2nd UPDATE: Exxon Sells Australia Filling Stations To 7-Eleven

Exxon Mobil Corp. (XOM) has sold its entire Australian network of 295 filling stations to 7-Eleven Australia for an undisclosed sum after an agreement to sell them to Caltex Australia Ltd. (CTX.AU) for around A$300 million was blocked by antitrust regulators.

The sale, flagged last week by local media, makes good on the U.S. oil giant's desire to exit its smaller-scale Australian retail operations to concentrate on opportunities further up the value chain and boosts privately-owned 7-Eleven's footprint to over 650 stores.

7-Eleven, which has a license to operate and franchise stores in Australia from U.S.-based 7-Eleven Inc., doesn't have a presence in South Australia state and will on-sell Exxon Mobil's filling stations there to private company Peregrine Corp.

Market watchers suspect that Exxon Mobil will eventually sell its Altona oil refinery in Victoria state but the company has so far indicated that it wants to keep its Australian wholesale operations. "We're not currently looking at selling the Altona refinery, but we always assess business opportunities," an Exxon Mobil spokeswoman said.

Of 7-Eleven's current 400 stores, about half of them already sell gasoline, supplied mostly by Royal Dutch Shell PLC.

Any Exxon Mobil filling stations already supplied by Exxon Mobil's Altona refinery will continue to be supplied under those arrangements, a 7-Eleven spokeswoman said.

She said that 7-Eleven doesn't expect the deal to be subject to regulatory clearance, although she added that the competition regulator may examine the deal's potential impact on specific geographic areas.

The Australian Competition and Consumer Commission in December blocked the sale of 302 Exxon Mobil filling stations to Caltex, which is 50%-owned by Chevron Corp. (CVX), after finding that competition would be substantially reduced at 53 specific sites.

The Exxon spokeswoman said the number of stations in its network has shrunk to 295 from 302 because seven stations have either changed ownership or their leases haven't been renewed.

When it rejected the Caltex deal, the ACCC said it also had broader concerns about its impact on the "stability and effectiveness of coordination between major fuel retailers in determining prices", meaning it would have likely rejected the deal even if Caltex agreed to divest the 53 sites of concern.

ACCC Chairman Graeme Samuel has previously referred to what he considers to be a "comfortable oligopoly" in Australia's gasoline market. In 2007, the ACCC conducted an inquiry which found that while there was no "obvious" evidence of price fixing in the market, there were operational concerns.

The regulator said in December that it was satisfied that Exxon Mobil will exit its Australian retail business within the next two or three years.

A pairing with 7-Eleven will create Australia's third biggest private company and biggest independent fuel retailer with projected annual sales above A$2.84 billion, 7-Eleven said.

-By Ross Kelly; Dow Jones Newswires; +61-2-8272-4692; ross.kelly@dowjones.com

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