MOL GROUP ANNUAL REPORT Economic, social and environmental performance
Kezdőlap
Table of contents
Downstream

HIGHLIGHTS

  • Exploitation of MOL Group-level synergies, increased flexibility and global optimums through Downstream integration
  • Continued operational efficiency improvements and rigorous control of costs and spending attained
  • Reinforced regional stronghold position with logistics and retail investments to boost captive market
  • Downstream level value chain optimization and organic growth projects to maintain and improve flexibility and increase profitability
  • Continuous roll-out of sustainability principles among Business Units and countries at regional level accomplished

In 2011, we elevated Downstream integration to exploit sequential and interactive business processes. We also kept our focus on operating efficiency whilst moderating the negative effects of the external economic environment.
The newly-formed Downstream Division operates 5 refineries, 2 petrochemicals units, more than 1 600 filling stations under 7 brands in 11 CEE countries, all supported by a far-reaching logistics system and driven by Supply Chain Management. With this new divisional structure, our aim is to increase our profitability through improved efficiency and more flexible operations while seeking to reach global optimums rather than local ones. Our Bratislava and Danube refineries continue to enjoy the advantages of their strong asset structure while major efforts to increase INA Downstream performance have been made.
In its core markets, MOL Group Retail performed above competitors’ average resulting in increased shares of declining markets. Our petrochemicals business is the leading polymer player in Central Europe and delivers flexibility and captive markets to our refineries.



COMPETITIVE ADVANTAGES

Our strength derives from our geographical position and competitive asset base with its well-balanced product and customer portfolio. In addition, our “7 production unit model”, optimised by our highly effective Supply Chain Management organisation, exploits available synergies in regional markets. As the main internal drivers of this complex system, we rely on our skilled sales and engineering teams.

Our main competitive advantages:

  • The two most complex’ refineries in Százhalombatta and Bratislava enjoy central positions in landlocked markets and high net cash margins.

  • Improved crude oil selection options: either uninterrupted supplies of Russian crude through a cost-effective direct pipeline system or refineries with seaborne crude supplies which benefit from crude cargo trading and related optimisation possibilities.
     
  • A region-wide logistics network to serve the marketplace: our extensive pipeline system and increased storage depot coverage ensure competitive crude and raw materials supplies and low-cost product distribution. Our diverse logistics network coupled with well-positioned commercial activities that reach end-users continue to be key advantages in capturing sales margin revenues.
     
  • Market-driven development: The revamping of our less efficient and sophisticated assets is now enabling all our refineries to produce Euro V quality motor fuels.
     
  • Enhancing our customer value proposition is a key element of our Retail strategy which aims at retaining customers and increasing market share.
     
  • Petrochemicals integration to manage our gasoline-naphtha pool: integration of our petrochemicals plants and refineries has improved the competitive position of our value chain. In addition, regional expertise, value-added services in logistics and technical support are the key factors to further improve the efficiency of MOL Group Petrochemicals business.

 

KEY ACHIEVEMENTS - 2011

 

Operating in an extremely negative environment

2011 was an extremely bad year due to the depressed environment for the refining and petrochemicals industry, which negatively influenced MOL Group DownstreamRefining and Marketing, Retail and Petrochemicals  from the operating and financial points of view. In general, crude prices increased and thus energy prices, compared with 2010, rose by more than 25%, compounded by unstable product crack spreads. Amid the economic crisis, fuel demand declined and markets shrank. The annual average integrated petrochemicals margin hit its lowest ever level and shrank by 14% compared with 2010, thereby blighting European petrochemicals markets.

Paradigm shift to give a truly effective response

In general, Downstream industry profitability fell off significantly resulting in several refinery shut downs thereby causing many industry players to be dead in the water. However, even in this rather desperate environment, our complex assets performed relatively well but a paradigm shift is still needed to increase the overall efficiency of the portfolio since the outlook for 2012 is not getting any better.  In addition to ongoing efficiency improvement programmes such as the EIFFEL bottom-up idea generation platform or the OptINA - Croatian top-down cost reduction programme, MOL is launching its New Downstream 2012-2014 programme comprising relevant initiatives to improve Downstream profitability.  In this New Downstream 2012 programme, four areas of focus have been defined:

I.)    Value Chain optimisation to take advantage of our extended value chain. Focal points include profit-driven raw materials selection, moving towards on-demand production through capacity optimisation, setting minimum quality targets to ensure product value in the most profitable way and sustaining already achieved petrochemicals integration.

II.)    Asset Management initiatives that focus on energy cost and consumption-driven production optimisation, logistics asset optimisation, selective organic growth investments and implementation of more effective maintenance selection. Minimisation of fuel losses and discrepancies and improvement of production flexibility and our petrochemicals product portfolio all contribute to more effective and cost-conscious use of assets.

III.)    Market Management to satisfy market needs on a broader geographical scale, mainly by exploiting Wholesale/Retail synergies and polymer, monomer and chemical sales opportunities, all supported by effective Logistics. New initiatives aim to increase sales of LPG, lubricants, fuel cards and implement the profit maximisation local market supply concept. Combination of global product lines and local country marketing strategies makes capture of increased sales margins possible.

IV.)    Resource and Process efficiency  programmes to exploit opportunities unrecognised thus far. In the short term our goal will be to split global-local responsibilities, activities and operations, review tasks and responsibilities, analyse resource productivity and review FTE requirements and business processes. In long term we are committed to „lean thinking” concept manifesting in a waste elimination program.

Selective investments to maintain leading position and improve profitability

Long-term trends justify our asset complexity and focus on diesel. The region’s GDP growth potential remains, accompanied by significant additional diesel demand and the expectation of increasing diesel shortages. Meanwhile, flexible handling of the gasoline-naphtha pool remains crucially important in mitigating the effects of a stable gasoline surplus. These trends provide room for some selective investments in the long term, either focusing on increased diesel output (Rijeka refinery DC and/or Duna refinery HCK) or maintaining Refining/Petrochemicals integration.

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