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In two separate deals, oil company ConocoPhillips has continued its radical divestment of its retail operations with the sale of nearly 1,200 gas stations in the USA. Acquisitive rival Sunoco has signed a definitive agreement with ConocoPhillips to purchase its retail network in Delaware, Maryland, Washington, D.C., and Virginia, which currently trade under the Mobil brand. The network consists of a total of 385 sites, of which 114 are owned in fee or subject to long-term leases, 36 are contract dealer-owned and -operated locations and 235 are branded distributor sites. Some 31 of the sites are company-operated and have convenience stores that are currently branded Circle K. These sites will be rebranded to Sunoco gasoline and APlus c-stores. The purchase price is $187.4 million plus inventory.

Russian oil company LUKOIL, meanwhile, has announced that it has agreed to acquire 795 gas stations – most of which operate under the Mobil brand - from ConocoPhillips in the states of New Jersey and Pennsylvania. The purchase price of the acquisition is $266 million, with the deal being primarily financed by a loan from Lehman Brothers. LUKOIL has said that the deal will double its market share in the north-east US, as the company will now operate around 2,000 sites. This latest deal adds to the 1,300 Getty Petroleum sites acquired by LUKOIL in 2000.

ConocoPhillips had promised that its retail disposal programme would gather pace in 2004 and it is certainly living up to this pledge. The sale of Circle K to Couche-Tard last year was the biggest single deal that could have been expected, and the oil company is now selling large regional tranches of stores to those of its rivals who feel that retail marketing is still a good place to be. The company is aiming for a year-end target of 325 company-owned and operated retail sites in the US, which will trade as Phillips 66, Conoco or 76. Further sell-offs in the USA are a certainty, but also up for grabs may be operations elsewhere around the globe, particularly as grocery retailers are on the prowl for ready-made forecourt store networks.

For the two buyers in the USA, these deals mark significant progress as they seek to forge a significant presence in the petroleum-marketing arena. LUKOIL has stated that it has a medium-term goal of 3,000 gas stations and this deal sets it well on its way. It has already begun rebranding some of its Getty sites to the LUKOIL brand and it seems likely that this selective rebranding initiative will be extended to the ConocoPhillips sites in due course. Sunoco has been one of the country’s more aggressive predators over the last year or two, picking up 397 Coastal locations in 2002 and 193 Speedway Superstores from Marathon Ashland Petroleum and 43 Phillips petrol stations from ConocoPhillips during 2003. It now has a network of over 600 c-stores spread among its 4,300 retail sites. Its APlus and Coastal Mart stores generate merchandise sales in excess of USD500 million, meaning that the business is steadily becoming one of the rising stars in the US c-store sector.
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