Mergers among the multinational oil giants are creating some of the biggest companies in the world, yet their impact on the UK forecourt remains far from clear.
Texaco UK managing director Roger Ebert, for one, has flown to the US where he expects to discuss the changing landscape of the worldwide oil sector. The recent collapse of a proposed European alliance between Texaco and Shell will definitely be up for discussion.
On the agenda will also be: the proposed merger between Exxon and Mobil – the biggest in history with a combined value estimated at 250bn; another proposed deal between French group Total and Belgian counterpart Petrofina; and rumoured mergers involving almost every one of its rivals.
A Texaco spokesman says: “Roger Ebert will attend a quarterly meeting of regional directors in New York at the end of next week. I dare say the deal with Shell will come up.”
The Texaco/Shell alliance, which was announced through a “non-binding memorandum of understanding” in September, would have merged the companies’ retail and marketing – or downstream – operations and reaped an estimated 119m in savings.
However, it was called off for reasons which neither party is willing to discuss, although analysts have cited the departure of Shell’s former European downstream chief Phil Turberville as a possible catalyst.
One analyst says: “There are theories that either Texaco or Shell are looking into something else, but Turberville was believed to be driving things forward. Some think he became frustrated with it [the Shell/Texaco alliance] getting bogged down.”
Shell’s official line reads differently. A spokesman says that Paul Skinner, who took over on the deal following Turberville’s departure, was as keen for it to work as any.
The spokesman adds: “Further discussions that took place after the non-binding memo brought out issues which hadn’t been identified before.”
Whatever the reasons for the pre-emptive parting, Texaco has now announced it is looking at the possibilities of other “alliances and acquisitions” within the sector. It would join most of the other major players if it were to do so.
French group Total is in the process of persuading investors that its proposed takeover of Belgian rival Petrofina will result in sufficient cost-savings, while, last August, BP acquired American group Amoco, in the deal which is believed to have triggered the recent wave of mergers in the sector.
But the impact of the proposed multi-billion pound deals most recently exemplified in the 250bn Exxon/Mobil deal on the UK forecourts are unclear.
At Mobil, where the Exxon deal would combine its operations in the UK with Exxon’s subsidiary Esso, marketers will have to face the problem of what to do with the 600 or so stations that have been rebranded as BP outlets, but remain under Mobil’s ownership. It is thought that were Mobil to reclaim them for itself, its resulting quota of 2,300 stations would push the company’s market share through the 25 per cent barrier, at which point regulatory bodies may become involved.
The obvious solution, say analysts, is for BP to buy out the Mobil-owned BP outlets, thus eliminating any extra costs in rebranding while also maintaining Esso/Mobil and BP’s relative market shares at around 20 per cent each.
“BP is slightly behind Esso in terms of stations and has gone into the Mobil venture to help redress the balance. BP is aiming to make a significant proportion of their profits from non-fuel retailing and that is where they are heading in the future. To lose the Mobil stations would go against that,” says one analyst.
BP and Mobil are tight-lipped and, until discussions between Exxon and Mobil advance, in the dark. Meetings over the Christmas period will make things clearer. However, both accept that the Exxon-Mobil merger will not leave them untouched.
A BP spokesman says: “The recently announced deal could have an impact on the joint venture (between BP and Mobil), but we have not had an opportunity to discuss this with Mobil.”
Total’s plans for the 400-plus Fina petrol stations in the UK, should their own merger go ahead, are also unclear. Speculation says a rebranding exercise seems likely.
For the moment, little can be revealed as the legal “quiet period” required in the US for proposed mergers prevents Exxon and Mobil from discussing their deal. BP, Mobil and Esso in the UK – as well as their numerous rivals – will await the implications with baited breath.