Chevron Press Release - Chevron Merges United Kingdom Refining And Marketing Operations With Elf And Murco
SAN FRANCISCO, Nov. 6, 1996 -- Chevron Corporation today announced that Gulf Oil (Great Britain) Ltd. (GOGB), a wholly owned Chevron subsidiary, has entered into a memorandum of understanding with Elf Oil UK Ltd. and Murco Petroleum Ltd. to merge their refining and marketing operations in the United Kingdom.
A new company will be formed by the three companies, with GOGB and Elf each holding a 41.25 percent interest and Murco holding a 17.5 percent interest.
The merger of GOGB's refining and marketing operations is consistent with Chevron's strategy of enhancing shareholder value through efficient and cost-effective operations.
The following is the entire release, which was issued today at 9:00 a.m. GMT in the United Kingdom.
ELF, GULF & MURCO TO FORM MAJOR NEW UK OIL COMPANY
ELF, GULF and MURCO have announced today the signing of a Memorandum of Understanding covering plans to create a strong competitive and dynamic new oil company by merging their UK refining and marketing interests. The move is seen by all three companies as an exciting long-term step forward providing major benefits of scale and improved efficiencies, as well as strengthening the future prospects for Milford Haven's refining industry.
Mr. David Setchell, currently managing director of Gulf Oil (Great Britain) Ltd., will be appointed chairman of the new company; and Mr. Christian Cliret, currently managing director of Elf Oil UK Ltd., will become managing director of the new company. Mr. Steve Wylie, currently finance controller of Murphy Eastern, will become the new company's finance director. Further senior management appointments will be made in due course.
The combined assets of the three parties will create a powerful UK oil industry leader, comprising: one of Europe's most efficient refineries; a retail network of approximately 1,500 service-stations; and an estimated eight percent share of the UK fuels market. The merger is expected to achieve annual cost savings of over #50 million.
Subject to final agreement which is expected early in 1997, interest in the new company will be held by Elf (41.25 percent), Gulf (41.25 percent) and Murco (17.5 percent). The formation of the new company is subject to further negotiation, parent company and regulatory approvals.
Elf, Gulf and Murco plan to pool their skills, strengths and resources in order to boost long-term performance within an industry which faces excess supply of refined products, growing costs of environmental regulations and fierce market competition.
Mr. Christian Cliret, managing director of Elf Oil UK Ltd., said, "The difficulties currently faced by the oil refining and marketing industry are well-known. We recognise today that, for all three of us, this merger is the best option for a promising future as a new force to be reckoned with in the UK market."
Mr. David Setchell, managing director of Gulf Oil, said, "This merger involves taking difficult decisions today, so that the new company and its employees will reap success tomorrow. In a highly competitive and demanding environment the new company will be better placed to serve its customers."
Mr. Mike Hulse, managing director of Murphy Petroleum Ltd., said, "We are fully confident that the new combined organisation, operated under a prudent business plan, can outperform all of the three contributing operations."
The creation of the new company, which will have its headquarters at Cheltenham (Gloucestershire), will involve:
Elf, Gulf and Murco together employ 1,322 people in UK refining and marketing. Detailed studies will commence to determine the best combination of skills and resources from the three parties in preparation for the launch of the new company. The three parties are committed to doing their utmost to address any job losses by early retirement, voluntary redundancy or limited redeployment within the shareholder companies. Outplacement support will be offered to those not joining the new company.
The new company is planning to consolidate the parties' refining interests in Milford Haven (SW Wales) by operating the 108,000 barrels-per-day (bpd) Elf/Murco refinery and cease processing at the 115,000-bpd Gulf refinery. As part of the proposed new merger, Gulf will sell to Texaco Ltd., operator of the neighbouring Pembroke refinery, its 50 percent interest in the jointly owned Pembroke Cracking Company.
The new company will supplement its output of products from the Milford Haven refinery through arrangements with other UK refiners in order to satisfy market demand.
The three parties believe this consolidation will strengthen considerably the future prospects of Milford Haven's refining industry in the long term.
Elf, Gulf and Murco will continue to manufacture their lubricants products at the blending facility in Silvertown (E. London), which, in due course, will also be operated by the new company.
The new company will continue to market fuels and lubricants to retail commercial and lubricants customers and distributors in the UK and Ireland. The separate brands of Elf, Gulf and Murco will continue to be used. The creation of a completely new brand has been ruled out currently on the basis of the value of the existing brands. In due course, the new company may unify under a single brand.
BACKGROUND INFORMATION: ELF OIL UK LIMITED
A wholly owned subsidiary of Elf Aquitaine of France.
|No. employees:||552 people (excluding service-station personnel)|
|Refinery:||Milford Haven (70 percent interest as operator)|
|Distribution:||Interest in four terminals
10 percent in the Mainline pipeline
|No. service stations:||601 sites
- 457 company owned
- 144 dealers
|Share of UK fuels market:||2.9 percent|
|UK turnover:||#1.2 billion (1995)|
|UK head office:||Wembley|
|1990||Acquired refining and marketing interests of Amoco UK Ltd. in August 1990 and merged with Elf Oil UK.|
|1991||Acquired 144 service-stations from the Heron group.|
April - Launched "Le Shop" retail concept; 50 sites to be developed by year-end.
July - Launched retailing alliance with Somerfield plc with two trial neighbourhood supermarkets
July - Elf and Gulf launch lubricants manufacturing joint-venture at Silvertown blending plant (E. London).Sept. - Completed and started-up #71 million Hydro De-Sulphurisation (HDS) project at Milford Haven refinery.
BACKGROUND INFORMATION:GULF OIL (GREAT BRITAIN) LTD.
A wholly owned subsidiary of Chevron Corporation of the USA.
|No. employees:||640 people (excluding service-station personnel)|
Milford Haven (Waterston) (100 percent, operator)
Pembroke Cracking Company (35 percent throughput rights
in 50/50 partnership with Texaco in 90,000 barrels per day
|Distribution:||Owns and operates three terminals: Cardiff, West Bromwich
and Ellesmere Port
Additional customer service facilities also at terminals in Grangemouth and West Thurrock (Essex)
5 percent in the Mainline pipeline
|No. service stations:||479 sites
- 192 company owned
- 287 dealers
|Share of UK fuels market:||4.4 percent|
|UK turnover:||#1.8 billion (1995)|
|UK head office:||Cheltenham|
|1989||Liverpool-based Telegraph Service Stations acquired.|
|1991||Gulf upgraded its brand image.|
|1992||Gulf won Forecourt News' "Best Corporate Image Award." Cardiff-based Action Service-Station chain acquired.|
|1993||A 12,500 bpd, #40-million Isomerisation Unit to enhance petrol production was commissioned at the Milford Haven refinery.|
|1994||Gulf won their second Forecourt News "Best Corporate Image Award."|
|1996||Gulf completed #15 million upgrade at Milford Haven refinery so it can produce low sulphur diesel.
Gulf and Elf launched lubricants manufacturing joint-venture at Silvertown blending plant (E. London).
BACKGROUND INFORMATION: MURCO PETROLEUM LIMITED
A wholly owned subsidiary of Murphy Oil Corporation of the USA.
|No. employees:||130 people (excluding service-station personnel)|
|Refinery:||Milford Haven (30 percent, non-operator)|
|Distribution:||Three wholly owned terminals
Westerleigh (nr. Bristol), Theale (nr. Reading),
Bedworth (nr. Nuneaton)
|No. service stations:||440 sites
- 140 company owned
- 300 dealers
|Share of UK fuels market:||0.9 percent|
|UK turnover:||#400 million (1995)|
|UK head office:||Finchley|
Updated: November 1996