments ,International Trading & Bunkering (ITB), and Marine Transportation.

Total revenue decreased by HK$23.2 million ($2.9 million), compared with the previous period of six months ended December 31, 2014; this was mainly due to the decrease of global oil prices, but Brightoil reports that "the increase in revenue from Marine Transportation compensated the decrease in revenue attributed to decrease in global oil prices, while the business performance of Upstream Gas Business remained steady."

The "voluntary impairment" of the Caofeidian oilfields in China, which are non-cash in nature, was cited as the reason for Brightoil recording a loss of HK$523 million ($67.3 million) during the six months ended December 31, 2015; however, the company believes the impairment will not have any impact on cash flows or business operations.

As for the company's core business in fuel oil and marine bunkering, it "continued to advance steadily" in the second half of 2015 and is focusing on Singapore, China, Taiwan, Korea, Japan, and other Asia-Pacific markets.

Looking forward, Brightoil's  3.16 million cubic metre storage and terminal facilities in Zhoushan will be operational this year, and its planned Dalian facilities will provide over 10 million cubic meters of oil storage capacity.

Brightoil predicts that with these facilities, it "will become one of the top five oil storage service providers globally and receive stable rental income upon the commencement of operations."

Brightoil is also focusing on business transformation via the January launch of the energy and financial e-commerce platform "Brightoil Online", said to be the company's most important initiative "to transform from asset-heavy to asset-light, from business-oriented to the public-oriented and consumer-oriented, from offline to online-offline."

With this platform, Brightoil expects "that land fuel supply, marine bunkering and our other downstream business will experience remarkable growth, bringing the Group with substantial rewards."

In December, Brightoil signed a memorandum of understanding to buy a bunker barge from Shenzhen Brightoil Shipping, a move that it said would "enhance the competitive strength in the bunkering business of the Group by expanding the operating fleet."