The companies said the transaction represents a petroleum product sales volume of about one million metric tons per year. It includes ExxonMobils retail station network in the two countries, consisting of 130 service stations, and its industrial, wholesale, LPG and aviation fuels businesses. In addition, most of the lubricants businesses conducted in Spain and Portugal by ExxonMobil Petroleum & Chemical, BVBA, will be transferred to Galp, of Lisbon, Portugal.

The sale does not include ExxonMobils asphalt business in Spain, marine and aviation lubricants, basestocks, private labeled lubricants, waxes and white oils. The agreement also does not impact on ExxonMobils chemical business in both countries.

ExxonMobils decision is the result of a careful assessment of the companys global portfolio in the downstream, and of its opportunities for growth, according to spokeswoman Prem Nair. Where appropriate, ExxonMobil restructures or divests those businesses that do not fit the corporations overall strategic business objectives, Nair said.

In Spain and Portugal, significant efforts have been made to improve fuels marketing and lubricants business performance, Nair told Lube Report. Still further improvement is needed to generate returns required by ExxonMobil. This would require further investment and implementation of further efficiency enablers and savings. Even considering these additional, potential business improvement steps, the fuels and lubricant businesses have a higher value for other parties than ExxonMobil.

Galp said the acquisition will increase the size of Galps Iberian operations, its core downstream market. It will also result in significant cost savings by combining the two networks. Galps overriding goals for marketing of petroleum products are to maximize returns on the retail network by raising efficiency and to increase the sales volume in line with planned refining capacity, the company said.

Stephen Ames, of SBA Consulting in Pepper Pike, Ohio, pointed out that Galp is Petrogal on the refining side, with – among other assets, a 180 kilotons per year (3,640 barrels per day) API Group I base oil plant in Leixoes (Oporto), Portugal.

Galp is currently a third owned by Eni, roughly 31 percent by the Amorim Energia and small positions by other companies, Ames told Lube Report. The equity in Galp has changed considerably over recent years.

Little Falls, N.J.-based consultant Kline and Co. estimates the Iberian lubricants market at about 550,000 tons per year, including aviation and marine lubricants, and white oils, according to Geeta Agashe, vice president of Klines Petroleum and Energy Practice.

ExxonMobil had a market share of 8 percent with approximately 45 kilotons and Galp had a 4 percent market share with approximately 24 kilotons, Agashe said. Combined, this acquisition would catapult Galp to the number three market share position after Repsol and Cepsa. We estimate Repsol to account for over 23 percent of the market and Cepsa for 17 percent. Hence, this acquisition will create a big impact in the Iberian lubes market.

The transaction is subject to approval by the relevant authorities. On completion, because it is a sale of shares, all contractual and commercial terms of the companies, as well as existing employment contracts, will remain valid. The business will continue under new ownership.