Shell, BP Considering $6b Assets Sale; Mobil Brand Returning Photo:
Trevor Collett | Jan, 09 2014 | 15 Comments

Oil giants BP and Royal Dutch Shell are both considering a mass sell-off of their Australian assets, including over 1000 service stations.

BP is believed to be considering a sale of some 225 service stations, along with refineries located in Queensland and Western Australia, affecting a further 1400 sites currently supplied by the oil giant.

Shell has had its Geelong refinery on the market since April, and is understood to be in early discussions with several investors on the future of its 900 service stations.

Both BP and Shell’s assets have been valued at the same figure of $3 billion.

For both companies, offloading these assets is expected to free up funds for further investment in energy exploration and production. Australia’s facilities have become less viable in recent years, due to higher maintenance costs and the high Australian Dollar.

The planned sales represent a continuing downward trend for the Australian petroleum industry, which has shrunk from 20,000 service stations in 1970 to just 6300 in 2011.

Over the same period, Australia’s population grew from 12.2 million in 1970 to 21.5 million in 2011 (23.3 million last year).

Shell completed a sale of New Zealand assets in 2010, along with assets in 21 African countries.

Mobil effectively exited the Australian market when it sold its sites to convenience store giant 7-Eleven in the same year. However, parent company ExxonMobil has today announced a new long-term agreement as the exclusive supplier of fuel products to the 7-Eleven network.

As part of the agreement, the Mobil brand will again adorn fuel bowsers along Australia's east coast, effectively resulting in a return to the market.

ExxonMobil says the deal will give the partnership the best chance of capitialising on Mobil's long-standing reputation, as customers will no longer be wary of what fuel they're buying from 7-Eleven.

Woolworths and Coles, through their partnerships with Caltex and Shell respectively, currently control 48 percent of the Australian petroleum market.

The Australian Competition And Consumer Commission (ACCC) blocked the sale of Mobil’s assets to Caltex in 2009, but the commission may have its hand forced if Coles offers to completely absorb the Shell brand in Australia.

A buyout from Coles would significantly strengthen the perceived ‘duopoly’ of the supermarket giants, but would also prevent the 900 Shell sites from disappearing altogether.

As most of the 1125 service station sites currently under threat are in prime locations, interest in the land they sit on can be expected to be high.

No final decision has been reached by either BP or Shell, but the Australian petroleum landscape will certainly look different if the planned sales go ahead.

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