By John M. Biers
Last Update: 10:31 PM ET Oct 4, 2007
HOUSTON (MarketWatch) — Royal Dutch Shell PLC which has been scaling back its marketing operations in recent years, plans to divest its remaining company-owned retail gasoline sites in the U.S. over the next two years, a spokeswoman said Thursday.
Shell will exit its remaining large markets between now and 2009, including New York, San Francisco and Houston, said Shell spokeswoman Anne Peebles. The Shell brand is expected to remain on most of the affected stores, but the stores will no longer be owned by Shell, or by its refining joint-venture, Motiva Enterprises LLC, Peebles said.
The move comes as major oil companies are reducing their stakes in direct gasoline sales, one of the toughest sub-sectors of the energy business.
“We are transitioning from direct supply to wholesale supply,” Peebles said. “But these stations will definitely remain Shell-branded.”
Shell has already shifted a number of other U.S. markets in recent years. The transition is part of a corporate initiative to make “the best use of capital employed,” Peebles said.
As part of the reorganization, Shell has eliminated 100 of 400 marketing jobs in the U.S. In some cases, the company has found other jobs for employees, Peebles said.
Shell’s move is the latest by the major oil companies to scale back exposure to the marketing wing of the business, where profit margins are weak compared with upstream oil and gas, where energy is produced, and refining, where crude is processed into gasoline.
Lysle Brinker, an analyst at consultant John S. Herold Inc., said the shift also likely reflects the calculus that retail fuels delivery is becoming more complex with the increased use of alternative fuels.
Marketing “has always been probably the weakest return area and it’s only going to get more complicated and perhaps less profitable in the years ahead,” Brinker said.
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