Mobil Oil Co. is the latest international oil company to take the first tentative steps into the downstream business in eastern Europe.
Like Royal Dutch/Shell Group and Total/CFP, the company has chosen the Hungarian market for its springboard into the uncertainties of selling in the east.
Through Mobil's joint venture with the former state owned distribution company Afor, the familiar Pegasus flying horse will start appearing at a new generation of filling stations around Budapest the next few months.
Joe B. Hinton, president of Mobil Europe Inc. and head of the Mobil Europe center of operations, says 50 or more stations will be involved in the deal. Some will be refurbished and modernized versions of existing Afor outlets but a number of grassroots sites also will be developed.
MOBIL'S TOEHOLD
The joint venture gives Mobil a toehold in a potentially fast developing market, while the Hungarians get access to Mobil technology and marketing expertise and a much needed infusion of foreign capital. Mobil will not be supplying gasoline or diesel to the new network. The joint venture's outlets will be supplied from existing domestic refineries.
Hinton, who has set up an office in London, says Hungary was chosen for the first eastern European venture because its economy has progressed further with reforms than any other former Soviet satellites.
At this stage Hinton is cautious about prospects for extending the Hungarian operation outside the Budapest area or embarking on similar joint ventures in other parts of Eastern Europe.
As all big oil companies are discovering as their executives trudge around the region looking at business prospects, gasoline marketing there is at least 20 years behind its western counterpart.
Doing business in the area is also riddled with problems, not least of which concerns currency and the repatriation of profits. Western companies also have to deal with an extremely unusual problem of finding the real owners of property and businesses.
Hinton said the Mobil philosophy is to wait and see how the business develops. There will be no headlong rush into the unknown.
LUBES BUSINESS PROSPECTIVE
Mobil is no stranger to business in the east. For many years it supplied lube base stocks and Hinton says the company "never lost a nickel" from its business under the old regimes. Sometimes payments were slow because of holdups in the availability of hard currency, but the bills were always paid.
Hinton said the lubes business looks to have considerable potential in eastern Europe. As general manufacturing reorganizes and re-equips along western lines, demand for high quality lubes will increase. Locally manufactured lubes do not fit the bill, because Soviet supplied base stocks are sometimes of poorer quality.
The Soviets in particular are interested in Mobil's lube technology, especially synthetic lubes for use in arctic areas. Mobil has shown little interest in a direct technology transfer.
In the Hungarian market, it supplied slurries which contain the additives developed by Mobil-a way of delivering higher grade lubes without handing over the technology.
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