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Irish Times: Statoil's Irish business goes up for sale

Arthur Beesley, Senior Business Correspondent
Norwegian state-owned energy group Statoil has put its Irish service station and oil supply businesses on the market with an estimated price tag of 150-200 million.
Some senior market sources in Dublin believe that Texaco would also like to sell its Irish portfolio of service stations.
A spokesman for Texaco yesterday initially said that the business was not for sale, but said later that the company had a policy of not commenting on rumours or speculation.
Statoil disclosed its intention to sell its Irish business only a day after the group sold its 30 per cent stake in the Synergen power station to Royal Bank of Scotland in a deal valued at 75 million.
However, a spokesman said the group had no intention of selling its 36 per cent stake in the troubled Corrib gas project in Co Mayo.
Statoil employs 1,100 people in its Irish fuel supply business and staff members were told at briefings yesterday that the group wanted to sell the business as a stand-alone entity with its workforce intact.
Merrill Lynch in London has been appointed to manage the sale process.
The business for sale comprises:
69 company-owned service stations;
supply contracts with another 167 outlets;
fuel terminals in Dublin, Cork and Galway;
interests in a number of smaller heating oil supply companies.
Management in Statoil Ireland is said to be disappointed with the decision to sell. However, an offer for the business from a management group is considered unlikely.
The Statoil sale follows the sale for some 180 million last year of Shell's service station network to Topaz, a group backed by Ion Equity.
The freehold title on many of Shell's 55 company-run properties was seen as an attractive part of that business as Topaz is said to have plans for residential or other developments on the Shell sites.
Statoil does not have outright ownership of many of its company-run service stations. This means that an acquirer of the business will not be able to close them down and use the sites for developments.
Statoil claims to be the biggest motor fuel retailer with 20 per cent of the market, but profit margins in the business are notoriously low.
With group turnover in 2004 of 1.07 billion, the company turned a pretax loss of 2.78 million. Its operating profit of 1.09 million was recorded after an exceptional charge of 6.5 million for a severance package.
Results for 2005 are not yet available.
“We intend to accelerate our strategic commitment to our markets in Scandinavia and eastern Europe. While we have a solid position in Ireland, we believe that, under new ownership, the organisation there will be better placed to achieve its strategic potential,” said Jacob Schram, senior vice-president of Statoil Retail Europe.
Statoil entered the Irish market in 1991 when it bought 180 fuel stations in the British Petroleum network.
It bought the Jet network in 1996, but had to sell some of the Jet outlets to Maxol under a direction from the Competition Authority.

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