Pumped dry
Poland has an exceptional number of small petrol stations. A chunky 52% of the 6,600 stations are independent businesses or part of networks with just a handful of outlets. By comparison only 20% of petrol stations in Germany and France are independent, and 25% in Spain, according to the Polish Organisation of Oil Industry and Trade (POPiHN).
The National market is heading towards European proportions at an increasing pace, market observers said.
"Independent petrol stations have an increasingly tough time," said Jacek Wróblewski, POPiHN's director. "They survive in niche markets and are often not the main source of income for their owners. Unfortunately, to make money on these stations it is increasingly necessary to work outside the law. They will decline in number, close down or join major chains."
The 1990s witnessed a petrol station boom when private retailers moved in to replace the failing state fuel distribution system, which comprised the state-owned retail distributor CPN and the small internal fuel stations of major factories, transport firms and farming collectives.
While CPN was broken up into regional refineries that continue to undergo privatisation, the small industrial petrol stations were often sold to individual investors drawn by the prospect of inexpensive entry into a growing market. This year, the number of independent stations reached 3,500 and continues to grow, albeit at a declining rate.
Trouble is brewing for smaller petrol retailers. While their sheer numbers mean that they are the most likely outlets to be encountered by drivers, their sales represent only 30% of the Polish petrol market.
However, the worst is yet to come as EU entry pushes the petrol market closer to European models, where small outlets have a significantly smaller role. In France, independent petrol stations hold only 2% of the market.
"In all European countries independent operators are in the minority," Wróblewski said "This is just a question of time." Global oil companies, led by Shell, BP and Statoil have proved the most effective in taking the market from independents. While they own only 770 stations, targeting locations that optimise customer traffic has allowed each outlet to sell up to three times the volume of petrol sold by independent stations.
"On average the multinationals sell up to six million litres of petrol a year, while a domestic station sells on average two million litres per year," said Michał Mierzwa, an analyst at Austrian investment bank Erste Securities.
Although its impact will be softened by transition periods, EU accession will increase operating costs and require additional investment that many small petrol stations cannot afford. EU environmental regulations mean that by 2005 petrol tanks at stations must meet tougher norms and face regular inspections. Distributors' fuel reserves must be upgraded to meet the EU standard 90-day capacity, increasing annually until 2008 and adding to fuel production costs.
"Many firms will be unable to meet the environmental standards and will rapidly disappear," Wróblewski said. "It is impossible to say how many firms will go this way. It could be 500 or even more than 1,500."
With 1,950 stations, PKN Orlen is the biggest domestic chain controlling 31% of the country's stations. As the company restructures and acquires market savvy, it is increasingly focusing on making its retail operations cost effective and competitive and becoming a predator on smaller stations.
"It has a strong position because its market share is significant," Mierzwa said. "It has very good city centre locations and is well-known on the market ... But in terms of sales volume, it is a minor player."
An even greater danger looms on the horizon. In western Europe hypermarkets have already rocked the profitability of petrol sales by oil companies and are gradually adapting the same model here. They practice vicious undercutting, part of a strategy that sacrifices the profitability to attract supermarket customers.
