Indian Oil hires E&Y for global marketing strategy

Vol 7, PW 13 (10 Sep 03) Midstream & Downstream

Aggressive expansion overseas is the new mantra at Indian Oil.

PETROWATCH learns India's largest refiner has hired consultant Ernst & Young as advisor to help craft a global marketing strategy for the sale of Indian and foreign petroleum products in South Asia, South East Asia, Africa and the former Soviet Central Asian republics. "They have already begun work and should be ready with a report well before the end of this year," an IOC source tells us.

In addition to the obvious markets of Bangladesh, Sri Lanka, Nepal, Bhutan and the Maldives, IOC wants a closer look at marketing possibilities further afield: Malaysia, Indonesia, Thailand, Brunei, Cambodia, Vietnam, Laos, Philippines, Tanzania, Uganda, Kenya, South Africa, Madagascar, Kazakhstan, Turkmenistan, Kyrgistan and Uzbekistan. "We want to expand beyond India," he adds.

"There's a limit to growing our market share in India." When Ernst & Young hands in its report, IOC will shortlist the country it wants to move into first. IOC's brief to Ernst & Young is clear: assess the potential of "retail marketing of petroleum products; marketing of lubricants and other specialty products and sourcing of petroleum products." IOC is starting from the premise that it will have to make, "long term investments to acquire marketing and distribution rights in the identified countries through retail outlets." A key driver to IOC's overseas plans is the ongoing privatisation of the downstream petroleum sector in many countries.

It wants Ernst & Young to look into deregulation plans, pricing mechanism, openness to foreign investment in the target countries. With all data in hand, Ernst & Young is expected to draw a macro-economic picture of the target countries, carry out a 'strategic analysis' of IOC's capabilities versus opportunities, prepare an 'entry strategy and business plan' and crucially, provide support to IOC in implementing its business strategy.

Naturally, IOC's first point of entry will be India's neighbours. "South Asia is as good as our home market.

In this region no multinational can match the advantages we have in terms of logistics, refineries, storage tanks and pipelines." Next will be South East Asia where IOC sees refineries in Singapore as a supply source. East Africa and the CIS countries will follow later.