Petroleum product consumption is set to rise by around 7% this year against 2007 on rising car fleet and expansion plans announced by the main players. Translated into money, the difference from last year amounts to almost 450m euros.
Another factor with a strong impact on the value of this market is last year's petroleum price su2rge, which is expected to be really felt as late as this year. In terms of trends, market dieselisation, anticipated several years ago, is now a reality and now the higher diesel demand has also led to a higher price for this type of fuel compared to petrol.
"The market advanced by 6.5% last year against 2006. In retail, fuel consumption amounts to 3.5-4 million tonnes annually and accounts for around 65%-70% of the overall market. Market growth has accelerated in the past two years. (...)," says Dan Rosu, an executive at Rompetrol Downstream, which ranks second on the market in terms of the number of filling stations.
According to market players, petrol consumption stands at around 1.6 million tonnes annually and diesel consumption stands at 3.4 million tonnes, with the volumes representing both retail and wholesale consumption.
Given these data, the petroleum product market last year reached 6.3bn euros and has the potential to get to around 6.8bn euros this year.
Market players say the market will see further growth this year, with the growth pace to range between 5 and 7%. These estimates could be exceeded, though, given that petroleum price doubling was reflected in the increase of prices at the pump by just 10%. Increases could go beyond this level this year as the petroleum barrel had a strong start to the year, exceeding the 100 dollar psychological threshold, to which two important factors are added: RON fall and the inelasticity of petroleum product demand. Beside the barrel, another important driver of the market is car market expansion, which could stand at 5% this year.
Companies are setting growth targets way above market growth, heralding the fierce competition between them. The battle among the biggest companies will be the tighter as each of them have expansion plans that will practically switch competition away from the proximity criterion to services quality. The battle will be fought on services and customers' time. At the same time, the segment of private petrol station owners will be almost swallowed up by major players.
Almost all important companies have announced plans to expand their filling station networks. Rompetrol wants to triple the network by late 2009, from the current 350 units, the most ambitious plan of a domestic player. Lukoil wants another 50-60 stations to be added to the current 300, Agip may double its market share and the 26 stations it owns now, while MOL, with its 121 stations, wants to boost its market share by 4% to 15%.
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