Texaco or Chevron?

Oil company revamping contracts to give marketers brand choice

Published in CSP Daily News

By
Carole Donoghue, Petroleum Editor

SAN RAMON, Calif. -- Chevron Corp. plans to revamp its branded contracts to allow marketers to fly either the Texaco or Chevron flag at their stations under the same supply agreement, CSP Daily News has learned. Currently, jobbers must sign separate agreements for each brand. Chevron said the change is a way to reduce its administrative costs and simplify its business practices in a way that makes sense for both the refiner and the marketer.

Chevron will make the move to one supply agreement for both brands on January 1, 2012, and will set a combined minimum volume standard for both brands of five million gallons per year. A marketer who currently operates under a Texaco or a Chevron contract will receive the new dual-branded agreement at the time of his contract renewal, giving him the ability to operate both brands in the marketplace, Chevron said.

Chevron has said the switch may take up to three years to complete on a market-wide basis.

"Providing both the Chevron and Texaco agreements have the same language, the contract changeover should not involve any issues under the Petroleum Marketing Practices Act," said industry attorney Al Alfano.

The plan, however, could give one Chevron-supplied marketer an edge over another who also buys his fuel from Chevron, depending on when each marketer's current contract expires, Alfano said.

For example, there could be a 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.

The new policy would mean that the Chevron-flagged marketer could open up Texaco stations in the other jobber's market, while the Texaco wholesaler would be unable to rebrand his sites to Chevron for another six months, should he want to do so.

Alfano suggested marketers ask Chevron whether they could voluntarily terminate their current supply agreement, and replace them immediately with the new dual-branded contract.

Marketers have largely welcomed news of the Chevron decision. "It should mean that we're able to choose either brand, depending on which makes best sense for our own business. It's a positive move, as far as I'm concerned," said one wholesaler, already eyeing outlets that he wants to rebrand.