OREANDA-NEWS. November 27, 2009. After settlement of the conflict between the shareholders, TNK-BP started to implement a braver business development policy and build up ambitious plans. Currently, the company is leading the sales of oil products at the Saint Petersburg International Commodity Exchange accounting for 12% of these sales and is going to increase its sales volumes in nearest future. TNK-BP is also planning to build up its retail sales, reported the press-centre of TNK-BP.

Amir Feyzulin, Vice President, Marketing, TNK-BP, shared his thoughts with correspondent Galina Starinskaya on TNK-BP’s strategy on the market of retail sales and explained why the company does not use one common brand for its oil products.

— In October, apart from selling its oil products at the Saint Petersburg International Commodity Exchange, TNK-BP started buying them. Why this decision was made by the company and how beneficial is it?
— The company is a leader in sales of oil products at commodity exchanges. We are selling considerable volumes of our products at the Saint Petersburg International Commodity Exchange. In October, we sold over 93,000 tons of oil products, which is approximately 12% of all oil products supplied by the company to the Russian market. We are going to increase this share up to 15% in November.

We think that exchange trading is a strong step forward in market development, which will increase the efficiency of all companies and the entire Russian economy. The sales subsidiaries of TNK-BP are also trying to buy oil products at auctions and commodity exchanges and from third parties. This is the way to increase the share of our sales at commodity exchanges to 15%. The sales subsidiaries have certain indications and directives on prices for buying oil products from third parties and at commodity exchanges and prices for selling oil products at commodity exchanges. This is a live process. The greater the number of offers from other oil companies, the livelier the sales. The final results are beneficial for all participants. Apart from that, such sales redistribute the logistic networks and makes the pricing mechanism more transparent.

— Three years ago, your company announced re-branding its retail sites to TNK. What has been done during this period?
— Our company has numerous retail sites working under the TNK brand – more than 700 in Russia and Ukraine. The re-branding process is already over in practically all regions of Russia. Almost 400 TNK retail sites in Russia have completed the conversion and adopted new operating standards. Only Moscow is left.

Why Moscow? The matter is that last year TNK-BP bought approximately 120 retail sites in Moscow and the Moscow Region and only recently started the process of their re-imaging. About 40 retail sites will be reequipped by the end of this year, and the rest will be re-branded next year. Re-branding is aimed at integration of the new TNK retail offer, which is oriented to professional drivers and offers a complex of products and services in accordance with their choice. The services we are offering include refueling, public convenience, vacuum cleaning, tire inflation, watering, payment terminals, etc. Most upgraded retail sites have modern retail outlets with convenient payment systems accepting cash and major credit cards.

— Why the company does not use a common brand instead of the two currently used brands (TNK and BP – RBK Daily)?
— This is a complex but important question. The use of two brands makes it possible to cover more customers in different consumer segments. Each of these two brands is intended for its consumer segment. For example, large cities and economically developed regions have customers of both BP and TNK retail offers, whereas the TNK retail offer is more efficient in Central Russia.

— How much is TNK-BP going to invest into construction and purchase of new retail sites?
— In October, the Board of Directors of TNK-BP approved the marketing strategy of the company, which implies investment of over \\\\$800 mln in the nearest five years into development of the existing sales assets.

— In which regions are you going to purchase retail sites? Are you ready to do so in Moscow and the Moscow Region?
— TNK-BP is going to buy retail sites in different regions according to the market offers, which are quite limited now. We are always choosing land plots for construction of retail sites and considering offers of private owners of retail sites. As earlier, our high priorities are Moscow, Saint Petersburg, and south Russia. In particular, we are going to promote the BP brand in Rostov-on-Don and Krasnodar. A total of approximately 45 retail sites will be constructed in the Rostov Region and Krasnodar Krai, including 30 retail sites under the BP brand.

— Do you plan to enter the fuel market of the Olympic Games in Sochi?
— We are considering this possibility in the framework of our activities in south Russia. Given an adequate land plot purchase offer, we will be glad to provide our BP and TNK retail offers there.

— TNK-BP announced its intention to account for 10% of the Saint Petersburg market of oil products in 2010 through construction of new retail sites. What the strategy of your further activities in this region?
— Now the company accounts for just 3% of this market and is going to build 11 new retail sites and purchase three or four land plots by 2010. Thus, TNK-BP will have 34–35 retail sites in Saint Petersburg in the nearest future. Apart from that, we are studying retail networks of independent owners. TNK-BP is intending to account some 15% of the Saint Petersburg market in the nearest three years.

— Faeton wanted to sell its retail sites …
— The retail network of Faeton is not good enough, so we are ready to negotiate purchasing certain retail sites rather than the entire retail network.

— Recently, TNK-BP and Gazprom Neft agreed to share the retail sites of Slavneft in Belarus. What is the development strategy of TNK-BP in this country?
— Our strategy in this region is currently under development. We are going to purchase approximately 40 retail sites and five oil depots. We have established our subsidiary TNK-BP West. I am the Chairman of the Board of Directors of this company. We will undoubtedly re-brand our retail sites in Belarus. Currently, I am not sure whether it will be BP or TNK, because we are now studying the local market. Price formation in Belarus is a complex process regulated by numerous legislative acts and governmental regulations. For this reason, the efficiency retail business in this country is not quite clear for us yet. When we reach good understanding of this market and local problems, including its pluses and minuses, we will be able to draw up an adequate plan of activities. I think that such a plan will be ready next year.

— Is TNK-BP integrating its know-how and technologies at its retail sites?
— The company is actively promoting its oil products under their respective brands, such as, for example, antifreeze solutions, cooling fluids, etc. We will continue this process because this is brings economical benefits for the company and increases the loyalty of our customers. They trust the brand of their choice, and we use the suppliers and producers with good reputation on the market.

— Well, the competitors are doing the same.
— Yes, but not as actively as we do. Apart from that, we are developing new brands of gasoline with improved characteristics, such as BP Ultimate sold at BR retail sites and TNK Pulsar sold at TNK retail sites. Our goal is to increase the number of users of our gasoline brands up to 40%. The sales of BP Ultimate is already close to this level. We are now selling approximately 260,000 tons of branded gasoline a year and are going to increase this volume up to 350,000 tons next year.

In addition, we will start offering improved diesel fuel to our customers next year in accordance with the current market trends as many car making companies are now building up their output of more economical and ecological vehicles. Diesel fuel was always underestimated in Russia, and we decided to shift the priorities.