AMID cutthroat competition, small margins, and losses due to skyrocketing oil prices overseas, oil firms have learned to diversify and are now more reliant than ever on secondary revenue streams.
In the past, a typical gasoline station offers fuel and engine lubricants. Fast forward, a filling station is more than that now. They are now a go-to for a quick bite, a convenience store, a coffee shop, an auto mechanic shop, and are now equipped with charging stations for electric vehicles (EVs).
The diversification is meant to improve traffic in gasoline stations and increase potential revenues of non-fuel business by either putting up their own convenience stores or lease space to quick-serve restaurants and other consumer service shops.
This is competition, Department of Energy-Oil Industry Management Bureau Director Rino Abad noted. “For as long as the fuel quality standards, safety and the technical requirements of a service station are met, they are not prohibited to diversify outside fuel retailing,” he said.
For example, Petron Corp. has undertaken the revitalization of its Treats convenience store chain, introducing new offerings to enhance customer service and create a more enjoyable experience during visits to their service stations.
“Our non-fuels business, with the continuous improvement in and opening of new Treats stores as well as the addition of more food and lifestyle locators, also drove traffic into our stations and helped generate volumes,” said Petron President Ramon Ang.
The country’s lone oil refiner ended the first half with a 22.39-percent market share of the total petroleum products demand.
If Petron has Treats, PTT Philippines Corp. has Café Amazon while Phoenix Petroleum has FamilyMart.
The Filipinos’ penchant for meeting up with people over coffee prompted PTT to bring into the country the Thai brand Café Amazon, which is part of the diversification of its parent company in Thailand.
On the other hand, the impact of Japanese cuisine on Filipino taste preferences prompted Phoenix to acquire the local operations of FamilyMart. Additionally, certain Phoenix stations feature take-out and drive-thru counters from the American fast-food burger giant, Wendy’s.
Phoenix Senior Vice President for External Affairs Raymond Zorilla said leasing out locators in its service stations reduces the company’s operational expenses by infusing rental recovery to the business.
“Our nonfuel-related business effectively increases our stations’ overall revenue streams as it offers a variety of products and services on top of our fuels. This proposition also pulls in motorists to gas up at our stations, providing them with a one-stop shop drive expectations with our brand,” he said.
Low-carbon future
THE competition goes beyond fuel and non-fuel business. Oil companies compete to be energy efficient as the world transitions to a low-carbon future.
Petron’s growing number of retail stations, now at 1,900, are designed and built to be more resilient and sustainable. “Many of our service stations are already fitted with rainwater-harvesting facilities, allowing as much as 1,600 liters of rainwater per station to be reused,” said Ang.
Petron stations are also shifting towards more efficient lighting sources and installing solar panels to reduce energy consumption.
Shell Pilipinas Corp. is converting retail sites from being more than just gas stations into one-stop “mobility stations,” in support of its carbon-neutral drive.
Company president Lorelie Quiambao Osial said the perimeter walls of Shell mobility stations were built using eco-bricks or recycled lubricant bottles from existing lube bays which are more durable and cost-effective than traditional bricks. Also, the pavements of the stations were built with Shell bitumen, which reduces emissions associated with asphalt.
EV charging stations
The current administration has expressed its goal of having half of the vehicles on the road powered by electricity by 2040. Undoubtedly, oil firms are well-positioned to enter the EV charging sector, leveraging their established brands, existing fueling stations, and familiarity with their customers’ refueling habits.
DOE-Energy Utilization Management Bureau Director Patrick Aquino said there are two oil firms that have partnered with or have their own EV charging stations (EVCS).
Shell has 12 charge points in three locations. It plans to add eight more to bring the total to 20 by year-end. “We now have three mobility stations with a total of 12 charge points, and we currently have one pilot site with a battery swapping station, which is another EV innovation to serve compatible vehicles,” said Shell E-Mobility Manager Josemari Lorenzo Valdez.
Unioil, meanwhile, has opened two EVCS.
Petron, on the other hand, is gearing up for the rollout of the first batch of EVCS at key locations.
Aquino said the DOE will issue policies next year to “nudge” oil firms to roll out EVCS. He said this will be achieved by implementing the Electric Vehicle Industry Development Act provisions.
Threat?
COULD the EV momentum present a threat to the oil firms’ traditional business?
This scenario holds true in countries with a robust renewable energy infrastructure. However, in developing nations like the Philippines, where EVCS are limited, and there’s a high dependency on oil, the transition to electric vehicles may be prolonged.
“Probably in the long run but given the lack of facilities here it may not yet be in the immediate future. It is also the motorists’ preference that will ultimately determine its success,” Zorilla said, when asked if EVs pose a serious threat to the oil industry.
From a fuel standpoint, the estimated difference between EVs running per kilometer compared to internal combustion engine is quite significant.
For those using gasoline, it’s P5.30 per kilometer, but for EVs it’s P1.26 to P1.90 per km, whereas the cost for running on diesel is at P4 per km.
Perhaps it won’t hurt if government could provide incentives to ramp up the development of EVCS. “One crucial enabler we see globally is incentive not just for EVs but also for EVCS,” said Valdez.
Threat or not, policies and laws must evolve with the times if EVs and EVCS are to progress.
“The real mover is the law,” said Abad.
Image credits: Michael Edwards | Dreamstime.com