Until recently it was an almost unknown experience for a representative of the world's largest oil company, which earned more than $5 billion in 1993, to be asked to provide corporate credentials in a business meeting.
Yet this has happened several times to salesmen from Esso AG, Hamburg, who are leading a push into eastern Europe by Exxon Corp.
Government officials in Slovakia and the Czech republic have proved the most sheltered from western ways.
"The difficulty is that Exxon is not known in Slovakia," said an Esso spokesman. "Annual profits of $5 billion are not conceivable to some officials, particularly as this is three times the income of many governments."
Even so, Esso and other western oil companies are making progress in Slovakia. Esso has set up a subsidiary to sell lubricants, and is negotiating to open a gasoline station.
GROWTH SOUGHT
Hungary was the first company to officially throw its door open to western investors. Esso has five service stations in Budapest run by its Hungarian subsidiary. Other stations outside the capital are being sought.
Esso's biggest push has been into eastern Germany, where it has opened 80 new service stations, each costing 3 5 million deutsche-marks ($1.5 2.5 million).
The aim is to have 170 175 stations by the end of 1996, which would give Esso a 12% share of the market, the same as in western Germany's retail sector.
Success in eastern Germany requires a tenacious approach to paperwork. Forty official approvals are needed before a new service station can be built. In the Czech republic it is not much easier. As many as 35 are required.
Esso has set up a network of lubricants resellers in the Czech republic and hopes to open its first service station in Prague this autumn. It also is operating an aviation fuel and lubricant service at Prague airport.
LUBRICANTS FIRST
The approach to Poland was opposite to the Czech plan. In Poland, service stations came before lubricant resellers. Esso has three service stations in Posnan and is testing the market for further expansion.
Investing in lubricant sales as a foundation for growth has proved useful to Esso throughout the region. Many eastern European residents own western cars and prefer to run the engines on western motor oils.
Like most companies, Esso is wary of investing in eastern European refining. It sees all countries in the region with surplus distillation capacity and many refineries as potentially obsolete under free trade conditions.
Investment in eastern European refining is generally thought to make sense only if a company's retail network becomes so big it needs a local supply. While a network is being built, there are easier ways to obtain gasoline.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
