SOCAR – Top Oil Importer of 2013

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SOCAR-Georgia_buldingThe import and consumption of diesel is increasing in Georgia, according to statistics provided by the Association of Oil Product Importers and Distributors. In total 376,636  tonnes of petroleum and 479,710 tonnes of diesel were imported in Georgia in 2013. By comparison, 915,700.5 tonnes of petroleum products were imported in 2012.

“The consumption of diesel has increased not only in Georgia but worldwide as well, especially in Europe where people tend to go for ecologically cleaner products,” said Giorgi Kotrikadze, Director of the Association of Oil Product Importers and Distributors. “Another reason which drove diesel import up is that demand for diesel cars has increased, which means cleaner exhaust, less noise and more range. While oil is mainly imported from Europe in Georgia, diesel is mainly imported from Azerbaijan. The types of cars driven in Georgia are very diverse. You can see cars that were issued in the 80s along with brand new cars. This means that every type of oil finds a customer base here. For example, those cars which were issued in earlier years are oriented on lower quality fuel. As for petrol, the difference is just 3,000 tons, not more, which means that petrol’s import increased just slightly,” he added.

“2013 was a normal year and not distinguished by any special economic activities. I expected more of a drop in petroleum import statistics,” said Soso Pkhakadze, President of the Wissol Group. “A certain number of automobiles in Georgia are using gas now instead of petrol, so the reduced amount of petroleum imported is not concerning. Gas has started to somewhat replace petroleum consumption in Georgia. Gas sales doubled at Wissol gas stations (15 stations in total) in 2013 compared to 2012,” he said.

SOCAR is in the lead as the top oil importer of 2013. It imported the largest amount of petroleum products in Georgia and is the largest taxpayer to the budget.

SOCAR’s network in Georgia imported 320,308.44 tonnes of fuel in total in 2013, slightly less than in 2012 (375,756.5 tonnes in 2012), according to SOCAR . The company imported 40,317.52 tonnes of petroleum and 230,248.09 tonnes of diesel in Georgia. The company paid GEL 127 million to the budget in the previous year and opened 11 petrol stations throughout Georgia.

SOCAR has stopped importing petroleum from Azerbaijan as the company saw increased demand for European products. As Kotrikadze said, not only the fuel but the whole management has been transformed to a European style. Azerbaijan will remain the main supplier of diesel. The statistics of January 2014 show that petroleum is not imported from Azerbaijan anymore.

LUKoil Georgia imported 132,9 thousand tonnes of fuel in total in 2013 out of which 95.1 thousand was petroleum and 37.8 thousand – diesel, according to LUKOIL . The company paid GEL 80.3 million to the state budget and opened 4 petrol stations in total. As Shavleg Mishveladze, General Director of LUKOIL Georgia, told The FINANCIAL, LUKOIL ’s market share today is 15%.

Rompetrol increased import. It purchased 164,294 tonnes of fuel in 2013 and 147,825 in 2012. The company imported 98,862 tonnes of petroleum and 65,432 tonnes of diesel. The company paid GEL 875 million to the budget. Its market share is 18 percent.

As for Wissol Group, Soso Pkhakadze says that in 2013 the company increased its import of diesel by 4.3 percent while the import of petroleum decreased by 1.5 percent. The company realized 137,254.007 litres of petrol and 91,532.117 litres of diesel in 2012 which in total roughly equals 181,000 metric tonnes of fuel.

In general, Giorgi Kotrikadze considers the year 2013 to be a satisfactory year for the petroleum sector in Georgia as the companies opened dozens of new petrol and gas stations, employed hundreds of extra people, invested in the sector and implemented new technology systems in their stations. However, the price of fuel has not decreased in Georgia, on the contrary – it increased by 5 Tetri due to the devaluation of the GEL, the currency of Georgia, according to Kotrikadze.

“The price is set in accordance with the Platts price, logistics costs and exchange rates. The increase or reduction of prices is dependent on all these factors,” said Shavleg Mishveladze.

The average price of gasoline around the world in February 2014 is USD 1.45 per litre, according to GlobalPetrolPrices.com, which collects and publishes data on gasoline and diesel prices using sources from governments, regulatory agencies, petroleum companies and major media outlets.

“However, there is a substantial difference in these prices among countries. As a general rule, richer countries have higher prices while poorer countries and the counties that produce and export oil have significantly lower prices. One notable exception is the U.S. which is an economically advanced country but has low gas prices. The differences in prices across countries are due to the various taxes and subsidies for gasoline,” says GlobalPetrolPrices.com.

All countries have access to the same petroleum prices of international markets but then decide to impose different taxes. As a result, the retail price of gasoline is different. In some cases, like Venezuela, the government even subsidizes gasoline and therefore people there pay close to nothing to drive their cars, according to GlobalPetrolPrices.com.

“When the companies import fuel from abroad and buy it in USD it is not surprising that they set a higher price especially when the USD has strengthened. Fuel at lesser prices is sold at LUKOIL and Rompetrol petrol stations. The Government’s pre-election promise that they could reduce the price of fuel was unrealistic from the start. After the Government understood the price calculation they realised that the price was set correctly and its reduction was impossible,” said Kotrikadze.

In Georgia “Premium” costs GEL 2.22 and “Regular” – GEL 2.02. GlobalPetrolPrices.com publishes the prices of fuel as: USD 1.13 in Georgia; USD 1.14 in Russia; USD 1.27 in Ukraine ; USD 1.39 in Armenia; USD 2.26 in Turkey; USD 1.77 in Bulgaria; USD 2.26 in Greece; USD 2.41 in Italy.

Recently “ECO” fuel has appeared on the Georgian market. Wissol Group in cooperation with Hellenic Petroleum, one of the largest oil refining companies in Greece, started selling ECO fuel instead of Api, the Italian fuel.

“Wissol Petroleum undertakes consumer market research constantly. During the last two years 75 percent of our customers declared that fuel of Hellenic Petroleum was the best in Georgia. As the Group’s main goal is to always meet its customers’ demands, we decided to bring fuel of Hellenic Petroleum to Georgia again. From 10 February all the petrol stations have been selling ECO Super, Diesel, Premium and Euro Diesel. After four months of negotiations Wissol Petroleum Georgia has signed a contract with Hellenic Petroleum,” he added.

After Wissol Petroleum launched fuel of Hellenic Petroleum the company’s sales increased and by the end of 2014 Soso Pkhakadze expects further increase. “Api fuel was also selling well enough through our petrol stations. But as the customers preferred to have fuel form Hellenic Petroleum we decided to shift to Hellenic Petroleum. Gasoline and diesel produced by Hellenic Petroleum is very well-known for local customers since 1996 and are the highest quality fuels. When a company meets the customers’ needs it is always profitable for the company, because satisfied customers means increased sales and as a result it contributes to the company’s overall profit. With fuels of Hellenic Petroleum customers can also enjoy more mileage, Pkhakadze said.

“I am afraid I cannot provide any valuable input as the company policy is not to comment on commercial matters let alone transactions,” Vasilis Tsaitas, Investor Relations Officer at Hellenic Petroleum S.A. Told The FINANCIAL. “Hellenic Petroleum exited the Georgina market in 2011 due to strategic considerations and to this end we cannot comment on the present status of the local market,” Tsaitas added.

LUKoil imports petrol from Bulgaria, Rompetrol – from Romania, and SOCAR – from Azerbaijan and Europe.



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