German utility RWE-DEA is to merge its dowstream oil business, encompassing refi ...

German utility RWE-DEA is to merge its dowstream oil business, encompassing refining, supply, distribution and marketing, with Deutsche Shell to create a joint venture to be known at Shell & DEA Oil, reports Wood MacKenzie. Both companies will initially hold a 50% stake in the new company, with Shell taking majority control from 2004 by acquiring an additional 1%. RWE-DEA will have the option to sell its remaining 49% stake to Shell. The new joint venture - based in Hamburg - will be the largest refining and marketing company in Germany, holding 30% of domestic refining capacity and a similar share of the inland wholesale products market. The combination of 1,681 DEA branded service stations and 1,515 Shell stations will command a joint retail fuel market share of 24%, putting it ahead of current market leader Aral (with 19%). Both brands are to be retained for the time being. Under the terms of the agreement, Shell is also to acquire RWE-DEA’s 45-strong network of service stations in Poland. These will not form part of the German joint venture, but will be integrated into Shell’s existing Polish operation, boosting its network to 161 outlets. This will place the company ahead of BP, with approximately 134 sites, as the largest foreign oil company network in Poland. In addition, both companies have lubricants plants at Grasbrook, near Hamburg. Shell’s 350,000 t/y lube oil plant is reported to be the Group’s largest globally and is its only one that can run napthenic base oils. RWE-DEA’s lubricants business is in the form of a joint venture with Fuchs Petrolub. The merger is expected to create synergies of at least $150mn. Approximately 10% of the combined workforce is expected to be made redundant.

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