Q&A with Eugene Mayne
Eugene Mayne is CEO of Tristar, Dubai-based provider of logistics for the petroleum and chemicals industries. He explains how specialty fuel transport logistics has weathered a prolonged period of low energy prices and cost-cutting pressure.
Q: Tristar is in surface fuel transport, you own oil tankers, you supply aviation fuel, you manage fuel farms, and you do turnkey fuel supplies for international organisations. Has the weak price environment hurt your business?
A: We aren’t insulated from the pressure to cut costs. I’ve seen oil majors saying they’ve cut operating costs by 50% in various areas of their business. We have had to make some adjustments and sacrifice some margins, but we are selling operational excellence and a strong safety record. We’ve got a lot of loyalty from our customers, and that means they often give us the first right of refusal.
Q: Could the cost-cutting in other parts of the industry threaten safety?
A: Yes. Most of our customers aren’t pushing us to the wall because we set high expectations as far as safety, and they know that comes at a cost. We handle dangerous commodities in high-risk workplaces, and we transport and manage fuel in extreme operating environments where peacekeepers and international relief groups need support. The safety performance is critical and requires commitment at all levels. It involves training, maintenance, vehicle and equipment management, reporting and measurement tools, and constant evaluation.
Q: How many international missions do you support?
A: We’re probably the only fuels company in the world operating seven fuel peacekeeping missions at the same time. We’re in Mali, Central African Republic, Uganda, Somalia, South Sudan, Liberia and Haiti. Liberia and Haiti are winding down. Across Africa, Tristar has fuel operations in 16 locations, and we’re looking at expanding in several more locations. That gives us the potential to serve more missions if they become necessary.
Q: Humanitarian missions tend to be fixed price contracts, correct?
A: Yes. And it is important to get the pricing right because there is not much ability to renegotiate pricing once the contract is awarded. There aren’t a lot of companies that know how to price, build and operate remote fuel installations, that can deploy quickly with experts, that know how to work with different fuels in different environments.
Q: You also own oil tankers. Has there been cost pressure there?
A: We own and operate 22 ocean-going and coastal oil tankers. Our customers are oil majors and we know their focus since the drop in oil prices has been managing cost, especially the cost of production, but costs throughout other parts of the supply chain, as well. Our ships operate on long-term charters and fixed contracts, so things have been stable. At the same time, Tristar is looking to consolidate and diversify within the shipping industry by entering the dry bulk and gas transport segments of shipping to ensure that we are not unduly exposed to any segment in a cyclical environment. We will also be looking at in-house ship management to further optimise our cost while improving the quality of service to the customer. In a low-priced and very competitive environment, it is important to have low operating costs without compromising safety and security of operations.