What’s changed? The pace. Ileana Sorina Baltatu, downstream executive at NIS Petrol, says shareholders’ pressure does not fall on the number of filling stations, but on locations, with imposed expansions generating lower-than-expected results most of the times.
Moreover, as estimates about the trend of oil prices have become a kind of guessing game, caution is the more valued.
In mid-2014, NIS Petrol announced it wanted to double its number of filling stations in Romania in 2014, to around 30 stations, planning to control over 10% of the market on the long term. Considering that reaching this share takes around 120-130 stations, it was clear organic growth alone would have been little likely. As a matter of fact, NIS Petrol has never declined it is eyeing all opportunities on the market.
“We’re mulling market opportunities, but investments will not be carried out unless certain investment conditions are met,” says Ileana Sorina Baltatu, with an over 20-year experience in the local oil industry.
Baltatu says the company’s shareholders do not want expansion at any price, either, but want all investments to be operated efficiently. Thus, from the 30 stations anticipated for 2014, NIS ended the year with 18.
NIS Petrol official also says that while the company wants to expand locally, NIS will not pay unjustified sums, especially as demand will see anemic growth at the best and fuel prices dropped significantly from 2014 highs.
“For us, having the time to review our portfolio was a positive. We have, beyond the opened filling stations, around 30 locations we’re considering, with around one third of them selected”.
According with information provided by Baltatu, NIS Petrol had a EUR8 million investment budget, with the money used for the opening of four new filling stations and payments in the account of investments operated in 2013.
“We opened new lines of activity. For instance, we introduced corporate cards at the end of 2013. We want these cards to get to be accepted in NIS’s regional network that includes around 400 stations in the region made up of Serbia, Bulgaria and Bosnia. We’re also in talks with Gazprom Neft for these cards to be used in Gazprom network on markets such as Russia and Ukraine. The talks are not over, yet”.
NIS Petrol official says that at market level around 30% of sold volumes are generated through fuel cards, a level the company has not reached, yet, but which it hopes to attain in 2015.
Additionally, the company is trying to develop the non-oil segment, a strategy almost all oil companies are following. However, NIS Petrol does not bet on “exotic” services. Ileana Baltatu says that at present one quarter of revenue generated by a filling station is brought by the non-oil segment.
“Over 25% of revenue generated by a station comes from the non-oil segment. We have enough transit stations and we want to diversify. For instance, we’re thinking of giving drivers the possibility of buying vignettes for other countries as well, with Hungary as the first. Additionally, we’re thinking of the possibility of paying fines in filling stations”.
On the introduction of the 7 cent excise per liter of fuel last April and the budget having been initially built around the 30-station target, the company’s 2014 sales did not reach the initially projected level.
“For 2015, our strategy takes into consideration the entire territory of Romania”. Baltatu does not specify when NIS Petrol is likely to reach the 10% share of the fuel market, but says this is a long-term target.
Ileana Baltatu says she expects the local fuel market to register growth of around 1% this year.
(English version by Catalina Apostoiu)