Three U.K. refining and marketing firms plan to merge their interests in mid-1997, leading to closure of one of two refineries owned by the group.
The refinery closure plan is further evidence that Europe's refining shakeout is gathering momentum. Earlier this year BP Oil Ltd. and Mobil Corp. announced a larger merger of European operations (OGJ, Mar. 25, p. 21).
A new firm will be created from the U.K. downstream assets of Elf Oil (U.K.) Ltd., Gulf Oil (Great Britain) Ltd., and Murco Petroleum Ltd.
Subject to a final agreement early in 1997, the autonomous new company will be held 41.25% each by Elf and Gulf and 17.5% by Murco.
The merger is expected to save costs of more than £ 50 million/year ($75 million/year) through the refinery closure and cutting administrative duplication.
Elf said 400-500 jobs could be lost through the move. The companies employ more than 1,300, excluding gasoline station workers.
Elf is 70% owner and operator and Murco 30% owner of the 108,000 b/d Milford Haven, South Wales, refinery. Elf said the merged company will continue to operate this refinery, among Europe's most efficient.
The new firm will close the nearby 115,000 b/d Gulf refinery, although storage and blending facilities there will be maintained for future use.
Elf disclosed 18 months ago it wanted to bolster its U.K. re- finng/marketing operations and was seeking partners in the face of overcapacity in refining.
The U.K. is reckoned to have two refineries too many, along with growing environmental costs and fierce competition.
The new firm's marketing operations are expected to continue under one of the three partners' established brands, but it has not yet been decided which.
The new company will have more than 1,500 gasoline stations and is expected to account for 8% of the U.K. fuels market. The number of outlets may be reduced, but this will be decided by the new company.
Under the merger, Gulf will sell its 50% interest in Pembroke Cracking Co. to partner Texaco Ltd., operator of a third refinery near Milford Haven, the 180,000 b/d capacity Pembroke plant.
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