The head of British oil giant BP says the planned $1.78 billion acquisition of Woolworths’ Australian petrol station business is expected be a good earner for the company and is indicative of the company’s push to grow its marketing business globally.
Speaking to investors after reporting fourth-quarter earnings overnight, BP managing director Bob Dudley said the acquisition and associated strategic partnership, which are subject to Australian Competition and Consumer Commission approval, would boost the oil major’s earnings.
“It is operating cash flow with returns that are competitive with the rest of our downstream portfolio … this one we feel is very attractive for us,” Mr Dudley said.
“In the UK we have got a great (petrol station convenience store) model with Marks & Spencer in our retail growth and revenue growth, and we have got a chance to replicate that very successful strategy in Australia.”
On December 27, following a six-month sales process, BP and Woolworths announced that BP would pay $1.78bn for Woolworths’ 527 Australian petrol stations and that the pair would form a convenience store partnership with expanded loyalty programs and a plan to roll out up to 200 modern stores.
BP is the last remaining oil major in Australia’s fuel marketing and distribution business after ExxonMobil, Shell and Chevron exited over the past decade.
But it sees Australia as a place it can make money by pursuing a strategy, successful in Britain and Germany, of teaming up with well known retailers to push more convenience store sales as petrol demand slows or flatlines and electric vehicles, driverless cars and car-sharing have the potential to transform personal road transport in coming years.
“The strategic partnership with Woolworths in Australia demonstrates our strategy of growing our advantaged marketing businesses in important global markets,” Mr Dudley said.
The deal will make BP the nation’s biggest petrol station owner and that, along with the expanded loyalty programs, has meant the pair have given the ACCC a year to work through any issues.
“Subject to the approvals there, we expect to probably complete it in early 2018,” Mr Dudley said.
Extracted from The Australian.