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From crisis to ‘new normal’ and beyond

Bogdan Kucharski, CEO of BP Polska, talks to Michael Dembinski about how one of Poland’s largest fuel retailers is dealing with the crisis – and how he sees its aftermath
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The price of crude oil has fallen significantly. There are worries about storage capacity as production overtakes demand locally. How will this feed into the market for automotive fuel in the short, medium and long term?

“Prices of fuels have fallen on the back of global overproduction and the demand crash caused by the Covid-19 pandemic. In Poland, this trend is slightly impeded by the value of Polish złoty declining relative to the US dollar. The situation is dynamic. Car traffic has reduced significantly due to restrictions on mobility imposed in Poland. A drop in fuel sales is significant, but it varies from one site to another depending on location and sales mix. Even though we sell less fuel, our costs remain almost unchanged, due to extra spending on additional health and safety measures in retail sites, which are necessary to comply with increasingly restrictive regulations introduced by the government. We expect the economy to re-open soon. We have already seen more traffic after the ban on mobility was lifted and the first phase of opening the economy took place on 20 April. We hope that the situation will gradually return to a ‘new normality’ while the country is coping with the pandemic outbreak and introducing effective preventive measures which do not, however, devastate the economy.

Supply chains of retail sites and transport companies are secured. Fuel is delivered to retail sites and wholesale buyers on a regular basis. The fuel industry is a key branch of the economy. It is taking a number of measures to optimise operations and ensure the retail sites operate efficiently and fuel is available on the market for drivers. Storage capacities across the globe are filling up and steps are being taken across all supply chain elements, from crude oil production, through refinery utilisation, to expansion of various storage options such as floating storage.

It is interesting to read the forecast recently published by POPiHN, Poland’s national oil industry association and included in the 2019 Report. It was pulled together before the global pandemic of Covid-19 and is based on the market trends prevailing before the outbreak, which means the assumptions and conclusions of the forecast will have to be reviewed to reflect the present economic situation in Poland and worldwide. The document doesn’t foresee any major changes in the long term but the forecast for 2020 will need to be adjusted profoundly. This will all depend on how well we will cope with the pandemic and what effect it will have on our economy. It is clear that the economy will rebound, but the pace of it remains uncertain.

As a major retailer on the Polish market, how is BP facing the Covid-19 crisis - has there been a shift in the fuel/non-fuel balance in your retail sales? Are Polish consumers coming to BP to buy food?

“The entire fuel industry records decreases in sales as the sector is a barometer of overall economic activity. Fewer people at work, no children at schools and virtually no tourist traffic must inevitably lead to lower traffic on the roads and hence lower revenues across filling stations. In early March, consumers stockpiled on many items in anticipation of possible restrictions in mobility. In late March, we saw sales decline at our retail sites, including fewer non-fuel items sold at shops and less food purchased at stations. Customers are visiting retail sites less often since the announcement of the epidemic threat and then the state of epidemic as many people work from home while shopping malls, restaurants and schools are closed. In recent days, though, we have been seeing upward trends in sales compared to the beginning of the pandemic.”

As a major employer, how has BP been protecting and supporting its workforce?

“The coronavirus pandemic changed the way in which business is done and it still poses a threat to people and the economy. We don’t know how long the threat will persist, how well we will be prepared to handle the most difficult scenarios and what the real social and economic consequences will be. However, a lot of important decisions were made and we believe that by complying with the temporary social-distancing orders everyone can make a real contribution to our common safety. Since the first days of March, a crisis management team has been operating at BP which reviews the situation on an on-going basis and takes decisions as necessary. [Visit www.bp.pl where a special tab is included with regular updates about BP’s operations in Poland.] In the past weeks, BP has implemented a number of procedures and amendments to its internal regulations to protect people, which we believe helped minimise the risks significantly. The safety of our people and customers is always our number one priority, and even more so these days. Since the beginning of March, nearly every day brings new changes that need to be implemented at retail sites, including new procedures and safety measures to improve safety. We installed polycarbonate screens to separate the checkout areas from the customer areas at all BP retail sites. We also implemented limits in the number of customers who may visit the shop at the same time. Our customers are kindly requested to keep their distance from each other and avoid using cash. A procedure was implemented to regularly sanitise fuel guns at the pump and selected components of the carwash facilities. Our staff have enough sanitiser, disposable gloves, face masks and screens to use. Customers are required to wear disposable gloves when coming to a BP retail site, while the order to cover your mouth and nose also applies at the stations. Additional information is provided to the customers along with a set of special measures. Hand-washing instructions have been made available in the toilets; information about coronavirus has been displayed for customers along with the telephone number of the national helpline. At stations which are often visited by foreigners that information is also available in English, German, Russian and Ukrainian. At selected stations, we displayed emergency telephone numbers to the local sanitary inspection authorities. Cutlery has been removed from the place where it was freely accessible to customers. It is now dispensed to the customer by assistants wearing gloves from behind a counter, and only for take-aways. All unpackaged accessories have been removed from places available to the general public; when picking up dirty dishes, our staff wear gloves to ensure their safety.  We provide disposable gloves as well as additional sanitisers for customers at our sites. In order to shorten the time spent by customers at the stations, we closed down Lotto points and stopped accepting refundable bottles. Wild Bean Cafes only serve coffee and a limited range of meals to go. We stopped filling customers’ own mugs with tea and coffee on a temporary basis. Yet the promotional price for hot drinks is still valid.”

How do you see the Polish market recovering after the restrictions are lifted? Will there be a sharp rebound, or rather do you anticipate a longer road to economy recovery?

The pace of economic recovery will very much depend on how long the crisis will last, as well as wise, holistic and tangible government support to businesses and individuals. The fuel industry is one of the most crucial industries for the economy. Supplies of fuel are secure. What is important now is to continue operating while ensuring safety of customers and employees. Industry safety practices including measures and solutions that minimise the risk of transmission of the virus to employees, contractors and customers are adjusted to the corona-reality of service stations, hubs and fuel warehouses, including manufacturers. Those measures are very much needed, but expensive to implement. As part of POPIHN, jointly with the Ministry of Climate, we are working on a number of scenarios and measures for the industry to adapt to the changing market conditions.

“BP Poland is a part of a global company operating for more than 100 years which has survived many crises so I am positive that we will overcome this crisis too. It is difficult to foresee when we will return to normality and what the new normality will be. “

What are the biggest changes that you predict for the world after Covid-19? Will globalisation go into reverse gear? If so, what would the implications for Central and Eastern Europe be?

“There are many potential changes that the world will adopt after the Covid-19 pandemic. The list can go on and on, so I would just mention a few key ones: agile/remote work patterns, further automation, continued development of virtual collaboration tools, changed business and leisure travel patterns, shortening of global supply chain, expansion of online shopping or basically styles of socialising or entertainment. I do believe there will be quite a few profound, value-adding learnings and opportunities coming out of the pandemic once we eventually combat it successfully. I do not believe the globalisation will fade away; however, it will certainly change as a result of Covid-19, and hopefully for the benefit of countries, societies, organisations, individuals and companies.”

Looking ahead, how ready is BP to face the challenge of the transition from fossil fuels to renewable energy?

“At the beginning, let me quote BP’s new CEO, Bernard Looney: “Maybe this moment of pause gives the world an opportunity to reflect on why we do what we do. It also gives a window into what a different world would look like. It reminds us all that while Covid-19 is an acute issue, climate is chronic. I’d like to think we assisted our communities in building it back better. And finally, I hope we lean further into the challenges the world is facing – and this tragedy will give us the courage to take on the tougher issues. Today is so, so challenging. But let’s remember there is a tomorrow. And each leader of their respective organisation noted that people are so important in this.”

“In February this year, BP set a new ambition to become a net-zero company by 2050 or sooner, and to help the world get to so called ‘net-zero’ emissions. We want to be net zero across our entire operations on an absolute basis, including the carbon in our upstream oil-and-gas production. We also plan to cut the carbon intensity of the products we sell by 50%. We plan to install methane measurement at all our existing major oil-and gas-processing sites by 2023, publish the data, and then drive a 50% reduction in the methane intensity of all our operations. We will work to influence our joint ventures to set their own methane intensity targets of 0.2%. We are committed to increase the proportion of investment we make into our non-oil and gas businesses. Over time, as investment goes up in low and no carbon, we see it going down in oil and gas. We will actively advocate for policies that support net zero, including carbon pricing. We start with stopping corporate reputation advertising campaigns and re-direct resources to promote well designed climate policies. These are just a few of our ‘net-zero’ goals.”

How is BP Poland stepping up to help communities at the time of the pandemic?

“During the pandemic, it has turned out that there is space for voluntary activity and that space is very important. At BP, assistance is provided on three levels: global, local and individual in the form of personal commitment of the company’s employees.  BP Poland offers help on three levels, too: action and activities directly related to the pandemic, joint actions with our social partners which had to adapt their operations to the pandemic, and educational campaigns to support the society and employees at the time of the pandemic. Here are a few examples:

  • Educational campaign #dbajmyosiebie [#careforeachother] – joint responsibility when shopping at a retail site. Obligatory isolation demonstrated the strength of relationships while gestures of solidarity and spontaneous joint aid initiatives prove the importance of universal values. Being true to its values, BP engages in an educational campaign in the media, among its employees and customers as well as in social media.

  • ·        As part of our direct response to the pandemic, we have offered free coffee for members of the emergency services at our retail sites, and key hospitals in each voivodship (already named by Ministry of Health) have received BP Supercards to fuel their medical transport as well as Castrol oil change for their cars

  • ·         Polish Humanitarian Action with Puppet programme (Pajacyk) organises meals for needy children. Children get hot food once a day at school, and thanks to BP and our clients who give their Payback points - we have financed over 1.5 million meals so far. Today, the schools are closed and BP is offering BP Supercards for refuelling the cars of volunteers supplying meals. Additionally, with Payback we offer our loyal customers the possibility to double the points they give to this programme during the coronavirus pandemic.

  • ·     The Wiosna association, with its two key projects – Szlachetna paczki (‘noble gift’ – help for families in need, the elderly and handicapped individuals), and Academy of the Future (educational programme for children growing in underprivileged environments) has brought to the Polish market the innovative mechanism of empowering people to help each other. These days Wiosna is engaged in a new initiative just developed during the coronavirus crisis, supported by BP – Report on Loneliness. Today, during the pandemic, it is crucial to find and help people who cannot survive on their own. The project is about providing the therapeutic help of trained psychologists – Kind Words – via telephone to senior citizens. Calls will be answered by specialists, which will be followed by volunteer’s regular relationship and day-to-day help.”

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