Total commitment

Market share has never bothered TotalFinaElf Phils. Corp. president and general manager Jeffrey Attwood. "I don’t care if we’re number three or number ten. What matters is that we meet our internal targets."

These targets mostly deal with performance benchmarks such as sales volume, margins, how fast the company can collect money from its customers and the management of costs.

"Profit is not a dirty word but we will not place profit over safety. Our company philosophy is to be a quality business. In making our decisions, we study their possible impact on our different publics," said Attwood.

TFE is considered the most serious contender against the so-called Big Three of Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Phils. It is the only one among the new players in the Philippine oil industry which has gone head on with the three majors in every industry activity from fuel terminal operation to the retail of fuel products.

Based on industry data, total Philippine fuel consumption in 2001 stood at 107.9 million barrels.

Retail market

Since opening for business in August 1997, TFE has put up 43 Total-branded service stations from Baguio to Bataan. Of this total, 11 are located in Metro Manila. (Metro Manila accounts for 50% of the country’s total retail business). A service station will be put up in Cebu sometime this year to build brand equity for TFE’s liquefied petroleum gas or LPG business.

"Our objective is to have a robust chain that is 50% company-owned," said Attwood. "It is important to consider the return on capital employed. What we lose in the dealer business is control and the strict enforcement of standards. To minimize these, we deal with people who buy into the TFE work ethics, which prioritizes safety and quality of standards."

Twenty five of TFE’s service stations are currently company-owned. Because foreign companies cannot own land, TFE leases the land on which the service station are located.

Excluding the cost the land, total investment in a Total service station is P17 million. The money goes into such amenities as clean, air-conditioned wash rooms with running water and a steady supply of soap and toilet paper; the La Boutique-branded convenience store; and car wash bays.

"The rate of return is a year but I don’t think this a correct measure," said Attwood. "Different investors put different weights on the effort they put into the business and the salary they pay themselves."

Whether it is company or dealer run, however, TFE provides everything that comes in contact with the fuel such as the fiber glass-coated storage tanks which are 25% more expensive than steel tanks but are cleaner and leak-resistant.

Logistics

Fuel comes from the company’s $20-million depot and terminal in Mariveles, Bataan. The depot, which is ISO 9002 certified for quality consistency, can store up to 55 million liters of fuel which are delivered by vessels and tankers from all over the world.

By the first quarter of 2003, TFE will be able to tighten its logistics costs and competitively price its products in Metro Manila with the opening of the oil depot at the Manila Harbor Center Industrial Park. The project, which is estimated to cost $15 million, accounts for the bulk of this year’s budgeted $20-million capital expenditure.

The company also co-owns an LPG terminal with Shell Petroleum NV along Batangas Bay. Although Shell owns 85% of the terminal, Shell and TFE each have an allotted capacity of 45,000 metric tons.

The Batangas terminal is complemented by two refilling LPG plants in Taguig and Pasig, which can produce 50 metric tons.

"Although the retail market is still dominated by the older players, we have made inroads in the consumer and LPG markets," said Attwood. "We now sell lubricants in 80% of the country. Our LPG brands – the 11-kilo Total Gaz and the smaller camping gas called Superkalan – are sold in Luzon and we have plans to sell in Cebu," he said.

TFE’s major consumer markets are independent power producers as well as the cement and transport industries.

"TFE is in a special position. We are the only truly international company across all spectrum which have entered the Philippines since deregulation. That we continue to invest in the Philippines–even if progress is disappointingly slow– shows the depth of our perseverance and endeavor," said Attwood.