BP Catapults to Top of German Market


Despite a regulatory hitch, BP has purchased a 51-percent stake in Veba Oel Group, creating a partnership that is the largest lubricant marketer in Germany.

The German energy company E.ON announced in July that it would sell a majority stake of Veba to BP, essentially in exchange for a majority stake in BP subsidiary Gelsenberg, which owns a 25.5 percent stake in Ruhrgas, Germanys largest natural gas distributor. Germanys Federal Cartel Office prohibited the transfer of Gelsenberg, but BP and E.ON decided to proceed with the Veba sale, which is expected to close this week. BP paid $1.63 billion and assumed $850 million in debt.

Veba owns Aral, Germanys biggest fuels retailer, with more than 2,600 service stations in that market, plus another 450 in adjacent countries. Aral AG markets approximately 100,000 metric tons (110,200 tons) of lubricants annually.

As Veba does not produce base oil, Aral buys from other suppliers. It also contracts with a third party to blend its branded automotive and industrial lubes, which it sells to retail outlets, car workshops, fleet and industry. An Aral spokesman said the company exports to numerous countries worldwide.

BP said it plans to use Aral as its exclusive brand name in Germany, although a spokesman said he did not know if this would apply to lubes. BP also owns Castrol.

The combination of Veba and BPs existing lubricant business in Germany creates that countrys largest lubricant marketer, according to competitor Fuchs Petrolub AG. If Shell and RWE-DEA complete their expected German joint venture, it will claim the number two position, followed by Fuchs, ExxonMobil and TotalFinaElf.

Under terms of its deal with E.ON, BP can buy the remaining 49 percent share of Veba after April 1 for $2.4 billion in cash.

In the meantime, BP must now move to divest a portion of Vebas business. In approving the Veba portion of the deal, German and European Union regulators required BP to dispose of 4 percent of the combined 26.5 percent retail market share of BP and Aral in Germany, as well as refining and pipeline assets.

In announcing the completion of the Veba sale Friday, BP and E.ON also said they have agreed to sell Vebas oil and gas production subsidiary to Petro-Canada, for $2 billion. BP said it would use its share – $1.63 billion – to help pay E.ON.

BP and E.ON have appealed the cartel offices denial of the Gelsenberg transfer. The companies have agreed that E.ON will pay $2.1 billion for Gelsenberg if that transaction is ultimately approved by the German Economics Ministry.

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