Feb 09, 2006
IRISH investors like Maxol, Topaz, Campus, Top and DCC are to become more and more involved in petrol and diesel retailing in the 32 counties as the oil giants such as Shell, Statoil and Esso cut back on their exposure to downstream activities and switch retailing to more lucrative markets. That is, unless Tesco beats them to it.
Super profits from record oil prices are diverting the attention of the international oil giants towards exploration/development and capital investment, where potentially heavy returns can be achieved. With oil prices now expected to remain high for the forseeable future, the oil majors can no longer stave off hefty capital investment in infrastructure and exploration and development in harsh territories.
Growing scarcity of petrol and diesel is expected to concentrate the majors' attention on refining infrastructure, where there has been little new capital investment and where bottlenecks currently exist. The oil majors can now justify expensive exploration and development spending in hitherto marginal new territories because of the possibility of a big payback (in today's oil and gas prices) from a commercial find.
It will come as no surprise, then, that Statoil has put its petrol and diesel distribution network in Ireland on the auction block for up to 250m, not long after hefty marketing investment of 80m in its Fare Play convenience stores.
The company is offering 69 company-owned and almost 170 franchised outlets for sale to the highest bidder.
However, it is determined that its stake in the troubled Corrib gasfield (where Shell is the operator) is not for sale.
The impending sale of Statoil's large business is surprising, given that it has the lion's share of the 3bn-plus Irish petrol retailing market – as high as 25pc, according to some industry insiders. For the year ended December 31, 2003, Statoil had an after-tax profit of
Irish Independent: Growing scarcity of resources is focusing the minds of the main players, as they turn their attention to more lucrative sectors
Feb 09, 2006