SINGAPORE: Consumers are unlikely to be greatly impacted by the change in ownership of Esso petrol stations in Singapore, experts told CNA on Friday (Oct 24).
Nearly 60 stations, which are currently owned by ExxonMobil, will be acquired by Indonesia-based petrochemical producer Chandra Asri Pacific. The deal is expected to be completed by the end of this year, subject to regulatory approvals.
Chandra Asri said it will purchase fuel from ExxonMobil, operate the petrol stations under the Esso brand and maintain existing customer loyalty points and cards.
"We anticipate business as usual during the transition period and will work with Chandra Asri to provide a smooth experience for our customers," said Ms Geraldine Chin, chairman and managing director of ExxonMobil Asia Pacific.
Since the brand is going to be the same, the change in ownership means "very little" for consumers, said energy consultant Tilak Doshi.
"They're not going to force customers to change into another brand ... so for customers, i think there'll be a minimal difference. It'll be the same brand, the same coupons, their loyalty points will remain," he said.
Professor Lawrence Loh of the National University of Singapore's (NUS) business school echoed that view.
"It's a seamless changeover as consumers do not need to know the underlying supplier," he said.
The number and the location of stations could change, but that is not likely, he said.
A spokesperson from the Nanyang Business School at Nanyang Technological University (NTU) also said there would be "no visible change".
Prof Loh of NUS said it is difficult to determine whether prices will be affected.
The move to a "branded wholesale model" means that ExxonMobil will supply fuel to Chandra Asri, which will function as an independent retailer owning and operating the stations.
Under the existing model, ExxonMobil supplies the fuel and is the retailer selling the fuel direct to consumers.
"The supplier is thus able to share or even transfer some risk to the retailers (using the branded wholesale model), but of course this means that the revenue or profit will be split between the parties," said Prof Loh.
He said it may be that Chandra Asri can lower prices because of better cost structure in the company, but that would be moderated by the impact of the wholesale model.
"Overall, however, the prices will be made competitive due to the aggressive pricing strategies of the local fuel providers," he said.
Chandra Asri will face the exact same retail competitive pressures that ExxonMobil does, said Mr Doshi.
"They will behave pretty much the same way because you don't want to start a price war by cutting (prices) just because you bought over (the stations). You will shoot yourself in the foot that way," he said, describing it as a "very delicate operation".
"I don't think they will change their behaviour very much from what Exxon would have done."
Mr Aldric Chew, head of Asia-Pacific products pricing at Argus Media, said fuel pump prices are usually influenced by the price of oil on the international market, which is impacted by various events, including one country imposing sanctions on another.
"This, among other factors, is likely to have a much bigger impact on fuel prices than a change in ownership," he said.
More broadly, analysts said the acquisition seems to be a calculated move by both parties.
"The move appears to be a strategic outsourcing of ExxonMobil’s last-mile retail distribution operations.
"The decision likely aims to streamline its balance sheet, finances, and operational management," said the spokesperson from NTU's Nanyang Business School.
Meanwhile, the acquisition gives Chandra Asri a chance to enhance efficiency in retail operations and improve its position in downstream energy logistics.
"Strategically, following the group’s earlier acquisition of Shell’s operations in Singapore, this move could expand its regional footprint and pave the way for diversification into new energy businesses by 2050," the Nanyang Business School spokesperson said.
The economic value of the Esso petrol stations to each company is objectively the same, but the perceived value is different, said Mr Doshi.
ExxonMobil announced earlier this month that it would cut 10 per cent to 15 per cent of jobs in Singapore by end 2027, he noted.
"For Exxon, they'll say, hey, I'd rather gather my assets and go for high investment, relatively high risk but very high reward areas, compared to running a retail station in Singapore," he said.
On the other hand, Chandra Asri wants to establish its presence here. "They're saying hey, we are becoming big ... Singapore is a major place for us, we've got the Shell refinery," said Mr Doshi.
In one stroke, they are going to take over a string of around 60 stations, he noted.
"They are on the upswing in the region, whereas Exxon is rationalising its global operations. So together, those two are the major overarching points ... that makes sense for this purchase by Chandra Asri to take place."
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Nearly 60 stations, which are currently owned by ExxonMobil, will be acquired by Indonesia-based petrochemical producer Chandra Asri Pacific. The deal is expected to be completed by the end of this year, subject to regulatory approvals.
Chandra Asri said it will purchase fuel from ExxonMobil, operate the petrol stations under the Esso brand and maintain existing customer loyalty points and cards.
"We anticipate business as usual during the transition period and will work with Chandra Asri to provide a smooth experience for our customers," said Ms Geraldine Chin, chairman and managing director of ExxonMobil Asia Pacific.
Since the brand is going to be the same, the change in ownership means "very little" for consumers, said energy consultant Tilak Doshi.
"They're not going to force customers to change into another brand ... so for customers, i think there'll be a minimal difference. It'll be the same brand, the same coupons, their loyalty points will remain," he said.
Professor Lawrence Loh of the National University of Singapore's (NUS) business school echoed that view.
"It's a seamless changeover as consumers do not need to know the underlying supplier," he said.
The number and the location of stations could change, but that is not likely, he said.
A spokesperson from the Nanyang Business School at Nanyang Technological University (NTU) also said there would be "no visible change".
WILL FUEL PRICES CHANGE?
Prof Loh of NUS said it is difficult to determine whether prices will be affected.
The move to a "branded wholesale model" means that ExxonMobil will supply fuel to Chandra Asri, which will function as an independent retailer owning and operating the stations.
Under the existing model, ExxonMobil supplies the fuel and is the retailer selling the fuel direct to consumers.
"The supplier is thus able to share or even transfer some risk to the retailers (using the branded wholesale model), but of course this means that the revenue or profit will be split between the parties," said Prof Loh.
He said it may be that Chandra Asri can lower prices because of better cost structure in the company, but that would be moderated by the impact of the wholesale model.
"Overall, however, the prices will be made competitive due to the aggressive pricing strategies of the local fuel providers," he said.
Chandra Asri will face the exact same retail competitive pressures that ExxonMobil does, said Mr Doshi.
"They will behave pretty much the same way because you don't want to start a price war by cutting (prices) just because you bought over (the stations). You will shoot yourself in the foot that way," he said, describing it as a "very delicate operation".
"I don't think they will change their behaviour very much from what Exxon would have done."
Mr Aldric Chew, head of Asia-Pacific products pricing at Argus Media, said fuel pump prices are usually influenced by the price of oil on the international market, which is impacted by various events, including one country imposing sanctions on another.
"This, among other factors, is likely to have a much bigger impact on fuel prices than a change in ownership," he said.
A DEAL THAT "MAKES SENSE"
More broadly, analysts said the acquisition seems to be a calculated move by both parties.
"The move appears to be a strategic outsourcing of ExxonMobil’s last-mile retail distribution operations.
"The decision likely aims to streamline its balance sheet, finances, and operational management," said the spokesperson from NTU's Nanyang Business School.
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Meanwhile, the acquisition gives Chandra Asri a chance to enhance efficiency in retail operations and improve its position in downstream energy logistics.
"Strategically, following the group’s earlier acquisition of Shell’s operations in Singapore, this move could expand its regional footprint and pave the way for diversification into new energy businesses by 2050," the Nanyang Business School spokesperson said.
The economic value of the Esso petrol stations to each company is objectively the same, but the perceived value is different, said Mr Doshi.
ExxonMobil announced earlier this month that it would cut 10 per cent to 15 per cent of jobs in Singapore by end 2027, he noted.
"For Exxon, they'll say, hey, I'd rather gather my assets and go for high investment, relatively high risk but very high reward areas, compared to running a retail station in Singapore," he said.
On the other hand, Chandra Asri wants to establish its presence here. "They're saying hey, we are becoming big ... Singapore is a major place for us, we've got the Shell refinery," said Mr Doshi.
In one stroke, they are going to take over a string of around 60 stations, he noted.
"They are on the upswing in the region, whereas Exxon is rationalising its global operations. So together, those two are the major overarching points ... that makes sense for this purchase by Chandra Asri to take place."
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