Japan’s TonenGeneral strikes deal with Australia’s Qube Holdings

Japan’s TonenGeneral Sekiyu K.K. has inked a 50-50 joint venture with Qube Holdings Ltd., Australia’s largest integrated provider of import and export logistics services. TonenGeneral Sekiyu and Qube Holdings Ltd. will each invest AUD 75 million (USD 55 million) in the joint venture company, TQ Holdings Australia Pty Ltd.

The joint venture intends to develop a fuel storage facility at Port Kembla in New South Wales (NSW) with a potential capacity of 230,000 kiloliters. Construction of the facility will be completed by mid- to late 2017. Port Kembla has shipping and logistics advantages enabling low supply chain and operating costs to deliver fuel to wholesale customers in NSW, including South and South West Sydney.

The joint venture also plans to develop a fuel marketing and distribution business to capitalize on the opportunity to supply fuel products from the new import terminal facility. As an initial step, the joint venture has agreed to acquire a 100% stake in Petro National Pty Ltd.

The total capital expenditure for the fuel storage facility and the Petro National Pty Ltd. acquisition is expected to be around AUD 150 million (USD 110 million), with the majority of the funding required in 2016 and 2017.

Australia is a major export market for TonenGeneral’s refined products, as import demand has been expanding for the past several years with the closure of several oil refineries in Australia. The joint venture will allow TonenGeneral to expand its product distribution into Australia, as well as enhance Australia’s petroleum products supply chain, together with Qube. TonenGeneral, Japan’s second-largest refiner, currently supplies 12% of Australia’s fuel market.

With declining petroleum product consumption in Japan, TonenGeneral began an initiative to seek business opportunities in growing overseas markets. This joint venture with Qube Holdings is aligned with achieving this objective.

The joint venture will be headquartered in North Sydney. Bradley Wheaton has been named chief executive officer of TQ Holdings Australia Pty Ltd.

“The transaction provides Qube with further diversification within the import-export supply chain and an opportunity to enter an attractive market that is significantly under-serviced,” said Qube’s Managing Director Maurice James.

“The chronic shortage of fuel storage capacity in Australia presents a compelling investment opportunity, the appeal of which has only increased as local oil refineries close and Australia moves to a substantial reliance on imported fuel,” James said.

Jun Mutoh, representative director and president, TonenGeneral Sekiyu said, “Australia is a major export market for TonenGeneral and we are delighted to be partnering with Qube to expand our activities into the onshore business in the Australian market, and jointly enhance Australia’s petroleum products supply chain.”

The joint venture will retain the existing senior management team of Petro National, which will be supported by the Qube and TonenGeneral management.

The joint venture is expected to be completed in August.