PdV breaks into downstream
VENEZUELA'S PdV is to sell oil products in the country under its own brand for the first time, taking advantage of recent downstream market reforms. It is also considering further investments, including acquiring refinery capacity in the country's northeast.
Consistent with its approach to products marketing in the US, the firm will not buy retail stations. Instead, it will enter partnerships with independent retailers, supplying them with equipment, services, products and branding, while they retain the assets.
Separately, the company has not written off investing in a Brazilian refinery. Discussions for such an investment, which began in 1999, continue, Ali Rodríguez, president of PdV, told a press conference in Rio de Janeiro last month.
Unlike in the US, where it markets products under the Citgo brand, the firm will use the PdV name in the downstream sector. The first PdV retail franchise will open around the end of the year, said Bob Clingan, president and chief executive officer of Citgo International Latin America (CILA).
An unspecified number of PdV-branded service stations will initially appear in the north and northeast of the country—a logical choice because of its relative proximity to PdV's refineries in Venezuela—selling a combination of locally produced and imported products. In addition, PdV began supplying lubricants to markets in the south last month (and also plans to supply them in the north as PdV outlets open up).
"Our business model, in general, for gasoline stations is that we don't own gasoline stations," says Julio Bucci, vice-president, light oils, CILA. "What we try to provide them [independent retailers] with is good support—in terms of quality products, service, image and commercial programmes. But we prefer them to be the owners of their own business."
The model, Bucci says, has been successfully applied to about 14,000 gasoline stations in the US, none of which are owned by PdV or Citgo. Referring to Rodriguez' comments, Bucci adds: "PdV has been analysing the possibility of expanding refining capacity in Venezuela and other countries. In the case of Brazil, the northeast is one of those areas."
Eventually, says Clingan, the company aims to sell lubricants and light oil products in the north and the south. "As you progress, if you can put your lubricants and your light oils in similar markets, you also get the benefit of recognition. So ultimately, you would like to have them both in the same markets."