Caltex fairer than Gull in buyer beauty contest

By PAULA OLIVER energy writer

Independent petrol retailer Gull Petroleum wants to boost its local presence by buying the Challenge service station network, but it says it "can't get through the front door."

The Challenge network is for sale after Shell bought its former parent company, Fletcher Energy.

Launched in 1998, Challenge trumpeted its independent status and vowed to take on the big four oil companies with price cuts. It has since settled at around a 5 per cent market share.

The 112-station chain is now in the stable of Fletcher offshoot Rubicon, which intends to sell it - but will not say when.

The first signs of progress came last week, when Caltex applied to the Commerce Commission for clearance to buy the chain.

Australian independent Gull, which has established 20 stations here since 1998, says it was surprised to hear of the Caltex move.

"We told them formally that we were interested as long ago as last year," Gull executive director Neil Rae said yesterday. "But we haven't heard from them ... We haven't got past the front door, so I was surprised to hear they had entered into talks with Caltex."

Rubicon said it had held discussions with "a number of parties" interested in Challenge. It indicated a sale would happen in the next 12 months.

Mr Rae said it was possible Gull was seen as too small an operator - but being a family company it would be hard to find out such information.

Gull has written to the Commerce Commission expressing its concern at the prospect of a reduction in the number of independent petrol operators in New Zealand.

Caltex has the smallest market share of the big four oil companies, about 17 per cent. Its share of the diesel market is greater, at 21.3 per cent. In its application to the Commerce Commission, Caltex says that if it bought Challenge, its market share for petrol would become 21.5 per cent - still lower than BP, Shell or Mobil. It would benefit through being able to spread its fixed costs across the chain.

An oil industry source said Caltex appeared to be the best fit for the Challenge network, because it was not as concerned about rebranding its stations to a specified format as the other big players.

Gull says it has no idea how much the Challenge stations might sell for.

"It's a mystery," Mr Rae said. "It's hard to know without knowing how they're performing, and we haven't been invited to find out."