Chevron Accelerates 'Contract Consolidation Project'

Allowing marketers to choose Chevron or Texaco flag January 1 rather than end of contract

Published in CSP Daily News

By  Carole Donoghue, Petroleum Editor

SAN RAMON, Calif. -- Chevron Corp. now said that its branded marketers who want to fly both the Chevron and Texaco flags at retail sites under a new dual-brand policy can do so as of January 1, 2012, and will not have to wait until their current supply contracts come up for renewal.

"If their current contract is not due for renewal at that time, a brand authorization agreement will allow them to use both brands until they move to a final dual brand agreement," a company spokesperson told CSP Daily News.

Previously, Chevron had told retailers in a memo that new agreements allowing them to market under or one or both of its brands would be issued when their current contracts end. "These changes will take place at the time of contract renewal which may take up to three years to complete," the company said in the memo issued earlier this week.

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However, the lag-time between the old, single-brand agreement and new dual-brand contracts prompted one industry attorney to warn that Chevron could inadvertently give a competitive edge to some branded jobber over others, depending on when each marketer's contract expired.

For example, there could be a brand conflict if a Chevron-branded marketer has six months to run on his current contract, while his Texaco-branded competitor has a year left on his agreement, said industry attorney Al Alfano. He advised marketers to ask Chevron to voluntarily terminate their current contracts and immediately replace them with the new dual-branded agreements.

The dual-brand strategy, which San Ramon, Calif.-based Chevron calls its "Contract Consolidation Project," is part of an attempt by the company to reduce its administrative costs by eliminating the need for separate supply contracts for each brand.

"It's a clarification, consistent with what company representatives are communicating to our marketers as they discuss the specific details of this policy," a Chevron spokesperson said of the change yesterday.