ExxonMobil has a card processing centre consisting of a high-end computer system that provides the payment gateway and the transaction switch for automating the credit and fleet card payment at the pumps. This central service served the ExxonMobil affiliates in Singapore, Malaysia, Thailand and Hong Kong. Although this card processing centre was located in Malaysia, this centre was not sold to Petron as it was not part of the local entity. ExxonMobil has since sold this centre to a payment system provider, Logical, and leased back the payment processing services for its other networks in the region. Since Petron could not issue its own proprietary fleet card, it was forced to continue with ExxonMobil’s fleetcard programme and to use the service from Logical. Since ExxonMobil Malaysia was the largest network among the other affiliates in SE Asia, Petron has to pay proportionally a larger fee for the service. The purchase of ExxonMobil’s network put Petron with greater risk exposure and high risk impact and is shown on the risk matrix under “M2” (Figure 11 and Table 9).
4.3.4 Maintained model fuel retail station (M3)
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In 2000, managers in BHPetrol, Shell, ExxonMobil and Chevron claimed to operate one company-owned company-operated station for each of their networks.
This was because each oil company under the Malaysian licencing regulation was given one operating licence. But why should they want to maintain a single fuel retail station under a model that would need a separate set of procedures, a dedicated team to monitor and audit station’s staff on performance and inventory control and arrangements with third-party contractors for the upkeep and maintenance of company’s infrastructure? According to two of the managers, they kept one fuel retail station with this organization structure so that they can use this model to set the operating standards for the rest of the stations to follow. They trained dealers on new procedures and trialled new concepts at this fuel retail station before deploying them throughout the network. This reduced the risks of introducing new concepts. ExxonMobil gave up the owned company-operated station when they sold the network to Petron. Chevron gave up operating one fuel retail station directly when they introduced the branded marketer concept.
Petronas as a national oil company chose to operate the network either as company-owned dealer-operated or dealer-owned dealer-operated stations. The use of a model fuel retail station to set the operating standards is shown on the risk matrix as “M3” (Figure 11 and Table 9).
Thailand 4.4
4.4.1 Background
Thailand, unlike the Philippines and Indonesia, is not made up of many islands.
Thus, one would expect that it should be easier to deploy a network of fuel retail
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stations across the country. However, the country was not adequately covered with fuel retail stations. More than 10 percent of the districts in the early 1990s were without any fuel retail stations. The fuel retailing sector was for many years controlled by four oil companies, namely PTT, Shell, Esso and Caltex. No oil trading licences were issued by the government for many years to allow new entrants into the fuel retailing sector. The application for the government permits to build new fuel retail stations was time-consuming and costly because only large-sized fuel retail stations were approved for development.
Following deregulation of the fuel retailing sector in 1991, the Ministry of Energy of Thailand registered the number of fuel retail stations growing nearly six fold from 3,475 in 1991 to 20,252 in 2011. However, the majority of these fuel retail stations could not be found or identified as proper fuel retail stations. A veteran of the oil industry commented that these missing fuel retail stations may not have been built or were abandoned and that the owners may have failed to deregister these defunct stations. The number of fuel retail stations was artificially inflated
Figure 12 Thailand vehicle and station population
Source: AJTP Information centre (vehicles); Gilbarco Veeder-Root (Asia) (stations)
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further when those abandoned stations were revived and registered by new owners.
The actual count of fuel retail stations given by oil companies totalled less than 5,0008 (Table 10), which was inadequate to serve the large and growing number of vehicles that has grown to 27.5 million in 2010 (Figure 12).
The fuel retail stations in Thailand do not have standardized designs even for the same oil company. Some fuel retail stations in Bangkok have large toilet facilities to cater for busloads of tourists. There are also fuel retail stations surrounded by small shops set up as part of the station. As one travels further away from the city, there are fewer and smaller fuel retail stations. To supplement the shortfall of fuel retail stations in the outskirts, fuels are retailed out of oil drums. With all these variations in size, type and design of fuel retail stations around the country, there are also no consistent organization structures used for fuel retailing. All the oil companies used a mixture of company direct operation and dealer operations with company- or dealer-owned sites in varying proportions (Table 10).
Bangkok, the capital of Thailand, experienced serious air pollution problems over several decades and transport was identified as the greatest source of air pollutants.
This is because motor vehicles registered in Bangkok soared from 600,000 in 1980 to 4,163,000 at the end of 1999. To improve air quality, leaded fuel was phased out in 1996. In 2001, Stage 1 vapour recovery was implemented at fuel retail stations in four main cities. Stage 1 vapour recovery prevents petroleum
8 Department of Energy Business of Thailand listed additional 14,019 stations under “others” in 2010 but these could not be located and may not all be real.
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vapour from being released into the atmosphere when the tanker truck is discharging fuel into the underground tank.
In 2007, Stage 2 vapour recovery was implemented in Bangkok and Stage 1 was extended to additional ten other provinces. Stage 2 vapour recovery reduces the petroleum vapour escaping from the nozzle when a car is being filled. The implementation of vapour recovery, especially Stage 2 vapour recovery, brought in new players specializing in this field. Besides providing the equipment, these new players have the knowledge to adjust the vapour pump to ensure the recovery of at least 95 percent of the petroleum vapour.
Among the countries in SE Asia, Thailand is the most aggressive in promoting the use of biofuels. Thailand has to import most of the fossil fuels for its domestic consumption. While it lacked this precious commodity, it has abundant
Oil Company Total No. of Sites COCO CODO DODO
PTT 1200 70 900 230
Bangchak 1100 215 685 200
Paktai 460 300 160 0
SUSCO 144 50 94 0
Petronas 106 0 50 56
Chevron 424 0 100 324
Esso / ExxonMobil 529 200 329 0
Shell 548 0 348 200
Rayong pure 78 78 0 0
PTTRM 147 147 0 0
Total Count 4736 1060 2666 1010
Table 10 Stations by type of operations in Thailand
Source: Gilbarco Veeder-Root (Asia) - 2011 Survey
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agricultural resources which have been used to make biofuel. The Thai government’s policy on the use of biofuels was enacted in 2005 and to promote the increased blend of biofuels in gasoline and diesel, the Ministry of Energy reduced excise tax and lowered the pump prices for blended fuels.
The two main biofuel blends deployed in Thailand from 2005 are E10, which is gasoline with 10 percent of ethanol, and B5, which is diesel with 5 percent of bio-diesel. By 2007, these two blends were sold at most fuel retail stations through the existing fuel dispensing equipment at the station. In 2012, oil companies were forced to upgrade the fuel dispensing equipment when the country introduced E20.
Higher blend of ethanol such as E20 has the problem of phase 2 separation that causes the water absorbed by the ethanol blended gasoline to separate from the gasoline. This increases the risks of selling E20 at the fuel retail stations as the precipitated water may get into customer’s vehicle and damage the engine.
Another alternative fuel, Auto-LPG, was successful as a result of government subsidy. Taxis and trucks were converted to use Auto-LPG and the number of fuel retail stations providing Auto-LPG rose to 988 stations in 2011. This was still not adequate to serve the growing number of Auto-LPG vehicles and stations dedicated to selling only Auto-LPG were set up. To sell Auto-LPG in existing fuel retail stations, the specialized Auto-LPG dispensing equipment has to be in its own forecourt separated from the existing forecourt. This increases operating costs as another group of pump attendants has to be deployed for the Auto-LPG forecourt.
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Based on the background information, I place the start positions of the oil companies at the top right quadrant of the risk matrix (Figure 13). There are more company-owned dealer-operated stations and although there is a lower risk exposure with this type of organization structure, the impact of adverse events is high. The other organization changes to manage risk are elaborated in the next few paragraphs and are summarised in Table 11.