BP to buy $5bn Mobil stake

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BRITISH PETROLEUM is expected to buy Mobil's stake in their $5bn European joint venture at a cut price if the oil mega-merger between Exxon and Mobil goes ahead.

Industry sources believe that a $238bn tie-up between the US groups, which confirmed merger talks last week, will give BP a golden chance to take control of one of Europe's largest fuels and lubricants businesses on the cheap.

European Union anti-competition authorities are widely expected to force Mobil to dispose of its stake in the BP joint venture, set up in 1996, as a condition for the approval of the merger. Oil experts believe that without the sale the deal could be rejected as Exxon/Mobil would have a near-dominant position in downstream activities in the UK and other European countries.

The regulatory pressure for a speedy disposal would enable BP to negotiate a bargain price for Mobil's stake. The US group's assets in the joint venture, which controls around 2,000 petrol stations in Britain, were valued at $1.6bn in 1996. A number of observers believe that BP will pay less than that if Mobil is pushed into a fire sale.

BP refused to comment yesterday, but sources close to the company said it would be keen to buy out the joint venture at a low price.

However, they said that the board has not taken a final decision on the merger as most of the top executives' time has been taken up by the $110bn merger with the US oil group Amoco.

The BP/Mobil deal pools almost all of the two companies' activities apart from pumping the oil out of the ground. It covers refineries, pipelines, tankage and terminals in 43 countries, including all the EU states, Switzerland, Cyprus, Turkey, Russia and all of Eastern Europe. It also operates 9,000 petrol stations under the BP logo, one of Europe's largest network of forecourts.