According to a report in the Australian Financial Review (AFR) energy giants BP and Royal Dutch Shell are exploring the potential sale of their respective Australian refineries and petrol stations, with each firm having around $3 billion in value tied up in Australian assets.
Both firms own petrol refineries which if sold will have a bearing on Australia's strategic interests; however it is the ownership of petrol stations which is of greater interest to many investors. Currently (according to the AFR) Coles – which is owned by Wesfarmers (ASX: WES) – and Woolworths (ASX: WOW) control around 48% of retail fuel sales between them.
Shell owns around 900 petrol stations and has a partnership for the supply of fuel to Coles, while BP owns around 225 petrol stations and supplies a further 1200 stations with fuel. For obvious reasons both Coles and Woolworths would be interested in bolting these operations on to their current businesses however with the Australian Competition and Consumer Commission (ACCC) keeping a close eye on the levels of competition with the fuel retailing sector, the possibility of either company participating in any industry consolidation is slim at best.
Meanwhile, Caltex (ASX: CTX) which enjoys a partnership with Woolworths could also be expected to be interested in expanding its fuel retailing network. However just like the supermarket giants, Caltex would be unlikely to get the go-ahead from the ACCC judging by the fact that it was blocked from buying a suite of service stations owned by Mobil in 2010.
No matter how the BP and Shell asset sales precede it is certainly looking like an interesting year for the oil & gas and fuel retailing sectors in Australia. In related news there is once again speculation that Chevron which owns 50% of Caltex is looking to offload its shareholding, while murmurings that Shell may continue its sell-down of its 23% holding in Woodside Petroleum (ASX: WPL) are surfacing again as well.
Foolish takeaway
The move into fuel retailing has been a clever one by the supermarket chains as a way to lock in customers via discount fuel offers and also to increase their footprint in the convenience store sector. Unfortunately for shareholders, neither supermarket owner nor Caltex is likely to be able to benefit from any major asset sales by BP or Shell.
