Pakistan State Oil:-

Introduction:-

The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January
1st; the government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum
Limited (DPL) as Premiere Oil Company Limited (POCL).

Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came
into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd
1976. Following that, the ESSO undertakings were purchased on 15th September 1976 and
control was vested in SOCL. The end of that year (30th December 1976) saw the merger of the
Premier Oil Company Limited and State Oil Company Limited, giving way to Pakistan state Oil
(PSO).

After PSO’s inception, the corporate culture underwent a comprehensive renewal program which
was fully implemented in 2004. This program over the years included the revamping of the
organizational architecture, rationalization of staff, employee empowerment and transparency in
decision making through cross functional teams. This new corporate renewal program has
divided the company’s major operations into independent activities supported by legal, financial,
informative and other services. In order to reinforce and monitor this structural change, related
check and balances have been established by incorporating monitoring and control systems.
Human Resource Development became one of the main priorities on the company’s agenda
under this corporate reform.
It is due to this effective implementation of corporate reform and consistent application of the
best industrial practices and business development strategies, that PSO has been able to maintain
its market leadership in a highly competitive business environment.
 Strategies of Pakistan State Oil:-

PSO is the market leader in Pakistan’s energy sector. The company has the largest network of
retail outlets to serve the automotive sector and is the major fuel supplier to aviation, railways,
power projects, armed forces and agriculture sector. PSO also provides Jet Fuel to Refueling
Facilities at 9 airports in Pakistan and ship fuel at 3 ports. The company takes pride in continuing
the tradition of excellence and is fully committed to meet the energy needs of today and rising
challenge of tomorrow.

Pakistan State Oil, the largest oil marketing company in the country, is currently engaged in
storage, distribution and marketing of various POL products. The company’s current market
share of 82.3% in the black oil market and 59.4% share in the white oil market, alone speak
volumes about its success.

Vision:-

“To excel in delivering value to customers as an innovative and

dynamic energy company that gets to the future first.”

Mission:-

We are committed to leadership in energy market through competitive advantage in providing

the highest quality petroleum products and services to our customers, based on:
• Professionally trained, high quality, motivated workforce, working as a team in an environment,
which recognizes and rewards performance, innovation and creativity, and provides for personal
growth and development.
• Lowest cost operations and assured access to long-term and cost effective supply sources.
• Sustained growth in earnings in real terms.
• Highly ethical, safe environment friendly and socially responsible business practices.

Strategic Objectives

1. Maximize profitability in the Lubricants business through segmented marketing and brand
promotion.
2. Explore potential markets for the export of fuels and lubricants.
3. Expand the PSO Cards Business by enhancing the customer base, efficient distribution and
brand partnership.
4. Enhance our reach and add to our network of New Vision Retail Outlets (NVROs).
5. Develop bio-fuels and expand the gaseous fuels business.
6. Revamp the C-store network, introduce Quick Service Restaurants and develop strategic
alliances with local and international franchises.
7. Revamp organizational structure and various functions in line with the best corporate
practices.
8. Streamline systems and procedures in accordance with the changing business environment.
9. Ensure full HSE compliance in all our operations and try to meet a zero accident objective
through effective system development, training, inspections and audit.
10. Reinforce quality assurance by acquiring the ISO 9000 quality management certification of
various departments, and expansion of MQTU network.
Promotion of Lubricants Business:-

Ever since its existence, Pakistan State Oil Co. Ltd. has been playing a leading role in the oil
industry of the country. Round-the-clock, uninterrupted oil supplies, all the way from Karachi to
Khyber, through an integrated network of oil terminals and storage depots has been PSO's
hallmark. Besides selling Mogas, Furnace Oil, Diesel, Kerosene, Jet Fuels, etc, PSO is committed
to serve the petrochemical needs of the local industry and is positioned among customers as a
reliable, cost-effective and high-quality chemical supplier. The company markets imported and
indigenous chemicals in bulk through tank lorries as well as in drums.

To cater to all kinds of lubricants customers, including automotive, hi-street and industrial
consumers by meeting the national demand through products of international standards, PSO has
set up a state-of-the-art Lubricants Manufacturing Terminal (LMT) at Korangi Industrial Area in
Karachi.
PSO ANNUAL REPORT 2009

Promotion of Gaseous Fuels:-

Pakistan State Oil has been putting great emphasis on the importance of gaseous fuels as primary
determinant of energy spectrum of the country. With its futuristic outlook, the company recently
restructured its Gas Business and brought it under one roof with a view to concentrate on this
hugely-lucrative and potential energy segment, which comprises LPG, CNG and LNG.

LPG AS THE ALTERNATE FUEL OF THE FUTURE

PSO has been into the LPG business since 1981 and the past 25 years have seen the company
evolve itself as an important player in the LPG domain. From humble beginnings in the early
1980s, PSO now generates over 21,000 M-tons of LPG in sales volume, supplying product in
all corners of the country through a web of distributors with the brand name “PakGas”.

The company has upheld the tradition of positive change in the backdrop of ever-transforming
market dynamics and in its pursuit has adopted a new, very trendy logo for itself that not only
depicts its vibrant status but also radiates its pioneering influence amongst all LPG marketing
companies and renews its commitment towards excellence and domination.

The company in order to deliver its promise of supplying fuel efficiently to the populace has in
place four LPG storage and bottling plants, one each in Karachi, Lahore, Dhurnal and Akora
Khattak, which collectively supply over 70 metric tons of LPG per day.

LPG's reckoning as an important hydrocarbon is gaining momentum day-by-day as the market

continues to expand and vindicated by the fact that the government has now issued its
directives to set up LPG Auto Gas Stations in the country. This development is destined to
transform the country's Retail Fuel landscape and PSO, being the largest fuel retailer, is all set
to tap this potential. Over 100,000 vehicles are already running on LPG fuel and this segment
is expected to proliferate once LPG
Retail Fuels Marketing and Technological Advancement:-
The transformation from orthodox bureaucratic style of management to a more progressive and
professional approach has positively impacted on the Retail marketing of the company.

In the pre-transformation phase, PSO, due to the increased marketing activities of its main
competitor Shell was struggling to maintain its market share despite a strong distribution
network. Similarly, Caltex also started to project its new “A star is born” image, which further
dented PSO’s market share in the industry. In order to counter the marketing activities of the
competitors, a need for a complete revamp of PSO's marketing activities arose, which led to
the inception of the New Vision scheme.

To create a new company image through high quality service and customer care, the old PSO
logo was redesigned along with the retail outlet specifications, which redefined the PSO
stations as state-of-the-art New Vision facilities. One of the most important tasks accomplished
during the initial period of transformation was to inculcate the significance of information
technology amongst the employees.

All the division offices and retail outlets across the country are now linked to the head office
through a number of state-of-the-art technical solutions, which include SAP Launch and Online
Order Management System. Others such as the Retail Automation Program, Price Changing
Units, Automated Tank Gauging System, Vehicle Identification System and Field Automation
are in the pipeline.

Since the inception of New Vision scheme, PSO's image and sales trend have been on the rise.
Apart from the New Vision, the concept of Company Owned and Company Operated (CoCo)
sites was launched in order to provide the best quality service at the PSO retail stations. The
idea was to make these stations the flagship sites under the company's maximum supervision
and intense scrutiny to maintain the highest level of operational efficiency, service and
customer care.

In order to communicate the idea of New Vision to the customers, specially-designed sales
promotional campaigns were launched. These campaigns, covering the electronic and print
media, not only promoted the new brand image but also played an important role in rebuilding
loyalty amongst the consumers.
Comparative Analysis of PSO’s Strategies Vs Shell’s Strategies:-
Pakistan State Oil:-
Employee Recognition To boost the morale of employees a reward and recognition scheme
is in place for the last few years and has been a great source of creating a spirit of healthy
competition amongst employees. Each year employees are nominated for two company-wide
ceremonies viz

- ‘Shaukat Raza Mirza Management Excellence Award’ and

- ‘PSO Managing Director’s Performance Award’

It acknowledges exceptional, smart and beyond the call of duty performance.

Motivation Survey Special efforts for continuously enriching our business systems and
implementing relative strategies have always been fruitful which are aimed at augmenting a
work culture that enhances employee motivation as well as gaining a better understanding of
forces that shapes motivation, attitude, behavior patterns and expectations.

Employee Motivation surveys are conducted that recognize the needs, opinions, concerns and
perceptions of our human capital about the organization and what they value in terms of
professional and personal interests and incentives. Keeping a human element is mind these
surveys help identify a meaningful employee relationship with the organizational objectives
and understand their job responsibilities and work expectations.
Communication
Open-book & direct approach environment

An assortment of forums/meetings at hand (Executive Committee, Management Committee,

Employee Leadership Team) inspire discipline and accelerate establishment of processes &
systems

Encourage team work & group dynamics while inculcating a sense of ownership through
empowered Cross Functional Teams (CFTs)

Employ Business Process Reengineering (BPR) to maintain an international working

environment by streamlining processes and removing unnecessary layers

Interactive sessions are regularly held by the Managing Director at all levels because clear,
coherent and consistent messages ensure that employees are able to integrate the inputs into
their thinking

All organizational changes are announced

Zero Tolerance We have high ethical standards and a ‘Business Principles and Ethics Policy’
in place. We value, encourage and inculcate corporate reforms, good governance, best business
practices and an environment of continued adherence to ‘Zero Tolerance’, resulting in the
development of our human capital and meeting all business challenges.
Performance Management
System of authentic performance evaluation and feed back is implemented at PSO and is an
integral part of our appraisal management

Individual performance is aligned with the business goals and company objectives

Performance–based rewards are offered to all employees on a yearly basis

Bell curve covers all management employees annual appraisal through a population spread

Products & Services PSO caters to POL requirements of a wide spectrum of customers
comprising the retail consumer, various industrial units, government, power projects, aviation
and marine sectors of Pakistan. We are truly the drivers of economy of this country.

A network of 3612 retail outlets enables us to reach Pakistanis from Nagarparkar to Sost. We
are proud to cater to the fuel and non fuel needs of approximately 2.8 million customers per
day.

PSO industrial consumer dominance in the government sector can be judged by the fact that all
the major government entities like OGDC, Pakistan Army, Pakistan railways, Navy, NLC,
PAF Wah and HIT have entrusted PSO to meet their POL needs.

Besides supplying fuel to national power utilities like WAPDA and KESC, PSO is the sole
furnace oil supplier to all Independent Power Projects (IPPs) in Pakistan with a share of over
80% in furnace oil market. Moreover, PSO is also playing its due role in meeting the growing
energy demand of the country.

PSO also supplies fuel to industrial units like textile, cement, agriculture, transport etc. Our
industrial consumer base includes prestigious entities like the Presidency and the Prime
Minister Secretariat, where PSO has developed consumer outlets for timely refueling of their
fleets.

Furthermore, PSO also serves the fuel needs of both national & international air carriers. We
also provide jet fuel into-plane refueling facilities at 9 airports of Pakistan i.e. Karachi, Lahore,
Islamabad, Peshawar, Multan, Faisalabad, Turbat, Pasni and Sialkot.

We also supply fuel to ships at Karachi Port, Korangi Fish Harbour & Port Qasim. Moreover,
we cater to the fuel requirements of Pakistan Navy, Maritime Security Agency, Karachi Port
Trust, PNSC, Faisal Marine Oil Services (Pvt) Ltd
Royal Dutch Shell:-

Sustainable development

We are convinced that contributing to sustainable development helps create business value and
reduce operational and financial risk, making us a more competitive and profitable company.

Technology and innovation

Our commitment to technology and innovation continues to be at the core of our strategy. We
believe our technologies and technical expertise will be telling factors in the growth of our
business.

Our major projects

Athabasca Oil Sands Project

Sakhalin II

Shell Eastern Petrochemicals Complex

Port Arthur Refinery

Pearl GTL

Qatargas 4

Perdido - world’s deepest offshore drilling and production facility

Parque das Conchas (BC-10)

Gumusut

We see no trade-off between being economically responsible (profitable) and socially and
environmentally responsible. Instead, being a socially and environmentally responsible company
contributes to our being a profitable company by helping us:

Earn our licence to operate and grow

By listening to the communities in which we work and addressing their expectations we

significantly reduce the chance of project delays, approval failures or disruption to existing
operations. These are significant risks to our business. Contributing to sustainable development
also helps us attract and retain staff, customers and business partners who are central to our
business success and future growth.

Develop the right products

By being aware of emerging changes to our customers’ values and changes in regulatory
requirements, we can develop products and services before competitors that meet our customers’
needs for clean, convenient and affordable energy.

Maximise opportunities

By adopting new or cleaner technologies we can improve the efficiency of our operations, reduce
costs, avoid current and future costs of emissions, and even create new income streams (like
carbon credits).
In short, we have learned – sometimes the hard way – that applying a sustainable development
mindset is not only the right thing to do, but it is also the smart thing to do.

Producing cleaner fuels

Transport uses over half the world’s crude oil production and accounts for around a quarter of
greenhouse gas emissions. The need to secure fuel supplies and reduce the environmental impact
requires a wider range of cleaner fuels. Shell recognises this need - we have one of the broadest
fuel portfolios in the industry.

Petrol (gasoline) and diesel

Petrol and diesel are the most widespread and convenient fuels. Good progress has been made in
many countriesin reducing their local emissions.

Biofuels
Produced from plants and organic waste, biofuels can help to reduce CO2 production and
improve energy security.

Hydrogen
Hydrogen could become a commercial viable transport fuel in the future offering the potential to
significantly reduce emissions.

Compressed natural gas

Compressed natural gas (CNG) can help to tackle air pollution by reducing local emissions and
cut overall CO2 production.
Recommendations:-

Pakistan State Oil’s lubricants business is not much successful. In order to make it a successful
one PSO should adopt different marketing strategies. It should improve its brand image. It should
focus more on the advertisements of its lubricant products. Promotional campaigns should be
launched in order to increase the sales of its lubricant products and to increase the market share
in lubricant business.

Pakistan State Oil should also focus on the development of bio-fuels. It should also run
campaigns regarding its products.

Pakistan State Oil should also focus on offshore drilling in order to expand its business. It should
also launch different schemes like its competitors.

PSO should also focus on green environment and in the development of environment friendly
fuels. It should also focus on CSR and creating awareness of green environment and emission of
green house gases among the people.

Conclusion:-

PSO is the market leader in Pakistan’s energy sector. The company has the largest network of
retail outlets to serve the automotive sector and is the major fuel supplier to aviation, railways,
power projects, armed forces and agriculture sector. PSO also provides Jet Fuel to Refueling
Facilities at 9 airports in Pakistan and ship fuel at 3 ports. The company takes pride in continuing
the tradition of excellence and is fully committed to meet the energy needs of today and rising
challenge of tomorrow.
Name:- Muhammad Muneeb

Roll No:- 37

Class:- BSPA 4th Year (Morning)

Department of Public Administration

University of Karachi