Statoil expects to sell its Irish service network

Norwegian exploration giant Statoil expects to sell its Irish service station network and oil supply businesses by the end of the year.

The company released figures yesterday showing that it made €1.3 billion in profits in the first three months of 2006, compared with €872 million during the same period last year.

Statoil described the performance as the best quarter in its history. The company is cashing in on high oil prices, the result of the war in Iraq and fears that neighbouring Iran plans to develop nuclear weapons.

Revenues for the period were €14 billion. The biggest contributor to this was manufacturing and marketing, which generated over €11 billion in sales.

In a statement yesterday, Statoil repeated that it was carrying out a review of its Irish operations, Statoil Ireland, that could lead to a sale.

"The nature and timing of any resulting transactions are uncertain, but are expected to occur during 2006," it said.

Statoil Ireland's business consists of 69 company-owned service stations, fuel terminals in Cork, Dublin and Galway and interests in a number of smaller heating oil suppliers. It employs around 1,100 people.

It turned over €1 billion in 2004 and lost €2.78 million. Statoil has been in the Irish market since 1991, when it bought BP's service station network.

Statoil's exploration arm holds 36 per cent of the controversial Corrib gas field project. This was in the news last year when five men went to jail for defying a court order demanding that they allow the pipes bringing the gas ashore to cross their land.

The Norwegian company last week welcomed the announcement by natural resources minister, Noel Dempsey, giving the green light to the project, once safety concerns were met.

The exploration and retail arms are different divisions of the Scandinavian company. Statoil does not intend selling its potentially lucrative stake in the Corrib field.

An estimated 20 bidders have expressed interest in buying Statoil's retail business.

Grocery distributor Musgrave and industrial holdings company DCC are known to be working on a joint bid. The latter operates a fuels business in Britain.

Existing players Maxol and Tedcastles are also said to be interested in buying the Norwegian operator's business.

Merrill Lynch in London is handling the sale. Statoil Ireland could fetch anything from €150 million to €200 million.