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BP shifts from refining to convenience

BP are selling out of New Zealand refineries but are investing in Australian ones.

Fuel producer and retailer BP has flagged divestment from refining concerns in order to invest in their retail outlets.

BP recently sold half of its 20% stake in the New Zealand Refining Company Limited, amidst reports of portfolio tightening.

Formerly the largest shareholder in the only oil refiner in New Zealand, BP retained a 10.1% interest in the company but would not disclose the buyer of their stake.

BP’s head of Asia-Pacific fuels Andy Holmes said BP regularly reviews of its assets, partnerships and shareholdings.

“Today’s transaction is the outcome of one such global portfolio review,” he said.

BP has also struck a deal with energy giant Ineos to sell the Forties Pipeline System in the North Sea.

Responsible for 40% of UK oil production, the Pipeline transports on average 450,000 barrels of oil per day.

The Unite union, which were previously involved in disputes with Ineos called for the Scottish and Westminster parliaments to carry out urgent inquiries into the sale.

Scottish secretary Pat Rafferty said that Unite firmly believed the sale was bad for Scotland and the UK.

BP suffered a $1 billion full-year loss in 2016, as well as admitting that its breakeven price was not as low as it once expected.

The head of BP’s downstream division Tufan Erginbilgic said he wanted to expand BP’s trading using long-term deals.

A BP Australia spokesperson said BP Australia operates Australia’s largest refinery in Kwinana, WA.

“We are proud of our long history of more than 60 years as part of the Kwinana community,” she said.

“We have just completed more than $80 million in planned maintenance and investment activities as part of our commitment to ensuring the refinery continues to provide competitively priced fuels across the country.”

BP also began the process of a $1.8 billion deal last year to purchase Woolworths’ branded fuel businesses.

The sale would result in 527 fuel convenience sites and 16 development sites being acquired by BP, from Caltex.

Woolworths chief executive Brad Banducci said the $1.785 billion from the sale would be used to strengthen the balance sheet and reinvest in the core business.

“Following extensive evaluation of the proposals received, we decided that BP’s proposal met our strategic and broader commercial imperatives and in its entirety provided superior long-term shareholder value,” he said.

However, earlier this year BP were forced to defend this decision to investors who questioned the rationale for the deal.

BP global chief executive Bob Dudley said it was consistent with the strategy BP had to develop high-quality differentiated fuels and convenience offers in the downstream business.

They also argued the deal will see them operating only 12% of all Australian fuel sites.

The Australia Competition and Consumer Commission (ACCC) is currently undertaking a public review of the sale proposal.

 

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