AN HONEST CONVERSATION
Headquartered in Houston, Phillips 66 has 13,500 employees and, as of 31st December, 2013, had $50 billion worth of assets
‘On the back of a strong supply of quality products both in the wholesale markets and in the retail market as JET’, Phillips 66 continues to grow its market share here. Fuel Oil News editor, Jane Hughes asked managing director, Pete George about the business, refining and fuels and its relationship with fuel oil distributors.
How many fuel oil distributors are now JET branded?
We currently have 16 branded distributors across the UK. Our network of distributors stretches from the north of Scotland down into Cornwall and demonstrates that the strength of the JET brand is still an important influencing factor for consumers.
It just so happens that this is the diamond anniversary of the JET brand, so we will be celebrating the 60-year milestone throughout 2014 to reflect our pride in a brand that has held so strong during this period.
Having more recently welcomed Highland Fuels and Kettlewell Fuels into the JET fold, are there plans to attract more distributors to the brand in 2014?
We still have a few postcodes that we would like to cover if the right opportunity arises. We believe our current JET branded distributor package has a great deal to offer and if we were approached by someone who is considering branding options, then we are happy to have those conversations. Relationships with our branded distributors are critical and, understandably, our aim is to find companies with whom we can work together successfully for many years – some of our branded distributors have been with us for almost 50 years.
Are JET distributors equipped to face the challenges of the forthcoming Renewable Heat Incentive (RHI)?
The RHI scheme, which incentivises commercial and domestic customers to look at alternative heat technologies, is something Phillips 66 is following with interest. It is very early days to be able to predict how far reaching and successful this scheme will be. What I will say is that JET branded distributors are very well aware that this scheme has the potential to impact their business longer term, but the consumer will ultimately be the one who has the most ability to influence the outcome. History tells us that consumers are generally reluctant to change from a tried, tested and trusted form of heating, with or without incentives, also implementation of such schemes has proven difficult in the past so it is tough to forecast the impact in the near to medium term.
For more on the Renewable Heat Incentive, see the Analysis article on page 17.
“Customer relationships are precious” – what are your top three ways to protect these relationships with distributors?
“Customer relationships are precious” is probably the phrase used within Phillips 66 more than any other when we are discussing our strategy and business activities. So the three key elements to making this a success?
Without doubt, communication is clearly important. I believe very firmly that no-one within Phillips 66 is too important to take calls from a customer who has a question or topic that they want to discuss. We have no qualms about sharing contact information, and I actively encourage everyone in Phillips 66 to talk to customers whenever the opportunity arises to ensure that we understand the issues their businesses are facing to see where we can help.
Secondly, I like to think that we are straightforward and consistent in all our dealings with customers. I know that distributors appreciate the fact that we will have an honest conversation with them. We may not always give them the answer they hoped for, that is in the nature of business, however, we are candid and open so that they always know how the land lies, what their options are and that we will deliver on any promises we make.
Finally, a relationship that endures has to be built on firm foundations, so we will take every opportunity to get out and meet with customers. Last October we met with over 200 customers, both retail and wholesale, at Gleneagles in Scotland. It is opportunities like this where you have the chance to discuss business topics and socialise with customers that enhance a relationship. A relationship that goes beyond purely talking about day to day business matters is more likely to endure and we have many examples of long term relationships.
For example, Kinch Fuels in Wiltshire is currently celebrating 30 years as a JET branded distributor (FON March page 6). Roy Kinch would tell you that his interaction with the people in Phillips 66 has been one of the key reasons we have had such a great business relationship over this time.
RESPONDING TO CHALLENGES AND OPPORTUNITIES
Built on more than 130 years of experience, “Phillips 66 is a growing energy manufacturing and logistics company with high-performing midstream, chemicals, refining, and marketing and specialties businesses. This integrated portfolio enables the company to capture opportunities in a changing energy landscape”, says Pete George
Asked back in 2007 about how he saw the fuel market in 2037, Pete George told Fuel Oil News: “The only thing that’s certain is that there will be continued change. The big difference is that it will come at a much faster pace than in the previous 30 years.’ Do you feel changes to date (e.g. refinery decline, consolidation, increased imports, more demanding consumers etc) have been faster or slower than you thought they would be?
No question – faster. A while back we came up with a very structured five-year plan for growth within the UK and Ireland markets. Whilst everything we predicted has happened so far, what we got wrong was the speed at which it would occur! It is probably more like a three-year plan in reality, but we’re fortunate that we have an organisation that responds well to challenges and we’re managing to implement our plans sooner than we thought we would have to.
Following the company’s strategic review up to 2015 conducted before the change from ConocoPhillips to Phillips 66, have you had to change anything about the structure?
This is the plan I just referred to, so the same answer applies really i.e. we had a plan that we have had to implement earlier than we thought. The structural change we’ve made is in realigning our people resources again to meet the demands of our customers. We have recruited extra resource both in the field and in the head office support groups to deliver the plan that is very much customer focused. This includes enhanced IT support, brand and promotional activity and of course, making our supply chain even more robust.
Is Phillips 66 still ‘an advantaged downstream company’?
Yes. Phillips 66 is a growing energy manufacturing and logistics company with high-performing midstream, chemicals, refining, and marketing and specialties businesses. This integrated portfolio enables Phillips 66 to capture opportunities in the changing energy landscape across our assets base.
How can a business like Phillips 66 ‘best differentiate itself in a commodity market’?
We differentiate ourselves through our uniquely positioned and diverse assets and the expertise of our highly-skilled workforce. We have strong performing business segments that capture value across our portfolio, allowing us to deliver on our vision of providing energy and improving lives.
We execute this strategy with our guiding values of safety, honour and commitment. These values have been well embraced by our organisation and hopefully our customers can feel this in everything we do.
We are strongly focused on building a high performing organisation, and this means that ‘how’ we do things is just as important as ‘what ‘ we do. Again, we would like to believe that our customers and contractors can feel this in our day to day relationships.
Are there plans for another Phillips 66 roadshow or do you feel the message has reached all your retailers and distributors?
We will continue to communicate with our customers in a variety of different ways, but obviously face to face is preferred. That is one of the reasons we have recently increased our field sales force to ensure that we both look for opportunities to enhance the relationship but at the same time support them with any issues we can help resolve. One of the things we are looking at is cross promotional opportunities between JET branded distributors and our JET branded forecourts. The ideas we generate are usually the result of discussions at our Distributor Council which is a forum where our distributors have representation on a more formal basis.
Does the company still look to ‘strengthen its northern presence’?
Quite frankly, we are looking to strengthen our presence everywhere and the North is very much part of this. We have had a lot of success building on the back of Humber in the UK and Whitegate in Ireland where a regular supply of quality products allows us to be consistent in our market offering. Judging by the number of people we’re currently talking to, they obviously like what they see and want to be part of our growth plans.
Please can you provide a little more detail re Andy Viens’ announcement – large scale investment in cleaner fuels, an increase in land fuel supply volumes across all regions of the UK and a commitment to the Jet retail brand – at last October’s Gleneagles conference.
Andy was making reference to our expertise around the world in quality fuel brands. Phillips 66 has a strong focus on, and understanding of, regulations and we’re actively engaged in these as they continue to develop both in terms of being an advocate for sensible regulation and compliance with them.
In respect of the reference to the UK and the JET brand, this is specifically our plans that I referred to earlier. These are to continue to grow our market share on the back of a strong supply of quality products both in the wholesale markets as Phillips66 and in the retail market as JET.
ON THE HORIZON AND BEYOND
Phillips 66 operates the Whitegate Refinery and the Humber Refinery where Julian Stoll is now refinery manager, a recent appointment reported in last month’s Fuel Oil News
With UK and Irish fuel oil distributors dependant on ‘a strong supply of quality products,’ Fuel Oil News asked Pete George about refining and fuel matters
‘Best in class and here to stay’ – is the Humber Refinery still safe from closure?
It is well known that Humber is one of the most efficient refineries in Europe. We have invested over £700 million pounds in the last decade alone to ensure it maintains its top quartile position. So whilst we accept that the European refining sector is under some duress, we still believe that Humber has a great future.
What is the latest position on the Whitegate Refinery?
Several parties have expressed interest in our Ireland business and we are currently evaluating the bids. We are continuing to operate the Ireland business as usual throughout the marketing process.
Phillips 66 is ‘one of Ireland’s largest suppliers of inland fuels’, if the refinery were to close would the company be able to ‘remain committed to supply in Ireland’?
We are continuing to operate the Ireland business as usual throughout the marketing process. We would not speculate beyond that horizon.
How does Phillips 66 see kerosene’s future?
If we continue to have winters like this one – precarious! Seriously, we know that in the last few years the seasons have been difficult to predict and that in turn leads to tough decisions around contracts, stock holding, pricing etc.
Having a robust supply chain to accommodate fluctuating demand is key and we believe that we control our forecast and demand as well as anyone along with having flexibility from our refinery production to try and even out the ‘pinch points’. The demand will be there for a long time to come.
Marine fuel changes come into effect on 1st January 2015, what advance preparation has Phillips 66 and its customers made?
We are already a major player in the marine gas oil market and that won’t change. As specifications continue to tighten in this particular market, we see nothing but opportunities for our refined products.
Is the petroleum coke market still good for Phillips 66?
We believe that petroleum coke provides value and diversity for Phillips 66. It is this diversity of products that enables us to be different when the market place is difficult and coke is just one of a number of products that gives us the agility to do this. So the fact that we do not have to rely on the usual product slate we believe gives us more options and therefore petroleum coke is still a significant part of our portfolio.
Follow Phillips 66 on Twitter @Phillips66Co.
And finally, Pete George was asked
Do you have any plans to retire soon or are you still very happy to continue taking the company forward?
Good question! I guess the one thing that’s certain is that my enjoyment of working within this industry, with the people who are in it and for this particular company won’t change – no matter how long I am around.
As for when it is time to hang up my boots with Phillips 66, well I guess I will just know when it feels right. If I thought I was not making a difference, then that would be something that would make me think long and hard about whether it was time to stop.
Making an impact, whether that is on our results, developing people or making the business long term sustainable is the reason I get out of bed every morning.