Oil companies hit back at accusations

Faroese oil companies came under fire yesterday from Terje Sigurðsson, of Kappingareftirlitið, the Faroese Competition Authority.

He claimed that Effo and Magn enjoy significantly higher profit margins than their overseas counterparts.

This claim is false, say Janus Thomsen, CEO of Effo, and Finn Jakobsen, CEO of Magn.

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“Simply subtracting the Brent crude price from our pump price and claiming that the resulting number, minus taxes, makes up our profit margin is just wrong,” says Jakobsen.

“Brent is an indicator, but it cannot be used for direct price comparisons.”

This view is echoed by Thomsen:

“Our purchase prices are not based on Brent crude but rather on prices determined by the various oil refineries that produce petrol, diesel and heating oil. These prices can vary greatly."

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The two companies have been posting annual profits of DKK 30-43 million over the past few years.

“Considering that we offer a wide range of products and services and that we have an annual turnover of more than DKK 1 billion, I wouldn’t say these profits are excessive,” says Thomsen.

Jakobsen adds:

“We earn money just like any well-run company should. But relative to our turnover, our profit margins are really not very high.”

Read the Faroese version of this article here.

More Faroese News in English.