1947-1967 – Years of expansion

Following the end of World War II, nations faced the urgent challenge of rebuilding war-battered societies, often from the ground up. The recovery required large infusions of will, capital and energy. With the recovery came the insistent need for oil to heat homes; light stoves; and fuel the cars, ships, planes and other forms of transportation that were in ever-growing demand.

The need was especially pressing in Caltex’s sphere of operations. The company was quick to act. It rebuilt damaged facilities, increased its bunkering service, and boosted the manufacture of lubricating oil and asphalt sales. And above all, Caltex dramatically increased its refining capacity.

By 1948, Caltex had access to 150,000 barrels a day from the Bahrain Refinery as well as an additional 27,000 barrels a day from California Arabian Standard Oil Co.’s Ras Tanura Refinery in Saudi Arabia for growing markets east of Suez. These numbers would continue to grow, for Socal and The Texas Co. were also partners in the California Arabian Standard Oil Co. (later Aramco), which would soon became the most prolific oil producer in the world.

To deliver the oil to markets throughout the Eastern Hemisphere, Caltex purchased 32 surplus tankers from the U.S. wartime fleet in 1947 and added eight more a year later. The T-2 tankers were refitted for peacetime commerce before entering Caltex service. The company then set up the Overseas Tankship Corp. (OTC) to operate its maritime operations around the world. And how they worked! Excluding repair periods, the tankers plied the waters 24 hours a day, busily transporting crude oil and products to markets throughout the Eastern Hemisphere. By 1958, Caltex had the world’s fifth largest fleet. And through the 1960s, the company maintained a fleet of more than 120 vessels, about one-half owned and one-half chartered.

The timely delivery of crude oil and products had an immediate impact on countries like the Philippines, where the postwar market was growing rapidly. Soon after the war, Caltex strengthened its position in that country by delivering 1,000 gasoline pumps to the islands before its competitors got their equipment in place. And while other companies were waiting for shipments of welded oil storage tanks, Caltex showed great resourcefulness in providing bolted military tanks as interim facilities. Caltex also rebuilt the country’s bulk terminals that had been destroyed in the war. These prompt actions helped Caltex maintain its position as the country’s leading marketer. Other key factors were the delivery of quality products and the practice of hiring mostly Filipino employees.

Halfway around the world, Caltex was working to restore and expand European marketing and refining operations that it acquired from The Texas Co. in 1947. Initially the company was a relatively small player in the nine European countries where the Caltex Star replaced Texaco, but its presence grew. Within its first five years of operation, Caltex rebuilt The Texas Co.’s largely destroyed Bec d’Ambes refinery near Bordeaux and constructed new refineries in Holland, Spain, Germany and Italy.

However, the greatest long-term impact for the company’s growth would not be in Europe but in the nations east of Suez. Nowhere was this more apparent than in Japan, which had been the most industrialized country in the Far East prior to the war. Now that nation urgently needed to restart its economic engine, and Caltex recognised Japan’s major economic potential when it entered the country in 1949. Caltex then extended its hand to the Japanese business community by offering to enter into 50-50 partnerships rather than emulating other Western corporations, which insisted on having a controlling interest. The company then followed through in 1950 by purchasing a 50 per cent interest in Koa Oil Co.., Ltd., owner of the Marifu and Osaka Refineries. A year later, Caltex entered a partnership with Nippon Oil Co. The two companies jointly organized the Nippon Petroleum Refining Co., Ltd., which in 1951 acquired, expanded and operated the Kudamatsu and Yokohama Refineries.

In yet another joint venture, Caltex became affiliated with Tokyo Tanker Co. (TTC), which over the next decade launched such vessels as the 32,000-DWT ‘Nikko Maru,’ TTC’s first supertanker, and the 150,000 DWT ‘Tokyo Maru,’ the world’s largest tanker at that time.

Caltex further expanded its presence east of Suez by building refineries in the Philippines, Australia and India; and beginning exploration in West Australia. The Batangas Refinery in the Philippines was particularly noteworthy. Rising on a 300-acre site along the waters of Batangas Bay, about 72 miles south of Manila, it became the nation’s first petroleum refinery when it was completed in October 1954. It was also Caltex’s largest single investment to date. Oscar Ledesma, the Philippines’ Secretary of Commerce and Industry, praised Caltex for its ‘vision and enterprise…not to mention its courage and faith in the future of our country.’ Caltex prepared its largely Filipino staff for their tasks by sending 44 of its employees to its Pernis Refinery in the Netherlands for an intensive 10-month course in refinery operation and maintenance.

Throughout this period, Caltex focused on expanding its refining capacity. From 1952 to 1966, the company commissioned close to 20 new refineries. At its plant in Frankfurt, Germany, Caltex introduced the first European iso-cracking method for production of high-octane gasoline and jet fuels. The construction of Australia’s Kurnell Refinery in 1956 enabled Caltex to process and distribute the increasing production from Caltex Pacific Indonesia’s Minas and Duri Fields.

Driving Caltex’s large refining presence was an ever-growing demand for petroleum products. During the early 1960s, Caltex’s product sales increased more than 10 per cent a year. Leading the demand was Japan, which in 1966 bought 11 million barrels of products. Other healthy growth areas included Australia, New Zealand and South Africa, where the introduction of Caltex’s own brand in 1952 spurred sales. By the early 1950s, Caltex had a market position of about 30 per cent in the countries east of Suez compared to 10 per cent before World War II.

Across the spectrum of Caltex’s activities, the two postwar decades were marked by consistent growth, both in results and in the company’s sphere of operations. During the 1960s, Caltex’s operations extended to more than 70 countries. But in 1967, that number shrank, when Socal and The Texas Co. divested Caltex of all of its European assets. The decision followed a period of strain prompted by The Texas Co.’s acquisition of Trinidad Leaseholds Ltd.’s 50-percent interest in Regent Oil Co. Ltd., a British-based marketer owned jointly by Trinidad and Caltex. This episode was atypical in an otherwise harmonious and long-lived partnership. For Caltex, the loss of its European subsidiaries reduced the size of its global operations but left the company even more focused on the area east of Suez where it had the most experience, cultivated relationships and profitable operations.