No. 1, 2010
IN THE ORBIT OF HIGH QUALITY
Interview of Andrey Spirin, General Director of LUKOIL-Volganefteprodukt
Despite the economic recession, JSC LUKOIL-Volganefteprodukt is demonstrating good performance indicators, maintaining its position as the leading operator on the wholesale and retail market for petroleum products in nine regions of Russia. The Company's 300 gasoline filling stations and 20 tank farms in the Republics of Mari El, Chuvashia and Mordovia, in the Nizhny Novgorod, Vladimir, Ivanovo, Vologda, Kostroma and Yaroslavl regions provide customers with high-quality LUKOIL brand fuel.
Q: What are the company's main results for 2008-2009 and how successfully, in your opinion, is it coping with its tasks under the difficult current conditions?
A: Just like for the majority of companies in our country and throughout the world, the end of 2008 and the year 2009 have not been easy for LUKOIL-Volganefteprodukt. The global financial disruption has naturally affected our indicators for this period.
Overall, 2008 was, as predicted, a fairly good year for us. Although the final months demonstrated a drop in sales volumes, the good beginning and middle of the year and the advantages of LUKOIL petroleum products meant that, in spite of the crisis, at the end of the year sales volumes were not much below the planned level and amounted to 1.64 million tons for the whole of 2008.
As for net profits, given the circumstances, 2008 was quite successful. Total profit amounted to 1018 million rubles. In 2009, the forecast volume of retail sales of petroleum products averaged 10-15% less than in the previous year. This fall was a result of decreased consumer demand owing to reduced motor vehicle freight transport turnover, which was, in turn, dictated by a fall in the level of industrial production.
LUKOIL-Volganefteprodukt takes all possible steps to attract customers and thus increase its sales volumes. At the company's filling stations, the consumer can buy either standard EURO gasoline or higher quality EKTO (ecological fuel) gasoline and diesel fuel. Our filling stations also carry out a variety of advertising campaigns to keep old and attract new customers and introduce additional services.
Our approach to advertising campaigns should be noted. We strive to involve other partners in them, thus cutting our costs of achieving the same effect in half. Also, we always analyze the results of our advertising campaigns in order to learn lessons and avoid repeating any mistakes we might have made.
LUKOIL-Volganefteprodukt's share of the petroleum products retail sales market has not changed, in spite of the drop in the volume of sales. This indicates a stable interest on the part of consumers in the LUKOIL brand gasolines and diesel fuel. I believe that our company's greatest achievement in 2009 was that we did not lose a single customer.
Q: What, in your opinion, are the prospects for development of gasoline filling complexes in your area of operation?
A: The market is developing actively - the liquefied petroleum gas (LPG) household consumption segment is contracting, but the gas motor fuel segment is expanding. In all areas of our operation, the number of cars equipped for gas canisters is growing, the regional authorities usually setting tax breaks for these, and in some regions programs are being implemented for transferring municipal and utility transport to LPG. The LUKOIL-Volganefteprodukt investment program provides for construction of new multifuel filling stations and rehabilitation of existing gasoline and multifuel filling stations, and the covers the period up to 2017. In accordance with the program, we have started up 6 multifuel filling stations in 2008-2009 and another 3 are to be commissioned in 2010. We are also trying to install LPG units at our gasoline filling stations. For the customer, this is a sign of a modern, top-class filling station with a high standard of service.
Q: The LUKOIL Group has traditionally focused on environmental safety. What does LUKOIL-Volganefteprodukt do to minimize production risks?
A: The effectiveness of the company's environmental management and HSE systems was confirmed by the Bureau Veritas Certification in May 2009 during its second compliance audit.
LUKOIL-Volganefteprodukt's systemic effort to ensure environmental safety has made it possible to reduce the manmade impact on the environment, optimize energy and water consumption, deploy emissions (discharges) minimization technologies, and transfer a number of boiler units from furnace fuel to natural gas.
Since 2006, all our filling stations have been selling petroleum products with improved performance characteristics under the EKTO brand.
All new LUKOIL-Volganefteprodukt filling stations are equipped with service piping systems to return gasoline vapor from the reservoir to the tanker during offloading of petroleum products, double-walled reservoirs with insulation space monitoring systems, rust-proof pipes, overflow prevention systems, fuel-dispensing units that automatically shutdown fuel supply once the gasoline tank is full, and wastewater treatment facilities. LUKOIL-Volganefteprodukt regularly tops the ratings and wins competitions for ensuring environmental safety and disclosing information about its activities. For instance, the company has five times won first place in the LUKOIL Group competition for the Most Environment-Conscious Company title.
Q: What are the plans for development of the company over the next few years?
A: Several spheres of development of LUKOIL-Volganefteprodukt can be identified. In order to increase petroleum products sales, we plan to draw customers by improving service quality, to which we are devoting particular attention during the crisis. Our staff are given special public relations training by highly qualified experts.
The problem of queues at filling stations is an urgent one for us. We are doing our best to improve the situation by setting up higher-speed filling units and, where possible, increasing the number of fuel dispensers at filling stations. LUKOIL-Volganefteprodukt is also planning to equip its filling stations with ATMs to speed up payment for the fuel. We really want to avoid our customers having to queue.
Let me note that our Company was one of LUKOIL's first to introduce the practice of building automatic car-washes at filling stations. We now have 9 such car-washes. These are European standard car-washes, one of the most advanced types of equipment in Central Europe. It takes an average of 10 to 13 minutes to wash a car, depending on its complexity. We also offer additional services at our filling stations: tyre inflation and cleaning of the vehicle's interior.
It is also planned to set up small automatic filling units in cities. These are smaller and more compact, so they take up less space and can be set up on the parking lots of large shopping malls.
