ChevronTexaco Revamps Additive Strategy

Techron to be added to all gasolines worldwide

Published in CSP Daily News

SAN RAMON, Calif. -- As consumers continue to view branded gasoline as a mere commodity, San Ramon, Calif.-based ChevronTexaco has announced that it will be including its patented Techron fuel additive in its gasolines throughout the United States and Latin America this summer.

In what company executives described as a first for a major oil company, ChevronTexaco will eventually add Techron to all ChevronTexaco gasolines worldwide, in effect creating a standardized gasoline.

Danny Roden, vice president of North America, said [image-nocss] all ChevronTexaco gasolines in the United States already contain Techron. But ChevronTexaco wanted to communicate the news to customers of the newly acquired Texaco branded sites, many of which ChevronTexaco began supplying on July 1, 2004.

As part of its 2001 merger, ChevronTexaco will share the brand rights to Texaco with Shell Oil Products U.S. until July 1, 2006, when ChevronTexaco gains exclusive rights to the Texaco brand.

As we get critical mass with Texaco locations, we'll now be communicating to the consumer that they are getting unsurpassed quality gasolines at Texaco as well as Chevron, Roden said. The company will launch a national advertising campaign to inform consumers of the news, company officials said.

Roden said Techron, an additive designed to prevent and even remove engine deposits in vehicle engines, is the main way ChevronTexaco differentiates its gasolines in the marketplace. He said by announcing a plan to eventually add Techron to all its gasolines worldwide, it further demonstrates our commitment to building our Chevron, Texaco and Caltex brands in the long-term.

Meanwhile, ChevronTexaco reported net income of $2.7 billion ($1.28 per diluted share) for first-quarter 2005, compared with net income of $2.6 billion ($1.20 per diluted share) in the year-ago period. The 2004 quarter included a special-item charge of $55 million related to a litigation matter.

Sales and other operating revenues in first-quarter 2005 were $40 billion, up 22% from the same period in 2004, mainly as a result of higher prices for crude oil, natural gas and refined products.

Quarterly profits for our upstream operations again benefited from strong prices for both crude oil and natural gas, said Chairman and CEO Dave O'Reilly. Our downstream earnings in the quarter, however, were adversely affected by the impacts of planned and unplanned downtime at several of our refineries.

U.S. exploration and production income was $767 million in the first quarter, down $93 million from the year-ago period.

U.S. refining, marketing and transportation earnings of $58 million decreased $218 million from last year's first quarter. The company's refined-product margins were lower in the 2005 period, primarily for West Coast operations. Included in the lower margins was the effect of planned and unplanned downtime at the company's refineries in El Segundo and Richmond, Calif. Margins in the East were modestly higher, despite planned downtime at the company's Pascagoula, Miss., refinery. Total operating expenses were higher in the 2005 period, largely due to costs for refinery maintenance.

Sales volumes for refined products were essentially unchanged at 1.462 barrels per day (bpd). Sales of branded gasoline increased 7% from the 2004 quarter to 583,000 bpd. The increase was attributable to the reintroduction of the Texaco brand in the Southeast.

And in other company news, ChevronTexaco Global Marketing said that Texaco Limited, a UK subsidiary, and Somerfield plc, a major UK food retailer, have reached an agreement on the sale of 118 Texaco-owned stations there to Somerfield.

Under the terms of the agreement, Texaco will continue to supply the 118 Somerfield-owned stations with fuel and the forecourts will remain Texaco branded. The convenience stores will be operated under the Somerfield brand. The handover of the sites and the rebranding of the shops will begin in the next few months.

This is part of our downstream strategy to improve returns by focusing on areas where ChevronTexaco has a competitive supply position and strong brand recognition for its three world class brandsChevron, Texaco and Caltex, said Shariq Yosufzai, president of global marketing for ChevronTexaco.