Corral Petroleum Holdings AB (publ) Business Update ... - Preem

Today, our business-to-business division concentrates on sales to large- and medium-sized commercial consumers.Our main focus is on the supply of diesel and fuel oil to the industrial sector of Sweden, as well as to the transport andagricultural sectors and to the majority of the Swedish municipalities.Within the business-to-business division, total volumes for the year ended December 31, 2010 increased byapproximately 11% compared to year ended December 31, 2009 as a result of the increasing demand for diesel and heatingoil.Station and Consumer DivisionOur station and consumer division consists of a network of service stations throughout Sweden. We have a networkof approximately 390 service stations in Sweden operating under the Preem brand name that are company-owned anddealer-operated. This network of Preem-branded stations consists of both full-service stations, offering a variety of productsthrough integrated convenience stores aimed at consumers who prefer “one-stop shopping,” and low-cost unmanned selfservicestations that sell gasoline and diesel at reduced prices for the price-sensitive customer. We also have a network ofapproximately 180 unmanned diesel truck stops that are company-owned and operate under the brand name “Såifa.” For amajority of our company-owned stations and truck stops, we own nearly all of the fixed assets and the fuel; however, welease the land upon which the stations are located.The following table shows a breakdown of Preem’s manned and unmanned stations as of December 31, 2010.Type of Station Preem (1) SåifaManned .................................................................................................................................................. 129 —Unmanned.............................................................................................................................................. 262 184Total .................................................................................................................................................. 391 184(1) Four of our 391 Preem-branded stations are boat stations, all of which are manned.We have implemented a retail strategy that has reduced our cost base, increased sales of fuels and conveniencegoods and improved our strength of brand. Part of this strategy involved developing a new retail concept and attractivecustomer offers. Our new convenience shop concept has been well received among our customers.A key component of this strategy was to outsource the operation and management of our company-operated stationsand convenience shops to independent dealer operators, which was completed in 2008.Transferring the operation of company-operated stores to independent dealer operators was an important factor inthe cost reductions achieved in connection with the restructuring of the marketing segment. We have substantially finishedrolling out a new design for our stations and continue to selectively upgrade certain of our stations that have not yetundergone the change. In addition, we are standardizing relations with these independent operators by using a new partnercontract, which helps us present a unified profile across our service stations.Sustainable Business InitiativesThe demand for biofuels is increasing and our costumers are systematically looking for solutions to reduce theirenvironmental impact. As Sweden’s largest producer and supplier of fuels, we have responded to this demand by expandingour offering of biofuels and partnering with various institutions in the testing and development of alternative fuels that userenewable raw materials and do not compete with global food production, reduce water assets or threaten biodiversity.Currently through out retail network, we offer our customers Bio100 diesel and fuel oil with 100% renewablerapeseed methyl ester, we have increased the availability of biogas, including bio-fuel E85 (which contains 85% renewableethanol and 15% gasoline) and we offer electric car owners in certain locations a free two hour charge. In addition, followingthe conversion of sections of the Preemraff Gothenburg into a biorefinery, we have begun producing and marketing tall oildiesel which is the first forest-based green diesel with 16% green content.We also strive to improve the sustainability of our business by employing strategies to reduce our emission levelsand optimize our energy consumption at each of our refineries. Some of the effective techniques that we employ to reduceour emissions include low nitrogen oxide burners, catalytic flue-gas cleaning, in-house produced fuel gas and energyrecovery from heat exchangers. Indeed, according to the 2008 Solomon Study, our refineries emit on average 20% lesscarbon dioxide, 70% less nitrogen oxide and 90% less sulphur oxide than the average refinery located in Western Europe.We are also exploring alternative energy sources, including through our partnership in VindIn AB with other energyintensivecompanies in Sweden that aims to identify, develop, build and run wind power stations in Scandinavia in order todeliver electricity to those involved in the partnership.45