Socar and Lukoil Lead Top Oil Importers of 2011

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The FINANCIAL — According to the Union of Oil Products, Enterprisers, Importers and Customers, 376,470,326 litres of petroleum and 406,250,897 litres of diesel were imported in Georgia in 2011.


In total 782,721,223 litres of oil products were imported, compared to the 832,160,114 in 2010. Socar’s branch in Georgia imported 259,189 tons of diesel and 78,560 tons of petrol in 2011, 337,749 tons in total. Lukoil Georgia imported 127,035 tons of petrol and 64,650 tons of diesel in 2011. The remaining 253,287 tons of oil products were imported by Gulf, Rompetrol, and Wissol.

Socar realized 140,534 tons of petroleum and 259,189 tons of diesel. Socar is the largest taxpayer out of all oil importers with 197,632,572 GEL paid to the state budget.

Lukoil Georgia paid 105,850,917 GEL to the state budget in 2011, up 35 percent compared to 2010. Lukoil Georgia ranks second in terms of budget payments among oil product companies and ranks first among European oil product importer companies. The company imported 127,035 tons of petrol and 64,650 tons of diesel in 2011. Import consisted of 93,914,000 litres of petrol and 33,104,000 of diesel in 2010.

Out of 782,721 tons of oil products imported in 2011 Socar and Lukoil imports amounted to 529,434 tons, while the remaining 253,287 tons should be divided between Gulf, Wissol and Rompetrol.

In 2011 the sales revenue of Wissol Petroleum Georgia increased by 30% compared to the previous year. Wissol’s total sale at pumps in 2010 reached 270 million litres. So in 2011 Wissol sold 351,000 tonnes of oil in total.

Rompetrol is the third largest taxpayer out of all oil importers with a contribution of 90,994,538 GEL.

According to Vano Mtvralashvili, Head of U.O.C., corporate sales could be reduced, but not retail sales. Finally, Mtvralashvili claims that import had the same quantitative index as last year. “Despite world and Georgian economy problems, increased consumption of gas instead of fuel plus record high fuel prices, fuel consumption has not been decreased,” said Mtvralashvili. “Tax payments to the state budget have been increased compared to last year. When consumption does not decrease it gives profit to the companies as they are dependent on sales,” he added.

Mtvralashvili expects the increased competition to reduce the number of players on the market. “Gulf has implemented a policy of aggressive expansion. This is the right strategy for the company,” said Mtvralashvili. “The level of expansion that Gulf is undergoing has no analogue in any company in Georgia. With its dynamic development Gulf will undoubtedly disrupt the business of other companies on the market. This will become obvious in the future. So far the expansion has occurred at the expense of small and individual petrol stations. Given such a rate of competitiveness it was difficult for some companies to get profit. So they ended up closing their businesses. They simply did not have the financial resources to import fuel,” he added.

“As small and individual petrol companies make up a very small percentage of the market, it will be the big companies that start to disrupt each other’s businesses. This is a rule of competition, this is business. And this process has already started. It is a fact that in such a development process the companies will not have the same sales statistics as they had before,” he added.

“More than 800 petrol stations are operating in Georgia at present. Out of them about 500 belong to the main, large companies. Who wanted to stay on the market stayed, and those who did not – left the market,” said Giorgi Kotrikadze, Director of the Association of Oil Products and Imports. “The number of companies represented on the oil market nowadays could decrease in the future, but it will happen naturally. This is the rule of business. Lots of countries have had similar situations. Success depends on the right marketing,” he added.

“Gulf plans to become the largest operator in terms of the number of petrol and GNG service stations. Despite the fact that in this case Wissol would lose the title, we have no problem regarding Gulf’s plans,” said Soso Pkhakadze, Chairman of the Board of Directors of JSC Wissol Petroleum Georgia.

“Every player on the market has its faithful clients. We do not disturb each other. Nowadays operations are easier than they were in the past,” he said.

“Corporate sales have decreased by 1 percent compared to in recent years,” said Tengiz Chichinadze, Head of the Sales Department at Rompetrol. “If we take into consideration that sales are generally decreased in Georgia, a 1 percent decrease is not disadvantageous anymore. As for cash sales, they have decreased as well,” said Tengiz Chichinadze.

“Gulf is aggressively expanding which reminds me of our company’s strategy at the very beginning. Despite the increased competition we also intend to expand. We chose the specific direction and strategy for how to attract clients,” he added.

“The companies compete with each other in offering the best service to their clients. We try to attract other companies’ clients as well,” said Shavleg Mishveladze, Deputy General Director of Lukoil. “The Georgian market is very small. Who will stay or who will leave the market depends on the companies’ marketing and management. It is not easy to operate on the market today, but Lukoil could become the fourth company in the total business sector in Georgia in terms of total turnover in 2011. The company has improved its financial indicators, expanded the network of filling stations and improved service quality. In 2011 the company unveiled three new filling stations, including one in Tbilisi and two in the regions,” he added.

“In a short of period of time we brought high development to our company and to the country as well. We increased our sales and guest satisfaction index in 2011. Compared to the companies we brought last year, sales statistics have increased two or three times,” said Otar Katamadze, Vice President of Gulf Georgia.



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