Doris Leblond
OGJ Correspondent
PARIS, Mar. 24 -- ExxonMobil Corp.'s French affiliate Esso Raffinage SAF has received "a massive response" to its December 2004 offer requesting bids for the purchase of subsidiary Esso REP with all its acreage, said Esso SAF Chairman and CEO Dominique Badel at a press meeting Mar. 24.
A first selection round will take place shortly, he said, with a second round at the end of spring if needed. The deal should be concluded by early 2006, Badel said.
Esso REP, one of the oldest and most prolific producers in France, is withdrawing from exploration and production because oil production is declining, unit costs are high, and potential for growth is limited, Badel said.
Last year Esso REP posted operating profits of 23 million euros, up from 19 million euros in 2003. Earnings were pulled up by crude oil prices, despite a 13% drop in oil production to 284,439 tonnes due to depletion.
In addition, production at Les Pins in the Aquitaine basin is growing at a lower rate than expected despite a satisfactory fifth well drilled in 2003. This year Esso REP has earmarked 10 million euros for E&P work in France.
Downstream operations
Refining and distribution operating profits rose to 179 million euros last year from 97 million euros in 2003, with margins reaching a record 30 euros/tonne. Badel pointed to the volatility of refining margins, which so far this year have dropped to 10 euros/tonne.
Over the last 3 years, Esso SAF invested 250 million euros at its Port-Jérôme-Gravenchon refinery in Normandy to manufacture motor oils with low sulfur content. It constructed a hydrogen treatment unit, which Air Liquide will operate, and modified the catalytic cracker to convert half of its high-sulfur fuel oil production into motor fuels. These units came on stream in October.
At its Fos-sur-Mer refinery in southeastern France, Esso SAF is investing 40 million euros in a SCANfiner and to modify the existing desulfurization units, which will come on stream in October to produce the new-specification motor fuels. After operating nonstop for 6 years, the refinery will be halted this year for maintenance.
In 2004 about 82 million euros were specifically devoted to environmental investments at both refineries, cutting carbon dioxide and sulfur dioxide emissions.
This year, investments will be limited to 72-75 million euros, Badel said, as Esso SAF is almost ready to produce to the 2009 motor-fuel specifications.
