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Bangkok Post (Thailand): Petronas aiming to become a global brand

Published: May 02, 2007

Although the weather in April was almost unbearably hot, a record-breaking 115,000 fans flocked to the Formula One Petronas Malaysian Grand Prix to support their favourite racing teams.

The large crowd at the Sepang International Circuit was a highly encouraging sign for the sponsorship efforts of Petroliam Nasional Berhad, better known as Petronas.

“Our nine years in motor sports have definitely made a huge impact. In European countries, they know immediately who we are and what business we are doing,” said Mohd Azhar Osman Khairuddin, senior general manager for corporate affairs of Petronas.

One major payoff to date is that Petronas is replacing Castrol as the premier partner for the BMW Sauber F1 Team.

The promotions are part of the company’s long-term plan to turn Petronas lubricant oil into a global brand on par with Shell, Castrol and Esso.

“We aim to be one of the world market leaders. Shell has tied up with Ferrari. Millions of dollars go to Ferrari in exchange for the top presence of Shell Helix lubricant oil throughout the globe,” Mr Azhar said.

“We hope to use the F1 marketing for strengthening [the Petronas] brand in Thailand as well.”

The Malaysian company entered the Thai market four years ago by taking over Q8’s 117 petrol stations nationwide from Kuwait Petroleum (Thailand). It spent $60 million redecorating the existing stations for the Petronas brand.

Because of Q8’s poor performance for nearly 10 years in Thailand, Petronas rebranded the company after the takeover. Amyn Mohamed Hussain, senior general manager for commercial and retail sales, admitted that Thailand was one of the toughest markets for newcomers. In the lubricant market, the company has 26 rivals across the globe.

He found from his two years’ working experience in the country that Thai motorists wanted not only to fill their vehicles’ petrol tanks and shop in minimarts, but they also need other services such as banking, laundry, restaurants, car care and even massages.

So, rebranding is insufficient, he said, adding that the company needed to inject more money to renovate the facilities and services in the stations.

“The exact budget is very hard to anticipate because it depends on location and requirements,” Mr Hussain said.

With market competition far beyond expectations, Petronas is focusing on consolidation rather than expansion. He said that high land prices and unfavourable retail oil prices were driving the company’s retail margins to almost zero.

As a result, the company set out to expand business in the higher-margin market, particularly lubricant oil, by introducing its Syntium lube product in Thailand last year.

Petronas is also a partner with Thailand’s energy flagship, PTT Plc, in the offshore Malaysia-Thailand Joint Development Area (MTJDA), covering 3,475 square kilometres.

Petronas has achieved an impressive performance and is one of the world’s top 10 oil players with a 42% growth in profits to US$18.6 billion last year. Of the total, 78% came from exports and international operations.

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