Interview with Peter Goedvolk, Founder and CEO, Argos | EnergyBoardroom

Interview with Peter Goedvolk, Founder and CEO, Argos

24.11.2009 / Energyboardroom

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Each year there are hundreds of smaller companies being created in the Oil and Gas complex but only a few of them make it through. You founded Argos 25 years ago with only 2 employees and nowadays direct a corporation of more than 500 employees present in a increasing number of European countries. How did you achieve such success and what were the main challenges you found in your way?

After some years working at Total and other companies in the marketing business selling products to end consumers such as lubricants and other oil derivates I decided to start my own company. Thus, I founded Argos in 1984 as a very small company. 25 years later Argos has activities in the downstream business in Benelux, France and Germany and is an active player in a number of Midstream activities in the Port of Rotterdam area.

The fact that 25 years ago the Netherlands had more than 12 oil majors facilitated the wholesale business for a new entrant like Argos. However, with the sharp decline in oil prices in 1998-1999 the situation changed and the market experienced a number of mergers that in one side opened opportunities for very interesting acquisitions for Argos but in the other made our position as wholesalers more complicated since the competition among oil majors diminished considerably.

Hence, Argos picked up some of the pieces of the downstream business from important oil majors such as Shell, from whom Argos acquired the LPG business, very popular in the Netherlands. This facilitated our expansion in the downstream business and paved the way towards Argos expansion in other promising areas.

The second biggest step Argos took was its expansion in the midstream business, especially in storage and blending facilities. The company bought a part of the NEREFCO refinery, a joint venture between BP and Texaco. The acquisition rendered Argos a important amount of land and storage capacity with many tanks that gave us the possibility to blend products from Western Africa, Eastern Europe and Russia so they can comply with Western European standards and also to refine all kinds of feedstock for the use of biofuel. The current capacity for storage is close to 650.000 cubic meters and Argos will increase it soon to 1.000.000 cubic meters.

One of Argos most important aims at the moment is to offer these storage and blending facilities for downstream organization that are buying products from West Africa or Russia. But the main activities of the company for now are still in the downstream activities. Last but not least, Argos is active in trading activities, offering storage services for companies willing to do so in the Western Hemisphere main port.

Argos has a wide portfolio, being active in the midstream and downstream business offering products such as lubricants, biofuels and also services such as blending, storage and so on. Which of those areas have been the main growth drivers of the company?

Historically, the wholesale business has been the main growth driver, but the competition in this segment in the Netherlands is very high. In last years, Argos sea bunkers activities were a main driver for the organization and at the moment the main driver is our storage and trading organization.

This will be the link for our future expansion towards gas condensates, oil and especially feedstock for the biofuel industry.

What’s your current strategy to scale up towards the midstream and upstream business?

Up until now Argos survived as a 100% independent company. However, investments in storage and upstream cost lots of money. Therefore, our strategy will be to find more experienced and financially strong partners with whom we can walk hand in hand and hence grow in the midstream and upstream sectors. However, Argos will maintain its independence, especially in the downstream business, were we will maintain our complete control.

For now Argos is opened to partnerships in the upstream sector, especially regarding the Small Gas Fields and also in the sugar cane Ethanol business. The company is also trying to find new opportunities to grow in the condensate gas field.

What are the main assets Argos can offer to companies that decide to partner with you?

The constant growth Argos had in the downstream business in Western Europe and its strong position in the midstream business with a wide knowledge of the industry and market are definitely unique assets for prospective partners. Besides, Argos 650.000m3 terminal in the Port of Rotterdam has a very strategic location close to Shell’s Pernis refinery and can offer a unique set of services in storage and blending. Argos also has storage facilities in Germany and France and we have partnerships in storage activities in Belgium. These assets build our attractiveness to our partners.

On top of that, Argos is actively looking for financial partners, which is not an easy task in a moment of financial crisis. However, the company offers very promising opportunities and has a solid portfolio. Argos has a record of 25 years, it has a constant and solid growth and we are looking forward to keep on this growth track with partners that share the same vision and expectations of the company.

How did you manage to raise the necessary capital to finance Argos continuous growth and what will be your strategy to attract future investors?

It starts by how we build up the organization in the last 25 years – never overstretching Argos possibilities. Growth is our aim, but never further than what our balance sheet can afford. This is why many investors can see the conservative and solid way in which the Argos has build itself and decide that this is a solid and interesting destiny for their capital. Argos combine solidity with entrepreneurship to target the best opportunities available in the market and through them guarantee a stable future growth for the company. We have big ambitions, but we don’t want to loose our independency and majority inside the company.

Argos has a rather unique stake in biofuels, differentiating yourself from other big and midsize companies. How important is this business for your present and future ambitions?

For smaller companies to grow into independent midsize companies they have to compete with other big oil companies, what is especially challenging since we buy most of our products from them. But products like biodiesel gave Argos the possibility to be different and the European Blending Act started with a 2% mix for biofuels and will grow to 5.75% in 2010. Therefore, there is a need for biofuels and this is why Argos decided to be active in this market.

Within 50 to 100 years oil will be gone and companies and governments need to do more to shift towards good alternatives. Biofuel is a great answer and the quicker European governments – the Dutch included – realize this the better. Countries like Brazil already proved that this is possible. Argos is not waiting, we are leading the way towards a more sustainable and energy independent future.

And as you mentioned before, Argo also has a 650.000 m3 Terminal in Rotterdam Penis, the heart of the western hemisphere biggest port – where you store a wide range of fuels which are integrated in the 24h logistics of the port. How strategic is it to be located at Rotterdam and how the company is taking advantage of its unique location?

Argos is very strategically located in the Western Hemisphere biggest port, being able to supply its products to international markets and is also very well connected to the rest of Europe by trains and roads. Argos is in the middle of Europe’s main refineries. With the mix of activities that Argos has, being active in the downstream, midstream and having a important trading organization with a strategic terminal in the Port of Rotterdam, its future is guaranteed.

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