French producers asked to lessen oil price impact

Doris Leblond
OGJ Correspondent

PARIS, Nov. 14 -- France's Finance and Economy Minister Christine Lagarde urged all producers and distributors of fuel in that country to reduce the impact of high oil prices on consumers.

Oil majors Total SA, Royal Dutch Shell PLC, BP PLC, ExxonMobil Corp.'s Esso subsidiary, and Eni SPA unit Agip, as well as smaller distributors, all promised at the Nov. 10 meeting to continue the policy, started in 2005, of "smoothing out" price hikes and passing on price drops to consumers as quickly as possible. In this way, said Total Chief Executive Officer Christopher de Margerie, "No company can outrageously take advantage of market movements."

Lagarde acknowledged that, as a result of that policy, pump prices in France are lower than average fuel prices in the European Union. She noted that a liter of premium gasoline was almost a third more expensive in Germany than in the competitive French market where large "hypermarket" outlets now account for 57% of motor fuel sales. She said she would encourage the opening of more super and hyper markets.

The majors have developed different strategies to remain competitive in that market. Esso has automated all of its service stations, eliminating shops and services to bring prices practically level with the hypermarkets.

On the other hand, BP is providing popular services and different efficient fuels to customers. Shell also is offering personalized services but only at strategically chosen sites. Total offers services and efficient motor fuels and depends largely on truckers, who are offered membership cards with attractive benefits.

Still, the majors are left with only 43% of the French market, with Total holding the largest share.

To help motorists find the cheapest fuel, a computer website provides nonstop the real-time price of motor fuels in 85% of the service stations throughout France.

At that meeting, representatives of the major oil companies confirmed their commitments to invest 3.5 billion euros in 2006-10 to increase and upgrade refining capacities. Total's share of that investment is 3 billion euros. In addition, Total will invest another 500 million euros in the same period to develop in new energy technologies.

Lagarde said she strongly backs the International Energy Agency's plea for oil and gas producing countries to increase production. She said the matter would be taken up at the Euro group and European financial ministers meeting this week in Brussels, as well as at the Nov. 17 meeting in South Africa of the "Group of 20"—a bloc of developing nations established Aug. 20, 2003.

Lagarde advocated more transparency of oil inventory levels, which should be published weekly, "as in the US."

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