Petronas Takes Thai Markets by Strom
Market expansion
The raising of the oil drop Petronas trademark in pale aqua-green and white at so many street corners in Bangkok, almost overnight, has left a strong impression of Malaysia’s economic presence in Thailand.
In 2004, Petronas made a strategic decision to buy over the Kuwait Petroleum International Company (KPC)’s Thai operations. "The taking over of KPC’s Thai operations brought a bonanza of 134 sites, including warehouses, vacant land and 117 KPC petrol stations, under the Q8 brand name, under Petronas’ s control," said Mr. Abdul Rahim Ismail, CEO of Petronas Retail (Thailand) operations.
This acquisition enabled Petronas to enjoy a substantial market share of
competitive retail oil market.
Petronas’s bold move surprised and intrigued industry players and analysts: since
liberalization in 1991, the Thai market has attracted more than 20 players.
The fact that the Thai market has attracted no further new international players in
the last decade further attested to the perception of over-competition.
Petronas
before the Asian Economic Crisis in 1997. Before the fateful economic crisis, we
opened five petrol stations in Petchburi, Pattaya, Chiangmai, Chanthaburi and
The Asian economic crisis, which came hard on the heels of Petronas’s debut into
created excess capacity at the refinery level," said Mr. Rahim.
"High competition led to declining margins; prices fell from 1.7 Baht per litre to
less than 1.0 Baht," he added.
Suddenly, the petrol station business had become unprofitable. Petronas decided
to shelve future expansion plans. "Putting more outlets into the Thai market was
simply not a viable option at that time," explained Mr. Rahim.
If expansion was not a viable option, pulling out from the Thai market was even less
attractive. Petronas decided to wait out
The market downturn, characterized by excess refinery capacity and reduced demand
for oil products in
By 2001, the economy had begun to show significant signs of bottoming out.
"Following the General Elections in 2001, the new Thai Rak Thai (TRT) Government
introduced price support in the form of diesel and gasoline subsidies.
Margins began to improve," observed Mr. Rahim.
With subsequent improvement in margins, Petronas decided to expand its operations
in
" said Mr. Rahim. The fortuitous timing of the KPC sale gave Petronas the prime
opportunity it was seeking, to expand in the Thai market.
Strategic directions
With such a large number if newly acquired assets Petronas faces a tough challenge to
maintain high standards and quality control. Apparently, not all the sites can be
effectively managed to return a profit. After careful consideration, several unprofitable
petrol stations in
Chanthaburi were marked for closure. Among the remaining petrol stations,
39 would be managed directly by Petronas,and the rest would be dealer operated.
โ?œWe find that company-operated petrol stations often have better management in
terms of merchanding, cleanliness and discipline. โ?œsaid Mr. Rahimโ??. โ?œWe have recently
completed our branding for 103, company and dealer operated, petrol stations in
July 2005, โ?œhe added.
Petronasโ?™s marketing strategy is to create its own differentiation in the Thai market.
โ?œWe want to give the consumers more choice by offering a wider range of services
and products,โ?? explained Mr. Rahim.
Among the new products are Petronas brand lubricants. Currently, Petronas petrol
stations are selling Q8 brand lubricants. However, beginning in August 2005,
Petronas launched its own lubricants, under the trade names โ?œSyntiumโ?? and โ?œSprinta,โ??
in the Thai market. From 2006, Petronas will sell only โ?˜ Syntiumโ?™ and โ?˜Sprintaโ?™ lubricants
at Petronas petrol stationsโ?? Mr. Rahim added.
Shop expansion is another important part pf Petronasโ?™s marketing strategy.
The Petronas-operated mimi-martunder the brand name โ?œAlwaysโ?? follows the
opening of every Petronas petol station all over
to be the locus of its market operations including, international Fast Foods
and local Fast Foods restaurants.
Petronas is currently negotiating with fast food franchises, both international and local.
These include: MacDonalds, A&W, KFC; and locally, Khao Kaeng, โ?œ94 Coffeeโ??
โ?œCoffee World,โ?? and pizza franchises.
โ?œAlwaysโ?? also plans to expand into car-care, beauty saloons, bookshops and Thai
traditional massage, โ?œexplained Mr. Rahim. โ?œ Our goal is to achieve a one-step service
for both family and cars in 1.5 year,โ?? added Mr. Rahim.
Market position
Petronas appears to be on the right track in navigating the Thai market.
But
number of petrol stations in
and Esso, in order of ranking.
However if market share is viewed in terms of average petrol station fuel sales per month,
Petronas ranks among the top 3 achieve the second highest ranking in terms of
fuel sales, together with JET and Shell โ?? a very respectable position indeed,
considering the short duration of time the current Petronas operations have been running.
โ?œGood locations, as well as the fact that 70% of our petrol stations are in Bangkok,
where average fuel sales are the highest, have enabled Petronas to achieve the second
highest ranking in terms of fuel sales, despite having petrol stations than our competitors,
โ?œ explained Mr. Rahim.
Petronas has emerged as the dark horse, in
of major industry players PTT, Shell and Esso.
–By Jeffery Sng & Isabella Ho
