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Bangkok Post: Shell seeks to expand presence in Thailand

ARANEE JAIIMSIN
4 June 2007

Royal Dutch Shell Plc, a worldwide group of oil, gas and petrochemical companies, is looking to buy petrol stations in Thailand after failing to acquire Conoco’s Jet retail businesses. Acquiring new stations would expand Shell’s distribution network in a country where the retail margins are low, said Rob Routs, Shell’s executive director of oil products and chemicals.

”We need high sales volume in the markets where the margin is low,” said Mr Routs.

Shell now has 570 retail outlets in Thailand. The company is the second-largest commercial oil distributor in the kingdom, with a 17% market share.

”We want to enlarge our market share in the future,” said Mr Routs. ”However, we don’t have a short-term plan to be number one in Thailand due to the fact that PTT Plc is roughly double our size.”

After PTT acquired Conoco’s Jet retail business, its market share jumped to almost 40%, he said.

Oil demand from Thailand’s transport sector has not expanded much during the past few years compared to Malaysia and Singapore, Mr Routs said. The oil retail business is also highly competitive.

Despite the challenges, Shell regards Thailand as an important market.

”At this point, we are interested in making investments that offer a long-term benefit to the company. However, we prefer to wait and see the economic and political situation in the country,” said Mr Routs.

Although Thailand is a significant market for Shell, Mr Routs insisted that Shell has no plans to re-invest in the exploration and refining business here. The company already has sufficient supply capacity from its refinery in Malaysia and Singapore, he said.

In addition, Shell hopes to expand in Indonesia in the near future because the country’s oil market is growing quickly. The company has about 10 oil retailers, Mr Routs added.

Shell’s sales proportion of gasoline octane 95 to gasohol 95 in Thailand was 50:50.

The company will continue to provide premium petrol until market demand for gasohol climbs to 70-90%, which will prove customers are willing to switch to gasohol, said Mr Routs.

”What we focus on now is proving that our biofuel production technology is very friendly to engines,” said Mr Routs.

Mr Routs said biofuel was extremely important, as it could help secure energy supplies in many countries. Biofuel can also help reduce carbon-dioxide emissions.

The European Union aims to reduce carbon-dioxide emission by at least 5.75% by 2010, while the United States targets to produce 12 billion gallons of biofuel by 2012, he said. Biofuel can be used for transportation and to generate electricity.

http://www.bangkokpost.com/Business/05Jun2007_biz49.php

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