Portugal’s energy giant Galp and the owners of Spanish refiner Moeve have agreed to advance discussions on a potential merger of their downstream portfolios to create two separate major Iberian companies.
Galp and Moeve’s shareholders Mubadala Investment Company and The Carlyle Group aim to create two energy companies in the Iberian Peninsula, which would be named RetailCo and IndustrialCo.
RetailCo would operate a network of around 3,500 service stations primarily located in the Iberian Peninsula, while IndustrialCo would focus on refining, petrochemicals, and supply activities, with a combined crude processing capacity close to 700,000 barrels per day (bpd) across three industrial sites.
IndustrialCo would include Galp’s industrial businesses, in particular refining activities, related supply and trading of oil and oil products, operation of logistics assets, and commercial B2B activities.
Galp operates a refinery in Sines, Portugal. Moeve, for its part, owns three refineries in Spain and plans the development of hydrogen and low-carbon fuel projects.
Both RetailCo and IndustrialCo are set to operate as independent self?funded companies, and they are well positioned to generate synergies and operational efficiencies, whilst pursuing growth opportunities and advance energy transition solutions, Galp and Moeve said in a joint statement.
Galp and Moeve believe that by combining their dowsnstream activities the businesses will be better placed to unlock value, boost scale and strategic positioning, and benefit from the complementary competencies and personnel expertise of both Galp and Moeve.
After merging its downstream portfolio, Galp will focus on its upstream and renewables businesses and supply and trading of oil, gas, and power.
It is not certain that Galp and Moeve would reach a binding agreement to combine their downstream portfolios, which remains subject to an in-depth due diligence process, and the obtaining of all relevant corporate approvals by the respective governing bodies.
A potential agreement is expected by the middle of the year, with completion also being subject to any relevant third-party authorizations and regulatory approvals being obtained.
By Michael Kern for Oilprice.com
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