Mobil deal to take Caltex to the top

Age
Wednesday 1/7/2009 Page: 3

DEPARTING Caltex boss Des King is confident the Australian Competition and Consumer Commission will approve the company's bid for more than 300 Exxon-Mobil service stations, which would catapult the petrol retailer into market leadership in all areas of its operations.

In his last interview as Caltex chief executive before heading back to parent company Chevron in the US, Mr King told BusinessDay that one of his legacies would be devising a strategy to make Caltex the market leader in refining, wholesaling and retailing in Australia.

"Our refineries are the largest in Australia with 32% market share," he said. "With our wholesale distribution we are also No. 1, at about a third of market share. But when it gets to fuel retailing we are only No. 4. Coles and Woolworths are No. 1 at 22% each. BP is No. 3 at 19% and we are fourth at 16% and that includes our franchises. Taking that out we are at 5%.

"If this is approved we will get a 6% increase in market share so we would be up there equal No. 1 with Woolies and Coles," Mr King said. He said he believed the commission understood Caltex's relationship as the wholesaler to Woolworths' retail petrol stations and that approval for its $300 million Exxon-Mobil offer would only increase competition.

"I don't think the public appreciates that when there is a Caltex sib in lots of places Caltex is not necessarily the retailer and that has caused confusion," he said. "We actually compete with Woolies at a retail level. The ACCC knows that though and that gives us confidence that we will get this approved."

After a holiday, Mr King will become president of Chevron Technical Ventures, a venture capital arm focused on clean energy. He said the developing world should be given access to the lowest-emitting technologies to allow them to meet their energy needs and help strike a climate change deal in Copenhagen in December.

He applauded the Federal Government for delaying its emissions trading scheme rather than rushing it through but believes the best way to treat petrol is through a tax system rather than emissions trading. "When it comes to distributors having to buy those permits, it drives inefficiency in the system," he said. "I think when it comes to emissions, 'emitter pays' is more effective. I think the debate has moved away from a carbon tax on fuel but...

it would make far more sense to have a carbon price on fuel set by the Government and let the big emitters that are industries work on the trading scheme." Mr King hands over to former Incitec Pivot chief Julian Segal, having just delivered a record first-half profit for Caltex but with a weaker outlook for the second half and doubts about a potential dividend.