BP forecourts suffer in petrol price war

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The Independent Online
British Petroleum is losing money at the petrol pumps as a result of the forecourt price war between the oil big names and supermarkets.

"There are just too many petrol stations," said BP chief executive John Browne, yesterday. He added that further restructuring was inevitable.

In the first quarter of 1996, BP's UK refining and marketing division lost pounds 4m. BP blamed the shortfall in its downstream division on weaker marketing margins "due to continuing competitive pressures, especially in the UK".

BP is the third-largest petrol supplier in the UK after Esso, which initiated the price-cutting campaign to win market share from the superstores, and Shell.

Mr Browne said BP had raised its share of the UK petrol market by 1 percentage point during the period but rising crude oil prices had cut product gains. Attempts had recently been made to lift petrol prices, he added.

BP will have an estimated 16 per cent share of the UK market if the European Commission gives the go-ahead to a proposed merger of its European fuels operations with Mobil. The European Commission is expected to give the $5bn deal the green light by mid-1996.

The joint venture, first announced in February, is an attempt to tackle competition from Royal Dutch/Shell and Exxon, owners of Esso, while also providing a platform for growth in eastern Europe.

BP has denied the Mobil joint venture is motivated by the petrol price war as Britian is just a small part of its operations.

Never the less, the deal will accelerate the decline in UK petrol station outlets. They have fallen from almost 40,000 some 30 years ago to less than 17,000 at the end of last year.

The Petrol Retailers' Association has warned that less than 10,000 stations could remain within two years if the the price cuts and consolidation trends in the industry continue.

Investment Column, page 21