The FINANCIAL — Rompetrol Georgia, one of the leading oil importers in Georgia, has said it sold more than 100 million litres of fuel in 2008. Company Director Dan Voicu told The FINANCIAL that the same volume of sales was reported for the first 7 months of 2009.
The company estimates that total sales will reach 150 million litres in 2009. “For 2009 as a full year we estimate that at least 150,million litres will be sold on the local market,” Dan Voicu says.
Dan Voicu in an interview with The FINANCIAL, speaks about the future plans of the company and reviews the past activities implemented in different directions. Voicu says that they are going to continue charity actions at the company and pay much attention to CSR.
“All our CSR operations for 2009 will be focused on an Energy for the Future platform with heightened focus on children and child activity at schools, in traffic, in parks etc. Thus new programmes will be announced soon that will be under the umbrella of the Energy for the Future project,” Voicu says.
Q. Rompetrol Georgia entered the Georgian market in 2005. How difficult was it assimilating a new market and what share of the total market do you occupy?
A. Officially we started in 2006. To be more precise we had 2 years of researching and better understanding the market. In 2006-2007 we were focused more on the market to understand the demand and consumer needs. In 2008 we switched to an aggressive development plan and in these 2 years we were focused on retail business and development of our network.
At the moment we have proper coverage and a full package of services available, so I would summarize that we did the right things in the right order
Q. Rompetrol managed to become one of the leading organizations in South-Eastern Europe and the Black Sea region. Currently you are focused on entering the list of the world’s top ten oil companies. What are you doing in order to fulfil your aim and under which terms do you presume to enter the above mentioned list?
A. Rompetrol Group is focused on occupying a proper place in the European fuel market. Our operations are around the Mediterranean and Black Sea regions. We implement our operations in countries from Georgia to Spain. This year we had a step forward when KazMunaiGaz, Kazakhstan’s national oil and gas company, decided to acquire 100% of Rompetrol Group in June 2009.
The event was officially announced. Starting from this month we will enter into a new phase and will have a new strategy synchronized with KazMunaiGas.
Q. In 2008 you offered the Fill & Go system to your corporate customers. How popular has it become among your customers and has demand for the fuel saving system increased during the global recession?
A. We developed the Fill & Go package of services in our home base of operations in Romania then subsequently we decided to switch our operations here in Georgia to retail and corporate markets. This project has been in existence for one year already and it has proved quite successful for our customers, they are enjoying our services. This is a specialized programme for fleet cost control management and I think we have exactly touched on the needs of the corporate segment.
It was hard for us to identify when the period of crisis started exactly as we didn’t experience any drop in consumption, more so since our company was at a stage of development. This means that we are continuing to grow and that it is hard to identify any effects of the crisis in our operations, but I do think that the service we offer is appropriate for such kinds of moments.
Q. In 2008 Rompetrol was active in carrying out reconstruction works of its petrol stations. What is the total number of your stations in Georgia and what are your plans for 2009. Do you plan to add any new petrol stations to your net?
A. 2009 should hopefully be the last year of development for us and from next year we should switch to let’s say, mature stage of operations focusing more on optimizing our numbers, reducing costs and improving our profitability. So probably we will finish this year with a network of around 45-55 locations all over Georgia with the biggest course in Tbilisi city so I think that, that will be enough to implement all our operations.
Currently, for the second part of 2009, we are operating 40 stations and we are preparing another 5 units to be launched on the market. In the following 3 month from July to September we will finish the development of our network.
Q. How do you manage to offer competitive prices to Georgian customers?
A. Actually, pricing is not a very simple science; we have to consider the international trends, as we are buying fuel from the international market. We also have to consider the local market in which you know that there are several brands active but there is also quite a big share of market occupied by independent sales in small stations all over Georgia, which are not registered under any brands and they also represent an input on the local pricing strategy.
We have our internal strategy of settling prices and we struggle to keep to this.
Q. The global recession made most customers start reducing expenses. Did it reflect on the number of your corporate customers and did you propose to them any special offers or discounts?
A. As I’ve mentioned earlier, being at a stage of development we are significantly growing month after month. It’s hard to decide if we have customers with financial problems at this stage. We take care of our operations; we choose our clients carefully and as of yet we have not felt any task or demand to be impossible. We have clear lists of discounts, payment terms and so on. We have never actually deviated from this initial approach.
Q. Rompetrol is actively financing an automobile race. Can you tell us in more detail what work you do in the direction of CSR and what the annual budget is that you spend on it?
A. First of all for the last two years Rompetrol has been involved in supporting the national rally championship. In terms of CSR, our focus is linked with the future, because our industry of energy, oil and gas, are very closely linked with the future of the country and its people. When you speak of the future you speak about children and our focus this year is the children of Georgia and we have a dedicated platform : energy for the future.
We are running some specific programmes and we had several events all over Georgia in which we are involved actively in children’s participation.
Q. Philip Verleger, who correctly predicted that oil prices would exceed USD 100 per barrel in 2007, has now predicted that due to the huge surplus and OPEC overproduction we now have, it will fall to USD 20 per barrel yet this year. What are your expectations of oil prices for the future? Should we expect price increase or decrease?
A. I think that accurately predicting the price of fuel is a sure way to become a millionaire, however it is not that simple, otherwise the market would be too well settled.
We had a big price drop earlier this year. The market had some strong fluctuations, but now the trend is on price increase again however we have more or less reached a sort of plateau in which we will see only minor fluctuation.
As you probably know, a crude oil barrel today is around USD 60 to USD 70. We will see in this range USD 65 to USD 70 fluctuations, but my personal prediction is that we will remain in this range, however it is hard to bet on this because there are lots of inputs starting from the big economics and demand, supply. It’s a mix that is hard to manage in the interest of field players.
Q. What were the maximum prices of fuel for RPG clients during the recession and by how much have they grown during the economic downturn?
A. There are two different issues. One is peak pricing, the second is the huge drop in prices, so I don’t think that it has big relevance. If I remember correctly in July 2008, when prices were very high I think we had GEL 2 and 30 tetri per litter.
The local market was very responsive to the international market and we tried to keep pace with certain aspects of international trends and the local market’s reaction to them.
Q. Has fuel price reduction increased the demand on fuel?
A. I think we should speak about two directions. One is diesel and the other petrol. I would say that on the diesel market this crisis has generated some problems as trade is not as high as it used to be, but because our operations are not so focused on diesel we didn’t feel this aspect too much. On the other hand, in the petrol industry I think these low prices have helped to increase consumption. I think that when prices reach such a low threshold; it helps people in reducing their expenses.
Q. Which season of the year is the best for selling fuel and why?
A. I would say that during the four seasons we can notice good consumption in Spring and Autumn, with a slight drop in summer and maybe a bit more of a serious drop during winter time. Overall we have good sales from February till December.
In 2008 we had operations of almost USD 90 million and our sales were more than 100,000,000 litres. We can be proud that we managed to top 2008’s operations in the first 7 months of 2009.
In realistic perspectives, 2009 will be minimum 50% higher than 2008 and this will stabilize our position on the local market to around 20-25% of market share.
Q. Does the demand for fuel decrease in summertime?
A. I would not say that demand is decreasing at all significantly, but we can say that city traffic in Tbilisi decreases a bit and people are visiting the black sea coasts more than driving around in urban environments.
Q. It is not difficult to deceive customers and sell them low quality fuel. Can you tell us how customers can protect themselves from being cheated?
A. I think that in Georgia there are some serious brands on the market. I cannot speak for the others but our number one role is to take care of our fuel and of our commitment to our customers.
We have a refinery in Romania, we have deliveries only in our Batumi oil terminal, so our fuel arrives there. We also have our own base in Tbilisi, so we take care of this aspect and additionally from our bases in Batumi and Tbilisi we use special trucks to deliver the end-product to our stations and up to our industrial consumers.
Let’s just say that the supply chain was properly designed and on top of this we have clear mechanisms of control. We have special laboratories to check the quality of fuel and we are sure that in each of our locations our fuel is not touched by other qualities of fuel and this is our commitment to our customers. We take care of our clients; we take care of our business, take care of our quality of fuel, so normally there is no issue regarding Rompetrol’s operations.
We even have good practical demonstrations, because our development is involved in the technological line. We had some demonstrations with your colleagues, journalists from Georgia. We proved that 1 litre is indeed 1 litre. It is a habit in some of the independent stations, they can offer such low prices because they’re playing with the volumes. Whereas with us you pay for 10 litters and you actually get 10 litters. We can be sure of our stations; we use the best and the newest dispensers Tokheim in our stations that are a guaranty of our quality.
The customers of Rompetrol feel our serious loyalty toward them and upholding our quality.
Q. Rompetrol was the initiator of the children’s art exhibition, how did you manage to involve people in this charity campaign and can you tell us how many pictures have already been sold?
A. I have been in Georgia for 18 months already and during this period I had the opportunity to see the Georgian’s love of being around children and I can say that children are certainly at the centre of people’s hearts here. People are very warm toward, and protective of children, and so it was not at all hard to push forward such an initiative.
We collected almost 6,000 drawings in June and in the quick charity exposition that we organized, we sold around 2,000 drawings. I think that the action was appreciated and warmly welcomed by all of the visitors. This welcome feeling was the real success of this initiative in my opinion.
Q. What is RPG planning in terms of charity actions in the near future?
All our CSR operations for 2009 will be focused on the Energy for the Future platform with heightened focus on children and child activity at schools, in traffic, in parks etc. Thus new programmes will be announced soon that will be under the umbrella of the Energy for the Future project.
Written By Tako Khelaia
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