Texaco has given up trying to make money out of running service stations and is planning to sell all its UK company owned network, just as ConocoPhillips did with its Jet-branded sites more than three years ago.
News of the oil company intending to focus on becoming a fuel wholesaler emerged as Texaco and Somerfield announced the signing of a memorandum of understanding for the sale of 140 Texaco sites to the supermarket operator.
The remainder of Texaco’s company owned sites – of which there are about 100 – will either be sold to other retailers or for alternative use.
“On the retail side we are planning to exit the company owned company operated class of trade and our focus will be on becoming more of a wholesaler,” said a spokesman for Texaco. “The UK is a low-margin retail environment, but the company has a long-term target for double-digit return on capital employed and will concentrate on enhancing the performance of our refining and distribution network.
“Providing the memorandum of understanding becomes a contract with Somerfield and if we are successful with our plans to dispose of the other 100 sites, Texaco won’t have any company owned sites.”
Texaco’s move has come as little surprise to Ray Holloway, director of the Petrol Retailers Association. “I think it’s a very sensible decision by Texaco; it allows the company to take capital out of the business and they get a return for no investment,” he said. “They’re just doing what Jet has done. I think the others will follow suit because oil companies must realise that retailing is not their strongest skill and if they can be professional suppliers and make money from it, what’s wrong with that? They do ‘supply’ very well and they should leave retailing to retailers.
“The future for oil companies is as suppliers and not retailers, and I think that with the exception of BP, that model fits every one of them.”
For Texaco’s existing dealers, the message is ‘business as usual’. “Dealers are going to be a much more important part of our business so we are looking at what we can do to improve service and relationships with dealers,” said the Texaco spokesman.
The Somerfield deal will see the shops on 140 Texaco sites branded Somerfield, with Texaco branding on the forecourt and pumps. But as Forecourt Trader was going to press, Somerfield announced it was to sell the Texaco sites to Palmer Capital Partners & Deutsche Property Asset Management, who will develop the forecourts and lease them back to Somerfield for 20 years. The property partner will create a portfolio worth £225m.