Much of the petroleum industry action in Portugal focuses on its burgeoning retail marketing business.
With one of Europe's fastest growing economies, demand for refined products is booming in Portugal, and two European state oil companies-Italy's Agip Petroli and Spain's Repsol SA-aim to capture a share of that market.
Agip plans
Agip, which recently acquired 72 service stations in Portugal from British Petroleum Co. plc at a cost of $25 million, plans to expand its network of stations in the country by at least another 100, the head of Agip Portugal told Oil & Gas Journal.
Roberto Mulinacci said it will take 5-7 years to reach this target.
"This is the number of service stations we believe we need to attain critical mass in the Portuguese market."
Mulinacci said Agip plans to spend $16.25 million/year to ex- pand its retail network in Portugal. Its target of more than 170 service stations would make it the fourth biggest marketer in the country and increase its market share to about 6% from the current 2.5%.
Agip will focus on regions of the country that can provide the best rates of return. "To this extent, we will be concentrating on highways and big urban areas."
Most of the stations will involve grassroots construction, although the company has not ruled out the possibility of acquiring service stations from other companies.
Mulinacci also noted that while Agip's main target is in retail gasoline marketing, the company also will be aiming to distribute lubricants and other products. "All activities in the petroleum sector are of interest to us," he said.
Agip's purchase of the BP stations was for less than industry observers expected, reflecting the outlets' sales levels of 2 million l./year vs. the Portuguese average of 3 million l./year. With the deal, Agip gains an immediate foothold of significance in a fast growing market.
"Portugal is one of the fastest growing economies in Europe and, coming from a backward position, has not yet reached the level of car ownership that can be seen in other countries. That, we believe, gives it a huge growth potential," Mulinacci said.
One of the company's priorities is to rebrand the former BP stations with its logo. Agip has set a 1 year timetable to achieve this but is likely to beat that deadline.
Under the deal signed with BP, fuel supplies are guaranteed by BP during the next 6 months, but after that Agip will have to provide its own supplies, most likely from parent Agip SpA in Italy.
Meantime, Agip has not ruled out the possibility of acquiring a stake in Petrogal.
But Agip will face strong competition. Not only is it entering a market that for decades has been dominated by four oil companies-Petrogal, BP, Shell, and Mobil control almost 90% of the market-but it is facing stiff competition from other newcomers such as Repsol.
Repsol plans
Repsol Pres. Oscar Fanjul said his company wants to greatly expand its activities in Portugal, particularly in the service station and natural gas sectors.
"We are aiming to become the fourth largest oil company in Portugal within the next few years," he said, adding that Repsol has earmarked an initial $340 million for that effort. He also said, "While the emphasis will be on natural gas and service stations, other areas of business would not be ignored. We want to provide the whole range of services."
Fanjul said Repsol is negotiating with Petrogal over ties with Cia. Logistica de Combustiveis (CLC), the company that will run the multiproduct pipeline linking the Sines refinery with Petrogal's planned tank farm at Aveiras.
"We are very interested in participating in the project, both as shareholders and clients," he said.
Shell and Mobil disclosed similar accords with CLC.
However, Fanjul dismissed earlier reports Petrogal will acquire a stake in the Repsol subsidiary CLH, which has a supply accord with Petrogal's highly successful Spanish subsidiary, Petrogal Espanha.
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